<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 7, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
AMERICAN TOWER CORPORATION
(Name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3669 76-0448808
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
3411 RICHMOND AVE., SUITE 400
HOUSTON, TEXAS 77046
(713) 693-0000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
MARTY L. JIMMERSON
3411 RICHMOND AVE., SUITE 400
HOUSTON, TEXAS 77046
(713) 693-0000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES TO:
<TABLE>
<C> <C>
BRUCE C. HERZOG DAN BUSBEE
KEITH R. FULLENWEIDER LOCKE PURNELL RAIN HARRELL
VINSON & ELKINS L.L.P. (A PROFESSIONAL CORPORATION)
1001 FANNIN, SUITE 2300 2200 ROSS AVENUE, SUITE 2200
HOUSTON, TEXAS 70002-6760 DALLAS, TEXAS 75201-6776
(713) 758-2222 (214) 740-8000
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
If any of the securities registered on this Form are being offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. []
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. []
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. []
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. []
CALCULATION OF REGISTRATION FEE
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<CAPTION>
==============================================================================================================
PROPOSED
TITLE OF EACH CLASS OF MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1)(2) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, $.01 par value................................ $57,500,000 $17,424
==============================================================================================================
</TABLE>
(1) Calculated pursuant to Rule 457(o) under the Securities Act of 1933.
Includes shares of Common Stock subject to the Underwriters' over-allotment
option.
(2) Estimated solely for purposes of calculating the registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
SUBJECT TO COMPLETION, DATED MARCH 7, 1997
SHARES
[AMERICAN TOWER LOGO]
COMMON STOCK
Of the shares of Common Stock, par value $.01 per share, (the
"Common Stock") offered hereby, shares are being sold by American
Tower Corporation ("American Tower" or the "Company") and shares are
being sold by the Selling Stockholder. The Company will not receive any proceeds
from the sale of shares by the Selling Stockholder. See "Principal and Selling
Stockholders."
Prior to this offering (the "Offering"), there has been no public market
for the Common Stock of the Company. It is currently estimated that the initial
public offering price will be between $ and $ per share.
See "Underwriting" for information relating to factors to be considered in
determining the initial public offering price. Application has been made for
quotation of the Common Stock on the Nasdaq National Market under the symbol
"ATWR."
SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
================================================================================
<TABLE>
<CAPTION>
Proceeds to
Price Underwriting Proceeds to Selling
to Public Discount(1) Company(2) Stockholder
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
Per Share.............. $ $ $ $
Total(3)............... $ $ $ $
===================================================================================
</TABLE>
(1) See "Underwriting" for information concerning indemnification of the
Underwriters and other matters.
(2) Before deducting expenses payable by the Company, estimated at
$ .
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to an aggregate of additional shares of Common Stock solely to
cover over-allotments, if any. If the Underwriters exercise this option in
full, the Price to Public, Underwriting Discount and Proceeds to Company
will total $ , $ and $ , respectively.
See "Underwriting."
The shares of Common Stock are offered by the several Underwriters named
herein, subject to receipt and acceptance by them and subject to their right to
reject any orders in whole or in part. It is expected that delivery of the
certificates representing such shares will be made against payment therefor at
the office of Montgomery Securities on or about , 1997.
------------------------
MONTGOMERY SECURITIES
ALEX. BROWN & SONS
INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
, 1997
<PAGE> 3
[MAP]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING PURCHASES OF THE COMMON STOCK TO COVER SOME OR ALL OF A SHORT POSITION
IN THE COMMON STOCK MAINTAINED BY THE UNDERWRITERS AND THE IMPOSITION OF PENALTY
BIDS (AS DEFINED IN REGULATION M). FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Unless otherwise indicated, the information in
this Prospectus assumes (i) that all numbers of shares of Common Stock and per
share amounts have been adjusted to reflect a 73 for 1 stock split to be
effected immediately prior to the Offering and (ii) no exercise of the
Underwriters' over-allotment option. References herein to the Company or
American Tower include American Tower Corporation and its subsidiaries, unless
the context indicates otherwise. Prospective investors should carefully consider
the information set forth in "Risk Factors" before purchasing any shares of
Common Stock offered hereby.
THE COMPANY
American Tower Corporation is a leading independent owner and operator of
wireless communications towers with nearly 600 towers on 550 sites in 30 states.
The Company rents tower space and provides related services to wireless
communications service providers, as well as operators of private networks and
government agencies, for a diverse range of applications including paging,
cellular, personal communications services ("PCS"), fixed microwave, specialized
mobile radio ("SMR") and enhanced specialized mobile radio ("ESMR"). American
Tower owns and operates towers in 45 of the top 100 metropolitan statistical
areas ("MSAs") in the United States and has clusters of towers in cities such as
Houston, Dallas, Baltimore, San Antonio, Atlanta, Jacksonville, Kansas City,
Albuquerque and Nashville. The Company's customers include Bell South Mobility,
GTE Mobilnet, Houston Cellular, Nextel, PageMart, Pagenet, Pittencrief
Communications, SBC Communications, Shell Offshore, CSX Transportation, and
various federal and local government agencies.
Communications site operators have benefited in recent years from
increasing demand for wireless communications services which has prompted the
issuance of new wireless network licenses and construction of new wireless
networks. The Company believes that the increase in demand for wireless
communications is attributable to (i) the increasing mobility of the U.S.
population and growing awareness of the benefits of mobile communications; (ii)
technological advances in communications equipment and increasing affordability
of wireless services; (iii) changes in telecommunications regulations; and (iv)
business and consumer preferences for higher quality voice and data
transmission. Consequently, more towers will be required to accommodate the
anticipated increase in the demand for higher frequency technologies (such as
PCS) which have a reduced cell range and thus require a more dense network, or
"footprint," of towers. The Personal Communications Industry Association
("PCIA") estimates that there are currently 22,000 antenna sites in the U.S. for
cellular and PCS alone and that this number will grow to 100,000 sites by the
year 2000 as cellular systems expand coverage and PCS systems are deployed.
Further, industry analysts estimate that between 1996 and 2000 total spending on
infrastructure for PCS networks in the United States, including cell sites and
mobile switching centers, will exceed $24 billion.
American Tower believes that it is well positioned to capitalize on the
continued growth in wireless communications. The Company's strategy for growth
is to focus its internal sales and marketing activities on maximizing the
capacity utilization of its towers. In addition, the Company has experience in
the construction and acquisition of towers which it believes will allow the
Company to increase its penetration of existing markets and expansion into new
markets. The Company is currently in the process of constructing 40 towers,
plans to construct as many as 35 additional towers in 1997 and has acquired or
agreed to acquire 33 towers on 19 sites since the beginning of the year.
In addition to providing multiple sites in existing and emerging markets,
the Company is seeking to develop a nationally-recognized or branded solution to
its customers' rental tower needs by focusing on quality customer service. Among
the enhanced services offered by the Company are (i) remote monitoring
capabilities which ensure compliance with Federal Communications Commission
("FCC") regulations and quickly identify breaches of customer network integrity;
(ii) regulatory compliance expertise which can accelerate a customer's speed to
market by decreasing the time and costs associated with Federal Aviation
Administration ("FAA"), FCC and local zoning or permitting compliance; and (iii)
standardized and master
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<PAGE> 5
licensing agreements and predictable pricing terms which simplify the
contracting process. The Company believes that wireless service providers prefer
to deal with a consolidated tower provider, as opposed to individual tower
owners, and that providers which are expanding within existing markets or new
markets are motivated to lease space from tower operators that offer a
consistent level of value added service. The Company believes that the
development of such customer-oriented services has contributed to its yearly
customer "churn" rates of less than 1%, increased capacity utilization on
existing towers and differentiation of American Tower's services from those of
its competitors.
GROWTH STRATEGY
In light of the increasing demand for wireless communications services and
the ongoing development of new wireless technologies and networks, American
Tower believes that there are significant opportunities to expand its business.
The Company's growth strategy includes:
Internal Growth through Sales and Marketing Activities. A key component of
American Tower's growth strategy is to maximize the utilization of its tower
sites. The Company targets wireless providers that are expanding their existing
network infrastructure as well as those deploying new technologies. The Company
also focuses on acquiring towers sites with underutilized capacity which it
believes can be filled through the implementation of the Company's sales and
marketing techniques. Because the costs of operating a tower site are largely
fixed, increasing tower utilization results in improved site operating margins.
When a specific tower reaches full antennae attachment capacity, American Tower
is often able to construct an additional tower at the same location, enabling it
to further leverage its investment in land leases, tower monitoring costs and
certain initial capital expenditures, such as utilities and telephone service.
Growth by Construction. American Tower intends to continue constructing
towers to "fill in" its tower network in existing markets and to enter new
markets. By locating new towers in areas identified by its customers as optimal
for their network expansion requirements, the Company attempts to secure
commitments for licensing space prior to commencing construction. Further,
master planned communities and other neighborhoods with zoning or regulatory
bodies which have previously opposed tower construction are increasingly seeking
a single tower rental company which can offer an integrated and efficient tower
construction plan to meet their growing wireless needs. The Company is seeking
opportunities to build towers in such communities and is currently constructing
five tower sites in The Woodlands, a master planned community north of Houston.
The Company believes that its experience in site analysis and tower construction
provides it with a competitive advantage in procuring such exclusive
construction agreements.
Growth by Acquisition. American Tower intends to continue to make
strategic acquisitions in the fragmented tower rental industry. The Company will
target acquisitions in markets where the Company already owns clusters of towers
as well as new markets. The Company seeks to increase revenues and operating
margins at acquired tower sites through expanded sales and marketing efforts,
improved service and elimination of redundant overhead. The Company evaluates
acquisitions using numerous criteria, including customer requirements, tower
location, tower height, competition and existing capacity utilization.
Acquisition candidates include local tower owners, private communication
networks (such as those previously used by railroad or energy companies),
independent tower rental competitors and the tower networks of wireless
communications companies. In order to capitalize on industry consolidation, the
Company has begun to hire additional personnel to support expanded acquisition
activities.
4
<PAGE> 6
COMPANY BACKGROUND
American Tower was organized in October 1994 by an investor group led by
Summit Capital Inc. of Houston and Chase Capital to acquire Bowen-Smith Corp.
("Bowen-Smith"). Bowen-Smith had been in the tower rental business since 1966,
initially serving the communications tower requirements of two-way radio and
microwave transmission users. At the time of the acquisition (the "Bowen-Smith
Acquisition"), Bowen-Smith owned 184 towers on 175 sites located primarily in
Texas, Louisiana and Oklahoma. Within the first year after the Bowen-Smith
Acquisition, the Company acquired or constructed more than 75 communications
towers. In December 1995, the Company acquired 103 towers from CSX Realty
Development Corporation ("CSX"), and in October 1996, the Company acquired 154
towers from Prime Communication Sites Holding, LLC ("Prime").
THE OFFERING
Common Stock offered by the
Company............................. shares
Common Stock offered by the Selling
Stockholder......................... shares
Common Stock to be outstanding after
the Offering........................ shares(1)
Use of proceeds..................... The Company intends to use the net
proceeds of the Offering to (i) repay
$4.9 million of subordinated debt; (ii)
redeem the Company's Series A
Redeemable Preferred Stock (the "Series
A Preferred Stock") for $4.5 million;
and (iii) repay a portion of the
outstanding indebtedness under the
Company's bank credit facility (the
"Credit Facility"). The Company will
not receive any proceeds from the sale
of shares by the Selling Stockholder.
See "Use of Proceeds."
Proposed Nasdaq National Market
symbol.............................. "ATWR"
- ---------------
(1) Includes warrants to purchase 2,681,071 shares of Common Stock at a nominal
price per share which the Company expects to be exercised prior to the
consummation of the Offering and shares of Common Stock having a value of
$1.0 million (based upon the initial public offering price) to be issued
upon the closing of the Offering in connection with a recently completed
acquisition. Excludes 456,250 shares of Common Stock issuable upon exercise
of options outstanding under the Company's stock option plan. See
"Management -- Stock Option Plan."
5
<PAGE> 7
SUMMARY FINANCIAL AND OPERATING DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 15, DECEMBER 31, 1996
1994 THROUGH YEAR ENDED ---------------------------
DECEMBER 31, DECEMBER 31, PRO FORMA
1994(1) 1995 ACTUAL AS ADJUSTED(2)
------------ ------------ ---------- --------------
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Total revenues...................................... $ 1,948 $ 8,277 $ 12,366 $15,756
Operating expenses:
Direct tower costs................................ 402 1,868 2,849 3,647
Selling, general and administrative............... 380 1,601 2,049 2,151
Depreciation and amortization..................... 403 1,908 2,709 3,891
---------- ---------- ---------- -------
Total operating expenses................... 1,185 5,377 7,607 9,689
---------- ---------- ---------- -------
Operating income.................................... 763 2,900 4,759 6,067
Interest expense, net............................... 576 3,068 3,808 3,347
Other expense....................................... 66 414 150 150
---------- ---------- ---------- -------
Income (loss) before income taxes and extraordinary
item.............................................. 121 (582) 801 2,570
Income tax (expense) benefit........................ (50) 217 (303) (977)
---------- ---------- ---------- -------
Income (loss) before extraordinary item............. 71 (365) 498 $ 1,593
=======
Extraordinary loss, net(3)........................ -- (207) (451)
---------- ---------- ----------
Net income (loss)................................. $ 71 $ (572) $ 47
========== ========== ==========
Earnings (loss) per common share:
Income (loss) before extraordinary item........... $ $ $ $
=======
Extraordinary loss, net...........................
---------- ---------- ----------
Net income (loss) per common share................ $ $ $
========== ========== ==========
Weighted average common shares and common stock
equivalents outstanding...........................
OTHER OPERATING DATA:
EBITDA(4)........................................... $ 1,166 $ 4,808 $ 7,468 $ 9,958
EBITDA margin(4).................................... 59.9% 58.1% 60.4% 63.2%
Tower sites:
Beginning of period............................... 175 175 361 361
Tower sites acquired during the period............ -- 183 158 177
Tower sites constructed during the period......... -- 3 27 27
Tower sites disposed of during the period......... -- -- (45) (45)
End of period..................................... 175 361 501 520
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
--------------------------------------------
PRO FORMA
ACTUAL PRO FORMA(5) AS ADJUSTED(5)
------ ------------ --------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Land, rental towers and related fee-based assets, net........... $66,857 $85,673 $85,673
Total assets.................................................... 75,527 95,417 95,417
Long-term debt, less current portion............................ 49,771 68,661 38,161
Redeemable preferred stock...................................... 4,000 4,000 --
Total stockholders' equity...................................... 11,598 12,598 47,272
</TABLE>
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(1) The Company was organized in connection with the Bowen-Smith Acquisition in
October 1994, at which time the book values of the assets and liabilities
acquired were adjusted to their estimated fair values on the basis of
purchase accounting. In addition, upon the closing of the Bowen-Smith
Acquisition the Company entered into new debt and equity financing
arrangements, adjusted the depreciation period for towers and related
fee-based assets, outsourced its tower maintenance services and implemented
other significant changes in the Company's operations. Each of these factors
affects the comparability of periods prior to the Bowen-Smith Acquisition
with periods since October 1994. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Overview."
(2) Gives effect to (i) the acquisition of 154 communications towers from Prime
in October 1996 (the "Prime Acquisition"); (ii) other acquisitions completed
since January 1, 1996; (iii) pending acquisitions of five tower sites; and
(iv) the application of the net proceeds from the Offering, as if each had
occurred at January 1, 1996. The pro
6
<PAGE> 8
forma data does not reflect towers under construction. See "Use of Proceeds"
and "Unaudited Pro Forma Condensed Consolidated Financial Information."
(3) Reflects extraordinary charges resulting from prepayment of indebtedness in
both 1995 and 1996, net of related income tax benefits. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Results of Operations."
(4) Earnings before interest, taxes, depreciation and amortization ("EBITDA").
Based on its experience in the tower industry, the Company believes that
EBITDA is an important tool for measuring the performance of tower companies
(including potential acquisition targets) in several respects, including
liquidity, operating performance and leverage. In addition, lenders use
EBITDA in evaluating tower companies, and substantially all of the Company's
financing agreements contain covenants in which EBITDA is used as a measure
of financial performance. However, EBITDA should not be considered an
alternative to operating or net income as an indicator of the Company's
performance or to cash flow from operations as a measure of liquidity.
EBITDA Margin represents EBITDA as a percentage of total revenues. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Overview" and "-- Liquidity and Capital Resources."
(5) Gives effect to (i) the acquisitions completed since December 31, 1996 and
(ii) pending acquisitions of five tower sites, as if each had occurred at
December 31, 1996. The Pro Forma As Adjusted column also gives effect to the
application of the estimated net proceeds from the Offering, as if the
Offering had occurred at December 31, 1996. The pro forma data does not
reflect towers under construction. See "Use of Proceeds" and "Unaudited Pro
Forma Condensed Consolidated Financial Information."
7
<PAGE> 9
RISK FACTORS
Prospective investors should consider carefully the following factors, in
addition to the other information contained in this Prospectus, in evaluating
the Company and its business before purchasing any shares of Common Stock
offered hereby.
DEPENDENCE ON DEMAND FOR WIRELESS COMMUNICATIONS
The demand for rental space on the Company's towers is dependent on the
demand for wireless communications and demand for tower sites from wireless
communication companies. The wireless communications industry, which includes
paging, cellular, PCS, fixed microwave, SMR, ESMR and other wireless services,
has undergone significant growth in recent years and remains highly competitive,
with service providers in a variety of technologies and two or more providers of
the same service within a geographic market competing for subscribers. Each type
of wireless technology currently requires ground-based facilities for
transmission and reception. Accordingly, in order to meet increasing subscriber
demand, wireless service providers must either construct their own tower network
or lease space on existing or new communications sites. The amount of leasing
activity in the wireless communications industry is dependent on a number of
factors beyond the Company's control, including demand for wireless services,
the financial condition and access to capital of wireless providers, the
strategy of wireless providers with respect to owning or leasing communications
sites, government licensing of broadcast rights, changes in telecommunications
regulations and general economic conditions. A slowdown in the growth of
wireless communications in the United States would depress network expansion
activities and reduce the demand for the Company's tower sites. In addition, a
downturn in a particular wireless segment (such as paging which accounted for
34% of the Company's total revenues in 1996) as a result of technological
competition or other factors beyond the control of the Company could adversely
effect the demand for rental towers. Finally, advances in technology could
reduce the need for tower-based transmission and reception. The occurrence of
any of these factors could have a material adverse effect on the Company's
financial condition and results of operations. This Prospectus contains a number
of estimates by industry experts regarding expected growth rates and penetration
for wireless communications technologies. There can be no assurance that these
estimates will prove to be accurate. See "Business -- Industry Background."
RISKS ASSOCIATED WITH ACQUISITION STRATEGY
The Company competes with certain wireless service providers, site
developers and other independent tower owners and operators for acquisitions of
towers and expects such competition to increase. The success of the Company's
growth strategy is highly dependent on its ability to identify and complete
acquisitions of towers. Increased competition may result in fewer acquisition
opportunities for the Company as well as higher acquisition prices. No assurance
can be given that the Company will be able to identify, finance and complete
future acquisitions on acceptable terms. Further, there can be no assurance that
the Company will be able to profitably manage and market the space on additional
towers or successfully integrate acquired towers with the Company's operations
and sales and marketing effort without substantial costs or delays. Acquisitions
involve a number of specific risks, including the potential loss of customers
and unanticipated events or liabilities, some or all of which could have a
material adverse effect on the Company's financial condition and results of
operations. The Company has three pending acquisitions for total consideration
of $9.5 million, which are subject to certain closing conditions. There can be
no assurance that the pending acquisitions will be completed. See "Unaudited Pro
Forma Condensed Consolidated Financial Information."
RISKS ASSOCIATED WITH CONSTRUCTION OF NEW TOWERS
The Company currently has 40 towers under construction and plans to
complete an additional 10-35 towers by the end of 1997. The success of the
Company's growth strategy is highly dependent on its ability to complete new
tower construction. Such construction can be delayed by factors beyond the
control of the Company, including zoning and local permitting requirements,
availability of erection equipment and skilled construction personnel, and bad
weather conditions. Certain communities have placed restrictions on new tower
construction or have delayed granting permits required for construction. In
addition, as the pace of tower
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<PAGE> 10
construction has increased in recent years, manpower and equipment needed to
erect towers have been in increasing demand. The Company's expansion plans call
for a significant increase in construction activity. There can be no assurance
that the Company will be able to overcome the barriers to new construction or
that the number of towers planned for construction will be completed in
accordance with the requirements of the Company's customers.
SUBSTANTIAL CAPITAL REQUIREMENTS AND LEVERAGE
The Company's construction and acquisition activities will create
substantial ongoing capital requirements. During 1995 and 1996, the Company made
capital investments aggregating $37.8 million in site upgrades, new tower
construction and tower acquisitions. The Company financed its capital
expenditures through a combination of borrowings under bank credit facilities,
equity issuances, seller financing and cash flow from operations. The Company
had negative working capital of $1.0 million and a total debt to stockholders'
equity ratio of 4.4 to 1 at December 31, 1996. Management believes that bank
borrowings together with cash from operations will be sufficient to finance the
Company's anticipated growth during 1997 and 1998. However, significant
acquisition opportunities could create a need for additional debt or equity
financing. In addition, if the Company's revenues and cash flow are not as
expected, or if the Company's borrowing base is reduced as a result of operating
performance, the Company may have limited ability to access necessary capital.
There can be no assurance that sufficient debt or equity financing or cash
generated by operations will be available to meet these requirements.
The Company expects to continue to operate with substantial leverage.
Accordingly, a significant portion of the Company's cash flow will be used to
meet debt service obligations. The Credit Facility includes financial and
operating covenants, including requirements that the Company maintain certain
financial ratios and limitations on the Company's ability to incur certain other
indebtedness, pay dividends, engage in transactions with affiliates, sell assets
and engage in mergers, consolidations and other acquisitions. If the Company
fails to comply with these covenants, the lenders under such agreements will be
able to accelerate the maturity of the applicable indebtedness. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
FINANCIAL CONDITION OF CUSTOMERS
Wireless communications companies must make substantial capital investments
and incur high fixed costs in order to enter new markets or offer new
technologies or services. As a result, many of the Company's customers operate
with substantial leverage, and there can be no assurance that the Company's
customers will make all scheduled payments or that such payments will be made in
a timely manner. The Company's tower leases generally provide for monthly
payments or payments in advance by wireless communications companies, and the
Company operates without accruing significant levels of accounts receivable when
compared to its average monthly revenue. One of the Company's largest customers,
MobileMedia, Inc., filed for protection under Chapter 11 of the Federal
Bankruptcy Code in January 1997. MobileMedia, Inc. made its scheduled payment to
the Company in February, but there can be no assurance that such payments will
continue. Financial problems for the Company's customers could result in
accounts receivable going uncollected or in the loss of a customer and the
associated lease revenue. In addition, the financial condition of the Company's
customers could adversely affect the ability of these customers to finance
expansion activities, thereby negatively affecting the Company's growth.
COMPETITION
The Company competes for tower customers with wireless carriers which own
and operate their own tower networks and lease tower space to other carriers,
site development companies which acquire space on existing towers for wireless
providers and manage new tower construction, other independent tower companies
and traditional local independent tower operators. Wireless service providers
which own and operate their own tower networks generally are substantially
larger and have greater financial resources than the Company. The Company
believes that tower location and capacity, price, quality of service and density
within a geographic
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market historically have been and will continue to be the most significant
competitive factors affecting tower rental companies.
The Company competes for acquisition and new tower construction
opportunities with wireless service providers, site developers and other
independent tower operating companies. The Company believes that competition for
tower site acquisitions will increase and that additional competitors will enter
the tower market, certain of which may have greater financial resources than the
Company.
RISKS ASSOCIATED WITH DAMAGE TO TOWERS
The Company's towers are subject to risks associated with natural disasters
such as tornados, hurricanes and earthquakes. The Company maintains insurance to
cover the cost of replacing damaged towers and general liability insurance to
protect the Company in the event of an accident involving a tower. The Company
maintains business interruption insurance on only a small number of its largest
revenue-producing towers. Accordingly, damage to a tower or group of towers
could result in a loss of revenue to the Company and could have a material
adverse effect on the Company's results of operations. In addition, a tower
accident for which the Company is uninsured or underinsured could have a
material adverse effect on the Company's financial condition or results of
operations.
REGULATORY COMPLIANCE AND APPROVAL
Both the FCC and the FAA regulate towers used for wireless communications
transmitters and receivers. Such regulations control siting and marking of
towers and may, depending on the characteristics of the tower, require licensing
of tower facilities. Wireless communications devices operating on towers are
separately regulated and independently licensed based upon the regulation of the
particular frequency used. All proposals to construct new antenna structures or
to modify existing antenna structures are reviewed by both the FCC and the FAA
to ensure that a structure will not present a hazard to aviation. Owners of
wireless communications towers may have an obligation to paint towers and
install lighting to conform to FCC standards and to maintain such painting and
lighting. Tower owners may also bear the responsibility for notifying the FAA of
any tower lighting failures. The Company generally indemnifies its customers
against any failure to comply with applicable standards. Failure to comply with
applicable requirements may lead to civil penalties.
Local regulations include city or other local ordinances, zoning
restrictions and restrictive covenants imposed by community developers. These
regulations vary greatly, but typically require tower owners to obtain approval
from local officials or community standards organizations prior to tower
construction. Local regulations can delay or prevent new tower construction or
site upgrade projects, thereby limiting the Company's ability to respond to
customer demand. In addition, such regulations increase costs associated with
new tower construction. There can be no assurance that existing regulatory
policies will not adversely affect the timing or cost of new tower construction
or that additional regulations will not be adopted which increase such delays or
result in additional costs to the Company. Such factors could have a material
adverse effect on the Company's financial condition or results of operations.
The Company's customers may also become subject to new regulations or
regulatory policies which adversely affect the demand for tower space. For
example, the federal government declared a moratorium on new paging licenses for
approximately six months during 1996 which negatively impacted the Company's
leasing activities with its paging customers.
TITLE TO REAL PROPERTY
The Company's real property interests relating to its tower sites consist
of fee interests, leasehold interests, private easements and licenses, easements
and rights-of-way granted by government entities. With respect to sites
purchased in tower acquisitions, the Company generally obtains title insurance
on only the most valuable fee properties and relies on title warranties from
sellers with respect to other acquired properties. The Company's ability to
protect its rights against persons claiming superior rights in tower sites
depends on the Company's ability to (i) recover under title policies, the policy
limits of which may be less
10
<PAGE> 12
than the purchase price of a particular tower site; (ii) in the absence of title
insurance coverage, realize on title warranties given by tower site sellers,
which warranties often terminate after the expiration of a specific period
(typically one to three years); and (iii) realize on title covenants from
landlords contained in lease agreements. In addition, there can be no assurance
that a change in law will not affect the terms on which governmental entities
have granted rights to the Company. Because of the large number of tower sites
involved in the Bowen-Smith Acquisition, the Prime Acquisition and the
acquisition from CSX in December 1995 (the "CSX Acquisition"), the Company's due
diligence investigation was limited to review of property files maintained by
the sellers and did not involve a search of real property records.
ENVIRONMENTAL MATTERS
Under various federal, state and local environmental laws, ordinances and
regulations ("environmental laws"), an owner of real estate or a lessee
conducting operations thereon may become liable for the costs of investigation,
removal or remediation of soil and groundwater contaminated by certain hazardous
substances or wastes. Certain such laws impose cleanup responsibility and
liability without regard to whether the owner or operator of the real estate or
operations thereon knew of or was responsible for the contamination, and whether
or not operations at the property have been discontinued or title to the
property has been transferred. The owner or operator of contaminated real estate
also may be subject to common law claims by third parties based on damages and
costs resulting from off-site migration of the contamination. In connection with
its former and current ownership or operation of certain properties, the Company
may be potentially liable for environmental costs such as those discussed above.
The Company believes it is in substantial compliance with all applicable
material environmental laws. The Company has not received any written notice
from any governmental authority or third party asserting, and is not otherwise
aware of, any material environmental non-compliance, liability or claim relating
to hazardous substances or wastes or material environmental laws. However, no
assurance can be given that there are no environmental conditions for which the
Company might be liable in the future or that future regulatory action, as well
as compliance with future environmental laws, will not require the Company to
incur costs that could have a material adverse effect on the Company's financial
condition and results of operations.
RELIANCE ON EXECUTIVE OFFICERS
The Company's business is partially dependent upon the performance and
continued availability of its current executive officers. The Company does not
have employment contracts with any of its executive officers. There can be no
assurance that the Company will be able to retain such officers, the loss of
whom could have a material adverse effect upon the Company. See "Management."
NO PRIOR PUBLIC MARKET; STOCK PRICE VOLATILITY
Prior to the Offering, there has been no public market for the Common
Stock, and there can be no assurance that an active public market will develop
or be sustained after the Offering or that the price at which the Common Stock
will trade in the public market subsequent to the Offering will equal or exceed
the initial public offering price. The initial public offering price for the
Common Stock has been determined by negotiations among the Company, the
representatives of the Selling Stockholder and the representatives of the
Underwriters based on the factors described under "Underwriting." In addition,
the stock market has experienced volatility that affects the market prices of
companies in ways often unrelated or disproportionate to the operating
performances of such companies. These market fluctuations could adversely affect
the market price of the Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE; POSSIBLE ADVERSE EFFECT ON FUTURE MARKET PRICES
Sales of a substantial number of shares of Common Stock in the public
market following the Offering could adversely affect the market price for the
Common Stock. Based upon recently adopted amendments to Rule 144, the Company
believes that all of the currently outstanding shares of Common Stock will be
eligible for sale under Rule 144 by March 1998, subject to compliance with
manner-of-sale, volume and other
11
<PAGE> 13
limitations of Rule 144, and that a substantial number of currently outstanding
shares will be eligible for sale under Rule 144 immediately following the
Offering. The Company, its directors and executive officers, certain of its
stockholders (including the Selling Stockholder) and all holders of options to
purchase Common Stock have agreed not to offer, sell or otherwise dispose of any
shares of Common Stock or options to acquire shares of Common Stock without the
prior written consent of Montgomery Securities for a period of 180 days from the
date of this Prospectus. See "Shares Eligible for Future Sale" and
"Underwriting."
ANTI-TAKEOVER EFFECT OF CERTAIN PROVISIONS OF THE COMPANY'S CERTIFICATE OF
INCORPORATION AND BYLAWS
Certain provisions of the Company's Certificate of Incorporation and Bylaws
could have the effect of making it more difficult for a third party to acquire,
or discouraging a third party from acquiring, a majority of the outstanding
capital stock of the Company and could make it more difficult to consummate
certain types of transactions involving an actual or potential change in control
of the Company, such as mergers, tender offers and proxy contests. Pursuant to
the Certificate of Incorporation, shares of the Company's Preferred Stock may be
issued in the future without further stockholder approval and upon such terms
and conditions, and having such rights, privileges and preferences (including
the right to vote and the right to convert into Common Stock), as the Board of
Directors may determine. See "Description of Capital Stock -- Preferred Stock,"
"-- Certain Provisions of the Certificate of Incorporation and Bylaws" and
"-- Delaware Business Combination Statute."
DILUTION
Purchasers of the Common Stock in the Offering will sustain immediate and
substantial dilution of approximately $ per share, based upon an
assumed initial public offering price of $ per share. Dilution for this
purpose represents the difference between the per share initial public offering
price of the Common Stock and the deficit in pro forma net tangible book value
per share of Common Stock after the Offering. See "Dilution."
12
<PAGE> 14
USE OF PROCEEDS
The Company estimates that its net proceeds from the sale of the shares of
Common Stock offered hereby will be approximately $ million (approximately
$ million if the Underwriters' over-allotment option is exercised in full),
after deducting the underwriting discount and offering expenses. The estimated
net proceeds will be used to repay approximately $4.9 million in aggregate
principal amount of the Company's subordinated debt, to redeem all of the shares
of the Series A Preferred Stock for an aggregate redemption price of $4.5
million, and to repay borrowings under the Credit Facility.
The subordinated debt to be repaid with the proceeds of the Offering
includes $2.6 million of subordinated term notes which bear interest at 11.0%
per annum, payable quarterly, with principal payable in October 2004. Such notes
were issued in connection with the Prime Acquisition in October 1996. The
remainder of the subordinated debt to be repaid with the Offering proceeds
consists of a $2.3 million subordinated note with interest payable quarterly at
10.5% per annum. Principal under this note is payable in two equal annual
installments beginning in November 2001. This note was issued in connection with
the Bowen-Smith Acquisition in October 1994.
The Credit Facility provides for borrowings of up to $60.0 million which
bear interest at LIBOR plus a maximum of 275 basis points. As of December 31,
1996, $39.9 million was outstanding under the Credit Facility. Borrowings under
the Credit Facility were incurred to finance the Company's acquisitions and new
tower construction activity during 1995 and 1996. The Company has entered into
discussions with its lenders for a new credit facility in the aggregate
principal amount of $100.0 million to be entered into upon the closing of the
Offering. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."
DIVIDEND POLICY
The Company has never paid cash dividends on its Common Stock and does not
intend to pay cash dividends on the Common Stock in the foreseeable future. The
Company currently intends to use its cash for the continued development of its
business. In addition, the Company's Credit Facility restricts the ability of
the Company to pay cash dividends. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
13
<PAGE> 15
DILUTION
The net tangible book value of the Company as of December 31, 1996 was
$1.30 per share of Common Stock. Net tangible book value per share is determined
by dividing the tangible net worth of the Company (tangible assets less total
liabilities) by the total number of outstanding shares of Common Stock. After
giving effect to the sale of the shares offered hereby and the receipt of the
estimated net proceeds (after deducting estimated underwriting discounts and
commissions and estimated expenses of the Offering), the net tangible book value
of the Company at December 31, 1996 would have been $ per share. This
represents an immediate increase in the net tangible book value of $
per share to existing stockholders and an immediate dilution (i.e., the
difference between the initial public offering price and the pro forma net
tangible book value after the Offering) to new investors purchasing Common Stock
in the Offering. The following table illustrates the per share dilution to new
investors purchasing Common Stock in the Offering of $ per share:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.................... $
Net tangible book value per share at December 31, 1996.... $1.30
Increase per share attributable to new investors..........
Pro forma net tangible book value per share after the Offering.....
--------
Dilution per share to new investors................................ $
========
</TABLE>
The following table sets forth, as of December 31, 1996, the number of
shares of Common Stock purchased from the Company, the total consideration paid
and the average price per share paid by existing stockholders and by new
investors:
<TABLE>
<CAPTION>
TOTAL CASH
SHARES PURCHASED CONSIDERATION AVERAGE
------------------- --------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
--------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders.................. 5,499,160 % $10,876,000 % $1.98
New investors..........................
--------- ----- ----------- ---
Total........................ 100.0% $ 100%
========= ===== =========== ===
</TABLE>
The foregoing computations assume no exercise of outstanding stock options
granted under the Company's stock option plan. A total of 456,250 shares of
Common Stock have been reserved for issuance pursuant to options granted under
the Company's stock option plan, of which 43,800 are exercisable at $1.37 per
share and 412,450 are exercisable at $6.51 per share. See "Management -- Stock
Option Plan." If the remaining shares currently subject to outstanding options
under the Company's stock option plan were included in the foregoing
calculations, the net tangible book value per share before the Offering would be
$ , the pro forma net tangible book value per share after the Offering
would be $ and the dilution per share to new investors would be
$ . In addition, the average price per share paid by existing
stockholders would increase to $ per share.
14
<PAGE> 16
CAPITALIZATION
The following table sets forth the capitalization of the Company (i) at
December 31, 1996; (ii) on a pro forma basis giving effect to the Prime
Acquisition, other acquisitions completed since December 31, 1996 and pending
acquisitions; and (iii) as further adjusted to reflect the sale of the shares of
Common Stock offered hereby, at an assumed initial public offering price of
$ per share, and the application of the estimated net proceeds
therefrom. This table should be read in conjunction with "Use of Proceeds,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," the Consolidated Financial Statements of the Company and the notes
thereto and the Unaudited Pro Forma Condensed Consolidated Financial Statements
of the Company and the notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AT DECEMBER 31, 1996
---------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Long-term debt, less current portion........................ $49,771 68,661 $38,161
Preferred Stock, par value $.01 per share, 5,000,000 shares
authorized, 22,500 issued and outstanding; no shares
issued and outstanding, as adjusted....................... 4,000 4,000 --
Stockholders' equity:
Common Stock, par value $.01 per share, 45,000,000 shares
authorized, 5,499,163 shares issued and outstanding;
shares issued and outstanding, pro forma;
shares issued and outstanding, as adjusted(1).......... 55 1
Additional paid-in capital................................ 11,997 13,051
Accumulated deficit....................................... (454) (454) (954)
------- ------- -------
Total stockholders' equity........................ 11,598 12,598
------- ------- -------
Total capitalization.............................. $66,744 $95,417 $
======= ======= =======
</TABLE>
- ---------------
(1) Includes warrants to purchase 2,681,071 shares of Common Stock at a nominal
price per share which the Company expects to be exercised prior to the
consummation of the Offering and shares of Common Stock having a value of
$1.0 million (based upon the initial public offering price) to be issued
upon the closing of the Offering in connection with a recently completed
acquisition. Excludes 456,250 shares of Common Stock issuable upon exercise
of options outstanding under the Company's stock option plan. See
"Management -- Stock Option Plan."
15
<PAGE> 17
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
In October 1996, the Company acquired 109 towers (net of dispositions of 45
non-strategic towers) from Prime for $15.3 million. The purchase price for the
Prime Acquisition consisted of $8.6 million of cash, which the Company borrowed
under the Credit Facility, and the issuance of a subordinated note and shares of
Common Stock. During 1996, the Company acquired four additional tower sites for
an aggregate purchase price of $1.0 million. Since the beginning of 1997, the
Company has acquired 14 additional tower sites in five transactions for an
aggregate purchase price of $10.4 million. Each of these acquisitions was
financed with borrowings under the Credit Facility. In addition, in connection
with one recent acquisition the Company has agreed to issue shares of Common
Stock (to be determined based on the initial public offering price in the
Offering) with an aggregate value of $1.0 million to the sellers. The Company
has three acquisitions pending which include five tower sites for an aggregate
purchase price of $9.5 million. The Company has accounted for each of these
acquisitions, and the Prime Acquisition, on the basis of purchase accounting.
The Pro Forma data does not include any adjustments relating to towers under
construction. The Pro Forma data also does not include any adjustment for the
disposition of the 45 non-strategic towers from the Prime Acquisition because
the results of such towers were immaterial to the Company's results of
operations.
The Unaudited Pro Forma Condensed Consolidated Statement of Operations (the
"Pro Forma Income Statement") gives effect to the Prime Acquisition, the other
acquisitions completed since January 1, 1996, the pending acquisitions and the
Offering and the application of the net proceeds therefrom, as if such
transactions had occurred on January 1, 1996. With respect to completed
acquisitions, the Pro Forma Income Statement reflects operations from January 1,
1996 through the closing date of each acquisition; operations subsequent to the
closings of the completed acquisitions are reflected in American Tower's
historical statements of operations. The Pro Forma Income Statement includes
only the total revenues and direct tower costs for the acquired tower sites,
other than the sites acquired in the Prime Acquisition. The Company believes
that the only incremental cost to the Company to produce the revenues associated
with these sites is in direct tower costs and that other costs associated with
the ownership and operation of the towers by the former owners are not relevant
to the Company's operation of such towers. As the Prime Acquisition resulted in
the acquisition of substantially all the assets of a business, full statement of
operations data has been included for the Prime Acquisition, with appropriate
adjustments to reflect known expense reductions that directly resulted from the
acquisition. The Unaudited Pro Forma Condensed Consolidated Balance Sheet gives
effect to the acquisitions completed since December 31, 1996, the pending
acquisitions and the Offering and the application of the net proceeds therefrom,
as if such transactions had occurred on December 31, 1996.
The Pro Forma Income Statement is not necessarily indicative of the results
of operations of the Company had such transactions actually occurred on the
dates assumed, nor is the Pro Forma Income Statement necessarily indicative of
the Company's future results of operations. The pro forma financial information
should be read together with the Consolidated Financial Statements of the
Company and Prime, including the notes thereto, included elsewhere in this
Prospectus.
16
<PAGE> 18
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
--------------------------------------------------------------------
COMPLETED
ACQUISITIONS
--------------- PENDING PRO FORMA
ACTUAL PRIME OTHER ACQUISITIONS ADJUSTMENTS AS ADJUSTED
------- ------ ------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total revenues................ $12,366 $1,167 $1,243 $980 $ -- $15,756
Operating expenses:
Direct tower costs.......... 2,849 589 149 60 -- 3,647
Selling, general and
administrative........... 2,049 425 -- -- (323)(A) 2,151
Depreciation and
amortization............. 2,709 496 -- -- 686(B) 3,891
------- ------ ------ ---- ------- -------
Total operating
expenses.......... 7,607 1,510 149 60 363 9,689
------- ------ ------ ---- ------- -------
Operating income (loss)....... 4,759 (343) 1,094 920 (363) 6,067
Interest expense, net......... 3,808 225 -- -- (686)(C)(D) 3,347
Other expense................. 150 -- -- -- -- 150
------- ------ ------ ---- ------- -------
Income (loss) before income
taxes and extraordinary
item........................ 801 (568) 1,094 920 323 2,570
Income tax (expense)
benefit..................... (303) -- -- -- (674)(E) (977)
------- ------ ------ ---- ------- -------
Income (loss) before
extraordinary item.......... $ 498 $ (568) $1,094 $920 $ (351) $ 1,593
======= ====== ====== ==== ======= =======
Weighted average common shares
and common stock equivalents
outstanding.................
======= ======= =======
Income before extraordinary
item per common share....... $ $
(F)
======= =======
</TABLE>
NOTES TO STATEMENT OF OPERATIONS
The Unaudited Pro Forma Condensed Consolidated Statement of Operations for
the year ended December 31, 1996 includes the following adjustments.
(A) A pro forma adjustment has been made to reduce selling, general and
administrative expense by $323,000 to eliminate specific expenses
associated with operation of the Prime tower sites prior to their
acquisition by the Company that would not have been incurred had the
acquisition occurred on January 1, 1996. Such cost savings relate to (i)
the known termination of all management and administrative personnel of
Prime; (ii) a known reduction in sales and marketing positions; and
(iii) the known elimination of certain management fees, all of which are
a direct result of the acquisition.
(B) A pro forma adjustment has been made to reflect additional
depreciation and amortization expense on the fair market value of towers
and related fee-based assets and licenses and permits acquired based on
a twenty-five year life. Such depreciation and amortization may change
upon final allocation of the fair market value to the assets acquired.
(C) Pro forma adjustments have been made to reflect (i) a reversal of
interest expense of $225,000 on debt of Prime not assumed by the
Company; (ii) an increase in interest expense of $2.4 million
attributable to additional borrowings under the Credit Facility and
subordinated notes to finance the acquisitions completed since January
1, 1996 and the pending acquisitions, as if each had occurred January 1,
1996; and (iii) a reduction in interest expense of $2.8 million due to
the application of net Offering proceeds to repay approximately $30.5
million in subordinated and Credit Facility indebtedness. Interest is
calculated, with respect to the Credit Facility, based on the
17
<PAGE> 19
weighted average rate of the Credit Facility during 1996 of 8.9% and,
with respect to the subordinated notes, at stated rates of 11.0% and
10.5% per annum.
(D) A pro forma adjustment of $59,000 has been made to eliminate the
accretion of a warrant holder's "put" right as if such warrant had been
exercised as of January 1, 1996 and the "put" right had expired.
(E) A pro forma adjustment has been made to adjust the pro forma provision
for income taxes to the Company's annual effective rate of 38% applied
to pro forma income from continuing operations before income taxes.
(F) A pro forma adjustment has been made to reflect (i) the issuance of
the shares of Common Stock contemplated by the Offering; and (ii) the
issuance of 473,113 shares of Common Stock in connection with the Prime
Acquisition and shares of Common Stock with an aggregate value of $1.0
million (based upon the initial public offering price) to be issued in
connection with a recently completed acquisition.
18
<PAGE> 20
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, 1996
----------------------------------------
PRO FORMA
ACTUAL ADJUSTMENTS AS ADJUSTED
------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Current assets........................................ $ 2,401 $ -- $ 2,401
Land, rental towers and related fee-based assets,
net................................................ 66,857 18,816(G) 85,673
Other................................................. 6,269 1,074(G) 7,343
------- ------- -------
Total assets.................................. $75,527 $19,890 $95,417
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities................................... 3,371 -- 3,371
Long-term debt, less current portion.................. 49,771 (11,610)(H)(I) 38,161
Other long-term liabilities........................... 450 (174)(J) 276
Deferred income taxes................................. 6,337 -- 6,337
Redeemable preferred stock............................ 4,000 (4,000)(I) --
Stockholders' equity.................................. 11,598 35,674(H)(I)(J) 47,272
------- ------- -------
Total liabilities and stockholders' equity.... $75,527 $19,890 $95,417
======= ======= =======
</TABLE>
NOTES TO BALANCE SHEET
The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December
31, 1996 reflects the following adjustments:
(G) A pro forma adjustment has been made to reflect the estimated fair market
value of the assets acquired or to be acquired consisting of land, towers
and related fee-based assets and licenses and permits. The assignment of
fair market value to such acquired assets was based on their estimated fair
market value.
(H) A pro forma adjustment has been made to reflect funding of the acquisitions
completed after December 31, 1996 and the pending acquisitions consisting
of (i) additional borrowings of $18.9 million under the Credit Facility and
(ii) the issuance of Common Stock with a value of $1.0 million based upon
the initial public offering price in the Offering.
(I) A pro forma adjustment has been made to reflect the issuance of shares of
Common Stock contemplated by the Offering and the application of the net
proceeds to (i) redeem all of the outstanding shares of Series A Preferred
Stock at its redemption value of $4.5 million ($0.5 million of which by a
direct charge to retained earnings for the value of related warrants) and
(ii) to reduce the Credit Facility by $25.6 million and the subordinated
notes by $4.9 million.
(J) A pro forma adjustment has been made to eliminate the Company's recorded
liability of $174,000 related to a warrant holder's right to require the
Company to repurchase the underlying shares of Common Stock after eight
years from the date of issuance of the warrant. This adjustment was based
on the assumed exercise of the warrant and subsequent sale of the Common
Stock in connection with the Offering. See "Principal and Selling
Stockholders."
19
<PAGE> 21
SELECTED CONSOLIDATED HISTORICAL AND PRO FORMA FINANCIAL DATA
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
The following table sets forth financial data of the Company as of and for
each of the periods indicated. The financial data as of and for the five years
ended December 31, 1996 were derived from the Consolidated Financial Statements
of the Company and its Predecessor. The adjusted pro forma financial data were
derived from the Pro Forma Consolidated Financial Statements included elsewhere
in this Prospectus. The pro forma adjustments are based upon available
information and certain assumptions that management believes are reasonable. The
adjusted pro forma financial information does not purport to represent what the
Company's financial position or results of operations actually would have been
had the acquisitions and the Offering in fact occurred on the dates assumed or
to project the Company's financial position or results of operations for any
future date or period. For additional information, see the Pro Forma Condensed
Consolidated Financial Information included elsewhere in this Prospectus. The
following table should be read in conjunction with "Capitalization,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Company's Consolidated Financial Statements and the notes
thereto.
<TABLE>
<CAPTION>
PREDECESSOR(1) AMERICAN TOWER(1)
--------------------- -------------------------------------------------------
YEAR ENDED
JANUARY 1, OCTOBER 15, DECEMBER 31, 1996
YEAR ENDED 1994 1994 -------------------------
DECEMBER 31, THROUGH THROUGH YEAR ENDED PRO FORMA
---------------- OCTOBER 14, DECEMBER 31, DECEMBER 31, AS
1992 1993 1994 1994 1995 ACTUAL ADJUSTED(2)
------ ------- ----------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
DATA:
Total revenues............. $3,393 $ 6,744 $ 5,218 $ 1,948 $ 8,277 $ 12,366 $15,756
Operating expenses:
Direct tower costs....... 765 1,434 1,151 402 1,868 2,849 3,647
Selling, general and
administrative......... 943 2,014 2,137 380 1,601 2,049 2,151
Depreciation and
amortization........... 1,199 2,586 2,106 403 1,908 2,709 3,891
------ ------- ------- ---------- ---------- ----------- -------
Total operating
expenses ....... 2,907 6,034 5,394 1,185 5,377 7,607 9,689
------ ------- ------- ---------- ---------- ----------- -------
Operating income (loss).... 486 710 (176) 763 2,900 4,759 6,067
Interest expense, net...... 780 2,026 2,117 576 3,068 3,808 3,347
Other expenses............. 100 193 93 66 414 150 150
------ ------- ------- ---------- ---------- ----------- -------
Income (loss) before income
taxes and extraordinary
item..................... (394) (1,509) (2,386) 121 (582) 801 2,570
Income tax (expense)
benefit.................. 237 500 -- (50) 217 (303) (977)
------ ------- ------- ---------- ---------- ----------- -------
Income (loss) before
extraordinary item....... (157) (1,009) (2,386) 71 (365) 498 $ 1,593
=======
Extraordinary loss,
net(3)................... -- -- -- -- (207) (451)
------ ------- ------- ---------- ---------- -----------
Net income (loss).......... $ (157) $(1,009) $(2,386) $ 71 $ (572) $ 47
====== ======= ======= ========== ========== ===========
Earnings per common
share(4):
Income (loss) before
extraordinary item..... $ $ $ $
=======
Extraordinary loss,
net....................
---------- ---------- -----------
Net income (loss) per
common share........... $ $ $
========== ========== ===========
Weighted average common
shares and common stock
equivalents
outstanding..............
</TABLE>
20
<PAGE> 22
<TABLE>
<CAPTION>
PREDECESSOR(1) AMERICAN TOWER(1)
----------------- -----------------------------------------
DECEMBER 31,
-------------------------------------------------------------
1996
---------------------
PRO FORMA
AS
1992 1993 1994 1995 ACTUAL ADJUSTED(5)
------- ------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Land, rental towers and related
fee-based assets, net................. $15,463 $13,943 $35,109 $46,233 $66,857 $85,673
Total assets............................ 18,343 16,600 39,599 53,782 75,527 95,417
Long-term debt, less current portion.... 12,590 11,719 23,116 31,875 49,771 38,161
Redeemable preferred stock.............. -- -- -- 3,633 4,000 --
Total stockholders' equity (deficit).... (707) (1,716) 7,496 7,424 11,598 47,272
</TABLE>
- ---------------
(1) The Company was organized in connection with the Bowen-Smith Acquisition in
October 1994, at which time the assets and liabilities acquired were
adjusted to their estimated fair values. In addition, upon the closing of
the Bowen-Smith Acquisition, the Company entered into new debt and equity
financing arrangements, adjusted the depreciation period for towers and
related fee-based assets, outsourced its tower maintenance services and
implemented other significant changes in the Company's operations. Each of
these factors affects the comparability of periods prior to the Bowen-Smith
Acquisition with periods since October 1994. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Overview."
(2) Gives effect to (i) the Prime Acquisition; (ii) other acquisitions completed
since January 1, 1996; (iii) pending acquisitions of five tower sites; and
(iv) the application of the net proceeds from the Offering, as if each had
occurred at January 1, 1996. The pro forma data does not reflect towers
under construction. See "Use of Proceeds" and "Pro Forma Condensed
Consolidated Financial Information."
(3) Reflects extraordinary charges resulting from prepayment of indebtedness in
both 1995 and 1996, net of related income tax benefits. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Results of Operations."
(4) Earnings per common share data are not presented for the Predecessor period
due to the change in the capital structure which occurred in October 1994
and the other factors affecting comparability subsequent to that date as
discussed in note (1) above.
(5) Gives effect to (i) the acquisitions completed since December 31, 1996; (ii)
pending acquisitions of five tower sites; and (iii) the application of the
net proceeds from the Offering, as if each had occurred at December 31,
1996. The pro forma data does not reflect towers under construction. See
"Use of Proceeds" and "Pro Forma Condensed Consolidated Financial
Information."
21
<PAGE> 23
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion is intended to assist in an understanding of the
Company's historical financial position and results of operations for each year
of the three-year period ended December 31, 1996. The Company's Consolidated
Financial Statements and notes thereto included elsewhere in this Prospectus
contain detailed information that should be read in conjunction with the
following discussion. Also included in this Prospectus are Consolidated
Financial Statements of Prime as of and for the year ended December 31, 1995 and
Unaudited Pro Forma Condensed Consolidated Financial Information reflecting the
Prime Acquisition, the Company's other acquisitions since January 1, 1996 and
three pending acquisitions.
OVERVIEW
American Tower was organized to acquire the stock of Bowen-Smith in October
1994. Bowen-Smith was a closely held company which owned and operated 175 tower
sites in Texas, Louisiana and Oklahoma. At the time of the Bowen-Smith
Acquisition, the book values of the acquired assets and liabilities were
adjusted to their estimated fair values and the depreciation period for towers
and related assets was extended to better reflect the estimated useful lives of
such assets. At such time, the Company also implemented significant management
and operational changes to the business. The Company outsourced its tower
maintenance functions during the first quarter of 1995 which resulted in a
reduction in personnel. In addition, the Company's new management undertook
increased marketing activities for its existing tower network and began to
pursue tower acquisitions, including opportunities outside the Company's
traditional Gulf Coast market. Finally, borrowings to facilitate the Bowen-Smith
Acquisition resulted in an increase in the Company's interest expense. The
financial results for the Company described herein for the period prior to
October 15, 1994 are the results of the Company's predecessor, Bowen-Smith, and
may not be comparable to the Company's results since that date for the reasons
described herein.
During 1995 and 1996, the Company acquired 297 towers, net of dispositions.
In December 1995, the Company acquired 103 towers from CSX, the real estate
affiliate of the railroad transportation company. In October 1996, the Company
acquired 109 towers (net of dispositions of non-strategic towers) from Prime, an
independent tower operator. The remaining 85 acquired towers were purchased in
16 separate acquisitions ranging in size from one to 50 towers. In addition,
during 1996 the Company began a significant tower construction program. By
year-end 1996, the Company had completed construction of 30 new towers, and
currently has 40 towers under construction. The Company currently owns
approximately 600 towers, including those under construction.
Since completing the Bowen-Smith Acquisition in October 1994, the Company's
financial objective has been to increase revenues on existing towers through
improved marketing efforts and to acquire and construct new towers which meet
the Company's economic return criteria. Accordingly, the Company believes that
EBITDA is a key measure of its economic performance and an indicator of the
availability of funds to service indebtedness and to invest in continued
internal growth and acquisition and construction opportunities. The Company's
EBITDA increased from $3.1 million for the year ended December 31, 1994 to $7.5
million for the year ended December 31, 1996 (a compound annual growth rate of
56%). The Company's growth strategy and investment in additional towers has
negatively affected net income during these periods primarily as a result of
increased depreciation and interest expenses, and extraordinary charges related
to the write off of unamortized debt financing costs. See Notes 6 and 9 of Notes
to Consolidated Financial Statements.
The Company's primary business is the rental of antenna and transmitter
space on communications towers to wireless communication companies, including
paging, cellular, PCS, fixed microwave, SMR and ESMR, as well as operators of
private and governmental communications systems. A majority of the Company's
customers enter into one-year rental agreements with the Company. Substantially
all of the Company's agreements exceeding one year include price escalation and
90-day cancellation clauses. A majority of the Company's contracts provide for
monthly invoicing payable on or before the tenth day of the calendar month. The
Company operators have been historically characterized by (i) minimal inventory
levels;
22
<PAGE> 24
(ii) low levels of accounts receivable; and (iii) customer turnover rates of
less than 1% per year (based on revenues). Accordingly, the Company has minimal
working capital requirements.
Direct tower costs consist primarily of land leases, tower inspections and
maintenance, utilities, insurance and tower monitoring costs. The most
significant of such costs are land leases and tower inspections and maintenance.
The Company outsources its tower inspections and maintenance requirements which
consist of scheduled site visits to perform ground and tower maintenance, tower
and shelter inspections and inventories of installed customer equipment. On a
per tower basis, the Company's direct tower costs are relatively fixed and are
not subject to incremental increase as the Company adds additional customers.
Selling, general and administrative expenses consist primarily of wages and
benefits for management, sales and marketing and operations, and professional
fees, advertising, travel, bad debts and office-related expenses.
The Company's depreciation and amortization charges result primarily from
the fixed capital required to operate in the tower industry and complete
acquisitions and constructions. The principal components of depreciation and
amortization relate to individual towers and related assets, buildings, site
upgrades, computer monitoring systems and licenses and permits. In connection
with the Bowen-Smith Acquisition, in order to better reflect the useful life of
towers and related assets, the Company adjusted its depreciation period for such
assets from 15 years to 25 years. Amortization relates to financing costs
associated with the Company's credit facilities and non-competition agreements
entered into in connection with the Bowen-Smith Acquisition.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, information
derived from the Company's Consolidated Statements of Operations, expressed as a
percentage of revenue.
<TABLE>
<CAPTION>
PREDECESSOR AMERICAN TOWER
----------- ----------------------------
JANUARY 1, OCTOBER 15,
1994 1994 YEAR ENDED
THROUGH THROUGH DECEMBER 31,
OCTOBER 14, DECEMBER 31, -------------
1994 1994 1995 1996
----------- ------------ ----- -----
<S> <C> <C> <C> <C>
Total revenues............................................. 100% 100% 100% 100%
--- --- --- ---
Operating expenses:
Direct tower costs....................................... 22 21 23 23
Selling, general and administrative...................... 41 20 19 17
Depreciation and amortization............................ 40 21 23 22
--- --- --- ---
Total operating expenses......................... 103 61 65 62
--- --- --- ---
Operating income (loss).................................... (3) 39 35 38
Interest expense, net...................................... 41 30 37 31
Other expense.............................................. 2 3 5 1
--- --- --- ---
Income (loss) before income taxes and extraordinary item... (46) 6 (7) 6
Income tax (expense) benefit............................... -- (3) 3 (2)
Extraordinary loss, net.................................... -- -- 3 4
--- --- --- ---
Net income (loss).......................................... (46%) 4% (7%) 0%
=== === === ===
EBITDA..................................................... 37% 60% 58% 60%
=== === === ===
</TABLE>
Year Ended December 31, 1996 Compared to Year Ended December 31, 1995
Total revenues. Revenue growth consisted of $2.8 million attributable to
increased utilization and price increases on towers owned by the Company at the
beginning of 1995 or acquired during 1995 as well as the full year effect of
towers acquired during 1995. Total revenues increased $4.1 million or 49% to
$12.4 million in 1996 from $8.3 million in 1995. The remainder of the increase
in revenues was attributable to $0.6 million
23
<PAGE> 25
associated with 159 towers acquired during 1996, $0.6 million attributable to
103 towers acquired in December 1995 and $0.1 million associated with 27 towers
constructed during 1996.
Direct tower costs. Direct tower costs increased 53% to $2.8 million in
1996 from $1.9 million in 1995. The increase in direct tower costs consisted of
$0.2 million associated with 159 towers acquired during 1996, $0.7 million
attributable to towers acquired during 1995 and expenses incurred during the
Company's establishment of its automated tower monitoring services. As a
percentage of revenues, direct tower costs remained relatively constant.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased 28% to $2.0 million in 1996 from $1.6 million
in 1995. The increase was primarily from the addition of personnel related to
the Company's increased sales, marketing and construction activities. The
decrease as a percentage of revenues was due to operating efficiencies on
existing towers as well as the construction and acquisition of new towers.
Depreciation and amortization expense. Depreciation and amortization
expense increased 42% to $2.7 million in 1996 from $1.9 million in 1995. The
increase in depreciation and amortization expense of $0.8 million resulted
primarily from the effect of a full year of depreciation on towers acquired in
1995.
Interest expense. Interest expense increased 24% to $3.8 million in 1996
from $3.1 million in 1995. The increase in interest expense was due primarily to
increased borrowing associated with the Company's acquisitions in 1995 and 1996
and construction of new towers in 1996.
Income taxes. Income tax expense for 1996 was $0.3 million as compared to
a benefit of $0.2 million in 1995. The Company's effective tax rate is not
materially different from the statutory rate.
Extraordinary loss. The Company recognized an extraordinary loss of $0.5
million in 1996 and $0.2 million in 1995. These losses resulted from the Company
restructuring and refinancing its debt arrangements in both years in conjunction
with acquisitions.
EBITDA. As a result of the factors described above, EBITDA increased 55%
to $7.5 million in 1996 from $4.8 million in 1995.
Year Ended December 31, 1995 Compared to Year Ended December 31, 1994
As described in "-- Overview" above, the Company completed the Bowen-Smith
Acquisition on October 15, 1994. The results described herein for 1994 reflect
the addition of the historical results for the Company's predecessor prior to
the Bowen-Smith Acquisition with the Company's results from October 15, 1994 to
year end. The changes in the Company's operating and capital structure described
in "-- Overview" have a significant impact on the comparability of the results
for the year ended December 31, 1994 with results for the year ended December
31, 1995.
Total revenues. Total revenues increased 16% to $8.3 million in 1995 from
$7.2 million in 1994. Revenue growth consisted of $0.4 million associated with
towers acquired during 1995 and $0.7 million attributable to increased
utilization and price increases on the Company's existing towers which resulted
primarily from a build-up of the Company's marketing efforts during 1995.
Direct tower costs. Direct tower costs increased 20% to $1.9 million in
1995 from $1.6 million in 1994. The increase in direct tower costs was primarily
related to front-end costs associated with the Company's decision to outsource
tower maintenance services effective during the second quarter of 1995.
Selling, general and administrative expenses. Selling, general and
administrative expenses decreased 36% to $1.6 million in 1995 from $2.5 million
in 1994. The decrease was primarily attributable to overhead charges related to
the elimination of certain management and administrative personnel.
24
<PAGE> 26
QUARTERLY FINANCIAL DATA
The following table sets forth certain consolidated statements of
operations data of the Company for the quarterly periods shown. The unaudited
quarterly information has been prepared on the same basis as the annual
financial information and, in management's opinion, includes all adjustments
(consisting of normal recurring accruals) necessary to present fairly the
information for the quarters presented. The operating results for any quarter
are not necessarily indicative of the results for the year or for any future
period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------------------------------------
1995 1996
------------------------------------------ ------------------------------------------
MARCH 31 JUNE 30 SEPT 30 DECEMBER 31 MARCH 31 JUNE 30 SEPT 30 DECEMBER 31
-------- ------- ------- ----------- -------- ------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues.................... $1,927 $1,969 $2,124 $2,257 $2,585 $2,711 $3,060 $4,010
Operating expenses:
Direct tower costs.............. 364 497 512 495 595 656 717 881
Selling, general and
administrative................ 436 395 387 383 481 454 550 564
Depreciation and amortization... 451 481 506 470 579 595 665 870
------ ------ ------ ------ ------ ------ ------ ------
Total operating
expenses................ 1,251 1,373 1,405 1,348 1,655 1,705 1,932 2,315
------ ------ ------ ------ ------ ------ ------ ------
Operating income.................. 676 596 719 909 930 1,006 1,128 1,695
Interest expense, net............. 681 703 782 902 865 869 896 1,178
Other expense..................... 109 80 61 164 37 38 38 37
------ ------ ------ ------ ------ ------ ------ ------
Income (loss) before income taxes
and extraordinary item.......... (114) (187) (124) (157) 28 99 194 480
Income tax (expense) benefit...... 43 70 46 58 (10) (38) (73) (182)
------ ------ ------ ------ ------ ------ ------ ------
Income (loss) before extraordinary
item............................ $ (71) $ (117) $ (78) $ (99) $ 18 $ 61 $ 121 $ 298
====== ====== ====== ====== ====== ====== ====== ======
EBITDA............................ $1,127 $1,077 $1,225 $1,379 $1,509 $1,601 $1,793 $2,565
====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
The following table illustrates the above quarterly amounts as a percent of
total revenues.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------------------------------------
1995 1996
------------------------------------------ ------------------------------------------
MARCH 31 JUNE 30 SEPT 30 DECEMBER 31 MARCH 31 JUNE 30 SEPT 30 DECEMBER 31
-------- ------- ------- ----------- -------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues.................... 100% 100% 100% 100% 100% 100% 100% 100%
Operating expenses:
Direct tower costs.............. 19 25 24 22 23 24 23 22
Selling, general and
administrative................ 23 20 18 17 19 17 18 14
Depreciation and amortization... 23 24 24 21 22 22 22 22
------ ------ ------ ------ ------ ------ ------ ------
Total operating
expenses................ 65 70 66 60 64 63 63 58
Operating income.................. 35 30 34 40 36 37 37 42
Interest expense, net............. 35 36 37 40 33 32 29 29
Other expense..................... 6 4 3 7 1 1 1 1
------ ------ ------ ------ ------ ------ ------ ------
Income (loss) before income taxes
and extraordinary item.......... (6) (9) (6) (7) 1 4 6 12
Income tax (expense) benefit...... 2 4 2 3 0 (1) (2) (5)
------ ------ ------ ------ ------ ------ ------ ------
Income (loss) before extraordinary
item............................ (4)% (6)% (4)% (4)% 1% 2% 4% 7%
====== ====== ====== ====== ====== ====== ====== ======
EBITDA............................ 58% 55% 58% 61% 58% 59% 59% 64%
====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically funded its operations, acquisitions and
construction of towers and site upgrade capital expenditures from bank
borrowings, cash flow from operations, private placements of equity securities
and the issuance of subordinated notes to sellers of tower sites. The Company
had a working capital deficit of $1.0 million and $0.8 million, respectively, as
of December 31, 1996 and 1995. The Company's ratio of total debt to
stockholders' equity was 4.29 to 1 as of December 31, 1996 compared with 4.29 to
1 at year-end 1995. On an as adjusted basis to reflect the acquisitions
completed since January 1, 1997, the acquisition which is currently pending and
the Offering, the Company had a working capital deficit of $1.0 million and a
total debt to stockholders' equity of 0.8 to 1 at December 31, 1996.
25
<PAGE> 27
The Company's primary sources of funds have been as follows:
<TABLE>
<CAPTION>
OCTOBER 15 TO YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1995 1996
------------- ------------ ------------
<S> <C> <C> <C>
Bank borrowings............................. $21,000 $ 4,600 $21,600
Seller financing............................ 4,500 7,300 2,600
Sales of Preferred Stock.................... -- 4,100 400
Sales of Common Stock....................... 6,800 -- 4,100
Net cash provided by operating activities... 300 1,600 3,100
------- ------- -------
$32,600 $17,600 $31,800
======= ======= =======
</TABLE>
The Company's principal operating subsidiary is the borrower under a $60.0
million Credit Facility which is guaranteed by the Company. At December 31,
1996, outstanding borrowings under the Credit Facility were $39.9 million.
Borrowings under the Credit Facility currently bear interest at LIBOR plus a
maximum of 275 basis points. The Credit Facility is divided between a $37.0
million term loan and a $23.0 million revolving line of credit. The term loan
requires principal amortization beginning in 1999 with quarterly payments
totaling $5.6 million in 1999, $7.4 million in 2000 and 2001, $9.3 million in
2002 and $7.3 million in 2003. The maximum amount outstanding under the
revolving credit facility is required to be reduced quarterly beginning in
January 1999 with a final maturity in October 2003. The Company has begun
discussions with its lenders regarding a new credit facility to provide for
borrowings of up to $100.0 million. If agreed to, the new credit facility would
be effective upon the consummation of the Offering. The Credit Facility
includes, and any new credit facility would be expected to include, financial
and operating covenants, including requirements that the Company maintain
certain financial ratios and limitations on the Company's ability to incur
certain other indebtedness, pay dividends, engage in transactions with
affiliates, sell assets and engage in mergers, consolidations and other
acquisitions. In addition, the Credit Facility requires the Company to apply a
certain portion of the proceeds of any equity offering to prepay borrowings
under the Credit Facility. The Company believes, based on initial discussions
with its lenders, that the terms of the new credit facility, specifically those
that relate to scheduled repayments, pricing, collateral, financial covenants
and availability of borrowings, will be similar or more favorable to the Company
than the terms of the existing Credit Facility.
The Company has used subordinated seller financing in several of its tower
acquisitions. The Company issued a subordinated note to a seller in the
Bowen-Smith Acquisition which has a current aggregate principal amount of $2.3
million and bears interest at 10.5% per annum. Principal under this note is
repayable in two equal annual installments commencing in November 2001. The
Company issued subordinated notes to the sellers of Prime which currently have
an aggregate principal amount of $2.6 million, bear interest at 11% per annum
and mature in October 2004. The effective interest rates on the notes issued in
the Prime Acquisition automatically increase after an initial public offering if
such notes are not prepaid at the time of the Offering. The Company intends to
repay each of the subordinated notes issued in connection with the Bowen-Smith
Acquisition and the Prime Acquisition with proceeds of the Offering.
The Company issued a subordinated note to CSX in connection with the
acquisition of tower sites in December 1995. This note is non-interest bearing
and has an aggregate principal amount of $6.3 million. The note is repayable in
annual installments of $1.0 million each in December 1997, 1998 and 1999 and in
a final payment of $3.3 million in December 2000.
In December 1995, the Company issued 22,500 shares of its Series A
Preferred Stock, together with warrants to purchase 1,642,500 shares of Common
Stock at a nominal exercise price per share, in a private placement to its
existing stockholders. The Company received proceeds of $4.5 million in exchange
for the securities, which is equal to the redemption and liquidation value of
the Series A Preferred Stock. The proceeds were used to pay part of the purchase
price for the CSX Acquisition and for general working capital purposes. All of
the shares of the Series A Preferred Stock will be redeemed with the proceeds of
the Offering, and the Company expects that all of the outstanding warrants to
purchase Common Stock will be exercised. For additional information regarding
the Series A Preferred Stock, see "Description of Capital Stock -- Preferred
Stock."
26
<PAGE> 28
Beginning with the Bowen-Smith Acquisition, the Company has made
significant capital investments in site upgrades, new tower construction and
tower acquisitions. The following table describes the Company expenditures,
including the Bowen-Smith Acquisition, since October 1994:
<TABLE>
<CAPTION>
CAPITAL EXPENDITURES
-------------------------------------------
OCTOBER 15 TO YEAR ENDED DECEMBER 31,
DECEMBER 31, ---------------------------
1994 1995 1996
------------- ------------ ------------
<S> <C> <C> <C>
Construction and Site Upgrades.................. $ 400 $ 1,900 $ 7,800
Acquisitions.................................... 31,300 12,700 15,400
------- ------- -------
$31,700 $14,600 $23,200
======= ======= =======
</TABLE>
The Company has budgeted site upgrade and new construction activities for
fiscal 1997 of approximately $10 million. The Company's actual levels of capital
expenditures relative to new sites may vary from these estimates depending upon
the availability of suitable construction opportunities. In addition, since the
beginning of 1997, the Company has expended approximately $10.4 million in
conjunction with the acquisition of existing tower sites. The Company also
presently has pending acquisitions of existing sites totaling $9.5 million.
While the Company continually reviews acquisition opportunities, the Company is
unable to estimate the total amount expected to be expended on acquisitions of
existing sites due to the inability to predict the availability of economically
viable acquisition opportunities. The Company believes that bank borrowings and
cash flow from operations will be sufficient to finance debt service obligations
and budgeted capital expenditures during 1997. However, because the Company's
acquisition and construction opportunities can be unpredictable resulting in
additional capital requirements, the Company may seek additional debt or equity
financing as required. There can be no assurance that such financings will be
available on terms the Company considers acceptable.
27
<PAGE> 29
BUSINESS
THE COMPANY
American Tower is a leading independent owner and operator of wireless
communications towers with nearly 600 towers on 550 sites in 30 states. The
Company rents tower space and provides related services to wireless
communications service providers, as well as operators of private networks and
government agencies, for a diverse range of applications including paging,
cellular, PCS, fixed microwave, SMR and ESMR. American Tower owns and operates
towers in 45 of the top 100 MSAs in the United States and has clusters of towers
in cities such as Houston, Dallas, Baltimore, San Antonio, Atlanta,
Jacksonville, Kansas City, Albuquerque and Nashville. The Company's customers
include Bell South Mobility, GTE Mobilnet, Houston Cellular, Nextel, PageMart,
Pagenet, Pittencrief Communications, SBC Communications, Shell Offshore, CSX
Transportation and various federal and local government agencies.
American Tower believes that it is well positioned to capitalize on the
continued growth in wireless communications. The Company's strategy for growth
is to focus its internal sales and marketing activities on maximizing the
capacity utilization of its towers. In addition, the Company has experience in
the construction and acquisition of towers which it believes will allow the
Company to increase its penetration of existing markets and expansion into new
markets. The Company is currently in the process of constructing 40 towers,
plans to construct as many as 35 additional towers in 1997 and has acquired or
agreed to acquire 33 towers on 19 sites since the beginning of the year.
American Tower was organized in October 1994 by an investor group led by
Summit Capital Inc. of Houston and Chase Capital to acquire Bowen-Smith.
Bowen-Smith had been in the tower rental business since 1966, initially serving
the communications tower requirements of two-way radio and microwave
transmission users. At the time of the Bowen-Smith Acquisition, Bowen-Smith
owned 184 towers on 175 sites located primarily in Texas, Louisiana and
Oklahoma. Within the first year after the Bowen-Smith Acquisition, the Company
acquired or constructed more than 75 communications towers. In December 1995,
the Company acquired 103 towers from CSX, and in October 1996, the Company
acquired 154 towers from Prime.
The Company's principal executive offices are located at 3411 Richmond
Ave., Suite 400, Houston, Texas, 77046 and its telephone number is (713)
693-0000.
INDUSTRY BACKGROUND
Overview
Communications site operators have benefited in recent years from
increasing demand for wireless communications services which has prompted the
issuance of new wireless network licenses and construction of new wireless
networks. The Company believes that the increase in demand for wireless
communications is attributable to (i) the increasing mobility of the U.S.
population and growing awareness of the benefits of mobile communications; (ii)
technological advances in communications equipment and increasing affordability
of wireless services; (iii) changes in telecommunications regulations; and (iv)
business and consumer preferences for higher quality voice and data
transmission. Consequently, more towers will be required to accommodate the
anticipated increase in the demand for higher frequency technologies (such as
PCS) which have a reduced cell range and thus require a more dense network, or
"footprint," of towers. PCIA estimates that there are currently 22,000 antenna
sites in the U.S. for cellular and PCS alone and that this number will grow to
100,000 sites by the year 2000 as cellular systems expand coverage and PCS
systems are deployed. Further, industry analysts estimate that between 1996 and
2000 total spending on infrastructure for PCS networks in the United States,
including cell sites and mobile switching centers, will exceed $24 billion.
Types of Wireless Communications
Paging. In recent years, the paging industry has been characterized by
substantial growth and technological development. Traditional paging services
have advanced rapidly from tone-only and analog to sophisticated digital
alphanumeric devices. Paralleling this product evolution and a reduction in
related service
28
<PAGE> 30
and product costs, the market for paging services has grown from a base of
largely specialized users, such as doctors and other professionals with
time-sensitive needs, to the mass consumer market. Industry sources estimate
that the number of paging subscribers in the U.S. was 41.1 million at the end of
1996 and is estimated to grow to 61.9 million by 2001.
Future technological developments in the paging industry may include new
paging services such as "confirmation" or "response" paging, which will have the
ability to send a message back to the subscriber from the paging system that
confirms the receipt of a paging message, digitized voice paging, two-way paging
and notebook and sub-notebook computer wireless data applications. In addition
to the above enhanced services, the penetration of paging into the mass market
is expected to continue as retail distribution expands and as local, regional
and national non-paging telecommunications service providers seek to bundle
paging services with their existing products.
Cellular. Mobile cellular telephone service has been one of the fastest
growing market segments within the telecommunications industry. According to
Paul Kagan Associates, Inc., an industry research firm, the number of cellular
users in the U.S. was 44.3 million at December 1996.
The FCC has divided the United States into 306 MSAs and 428 rural service
areas for a total of 734 cellular markets and allocated spectrum to license two
systems in each market. As cellular systems mature and more subscribers are
added, the effective radiated power of the cell site transmitter is reduced so
frequencies can be reused at closer intervals, thereby increasing subscriber
capacity. In order to increase network capacity, compete with emerging PCS
providers and accommodate the conversion from analog cellular service to digital
cellular service, cellular operators are re-engineering their networks into
smaller and more numerous cells, resulting in increased demand for antennae
sites. While cellular operators have historically constructed and operated many
of their own towers, the Company believes that growing demand for antennae
sites, along with increasing capital requirements for, and restrictions on, new
tower construction, will make independently owned rental towers an increasingly
important component of cellular communications networks.
PCS. Broadcast PCS systems are similar to cellular systems but operate in
a higher frequency band. As a result, PCS operators will require more tower
sites as compared to cellular operators as they build their systems to provide
coverage in their service areas. For licensing purposes, the FCC has divided the
United States into 51 major trading areas ("MTAs") and 493 basic trading areas
("BTAs") and has allocated spectrum for two licenses in each MTA and four
licenses in each BTA. The FCC completed the first auctions of PCS licenses (A-
and B-blocks) in March 1995, at which time 99 licenses were granted for MTAs.
The initial buildout of PCS is focused on the MTAs, and PCS usage is growing
rapidly. According to industry estimates, total broadband PCS subscribers in the
U.S. were approximately 349,000 at the end of 1996 and will grow to
approximately 18.6 million by the year 2001.
The FCC completed its auction of PCS licenses in January 1997. The winning
bidders in the six auction blocks spent an aggregate of $19.7 billion for PCS
licenses. FCC rules governing the build-out requirements of the PCS licenses
require 30 MHz block holders (A-, B- and C-blocks) to build network facilities
to cover one-third of the service area population within five years and
two-thirds of the service area population within ten years. Ten MHz (D-, E- and
F-block) licensees are required to build network facilities to cover one-quarter
of the service area population within five years. Industry analysts estimate
that between 1996 and 2000, total spending on investment for PCS networks in the
United States, including cell sites and mobile switching centers, will exceed
$24 billion.
29
<PAGE> 31
SMR/ESMR. Specialized Mobile Radio is a mobile communication service that
relies on specialized mobile radio frequencies that have been historically
limited to two-way voice communications in small local networks (such as for
taxi or messenger dispatch, remote credit card verification and telemetering).
As a result of advances in digital technology, ESMR operators have begun to
design and deploy digital mobile networks that increase the frequency capacity
of ESMR systems to a level that may be competitive with that of cellular
systems. A limited number of ESMR operators have recently begun offering short
messaging, data services and interconnected voice and data telephone services on
a limited basis.
Other. Wireless cable (LMDS, MMDS), wireless local loop (a system that
eliminates the need for a wire loop connecting users to the public switched
telephone network) and wireless high-speed data services represent other areas
of the wireless communications industry being developed by operators in the U.S.
and abroad.
The following table sets forth various industry estimates regarding
projected subscriber growth and penetration rates by type of wireless
communication system. There can be no assurance that these estimates will prove
to be accurate.
PROJECTED WIRELESS COMMUNICATIONS SUBSCRIBER GROWTH RATES (1)
<TABLE>
<CAPTION>
ESTIMATED PROJECTED PROJECTED
SUBSCRIBERS -- SUBSCRIBERS -- COMPOUND PENETRATION OF
1996 2001 ANNUAL GROWTH U.S. POPULATION
TYPE OF WIRELESS COMMUNICATIONS SYSTEM (IN MILLIONS) (IN MILLIONS) RATE IN 2001
-------------------------------------- -------------- -------------- ------------- ---------------
<S> <C> <C> <C> <C>
Paging.................................. 41.1 61.9 8.5% 21.8%
Cellular................................ 44.3 80.1 12.6% 28.2%
PCS..................................... .3 18.6 121.5% 6.5%
ESMR.................................... .1 6.1 113.8% 2.2%
</TABLE>
- ---------------
(1) The source of this data is Paul Kagan Associates, Inc.
Operation of Two-Way Wireless Systems
Wireless telecommunications networks use a variety of radio frequencies to
transmit voice and data. Such networks include two-way radio applications, in
which each communications unit is equipped with both a receiver and transmitter,
such as cellular, wideband and narrowband PCS and ESMR networks, in addition to
one-way radio applications, in which communications units are simple receivers,
such as traditional paging services. Each type of wireless application operates
within a distinct radio frequency block.
Communications systems, such as cellular and PCS, operate by dividing large
geographic service areas into cells and assigning the same frequencies to
multiple, non-adjacent cells. Wireless operators refer to this as frequency
reuse. Each cell contains a base station which consists of a low-power
transmitter, a receiver and signaling equipment, which are typically located on
a tower, rooftop, building top or other antennae site. Cellular system cells
generally have a radius ranging from two to 25 miles. PCS system cells generally
have a radius ranging from one-quarter mile to 12 miles, depending on the type
of PCS technology in use and the terrain. Growth in the number of cell sites is
one of the primary factors driving demand for rental towers and other
communications sites. The base station in each cell is connected by microwave,
fiber-optic cable or telephone wires to a switch, which uses computers and
specially developed software to control the operation of the wireless telephone
system for its entire service area. The switch controls the transfer of calls
from cells within the system and connects calls to the local landline telephone
system or to a long distance telephone carrier.
Each wireless network is designed to meet a certain level of subscriber
density and traffic demand and to provide specific geographic coverage. Each
transmission over the wireless network requires a certain amount of radio
frequency, therefore a system's capacity is limited by the amount of frequency
that is available. The same frequency can be reused by other transmitters,
subject to certain interference limitations. Each wireless system is designed so
that transmission equipment is placed in locations that will make optimal use of
30
<PAGE> 32
available frequency based upon projected usage patterns, subject to the
availability of such locations and the ability to use them for wireless
transmission under applicable zoning requirements.
After a wireless system has been installed, the system's capacity can be
increased by (i) adding available frequency capacity to cells as required, if
such capacity is available; (ii) using directional antennas to divide a cell
into discrete multiple sectors or coverage areas, thereby reducing the required
distance between cells using the same frequency; or (iii) "cell splitting"
(dividing a single cell into a number of smaller cells served by lower-power
transmitters, thereby increasing the ability to reuse radio frequencies and
increasing the number of calls that can be handled in a given area). Additional
solutions are being designed to increase network capacity and coverage,
including (i) the introduction of microcells, which can be placed very close
together to increase frequency reuse and the total capacity of the cellular
network and which can be placed within buildings, train stations and other
structures to provide coverage where none was available before and (ii) the
introduction of digital technologies, which increase the number of conversations
which can be transported on a single radio frequency. All forms of system
expansion require additional antennae.
Tower Rental Industry
The tower rental industry in the U.S. is highly fragmented with few
companies owning large networks of towers. The Company believes that the
structure of the industry provides larger multi-site operators with an advantage
in leasing tower space to national wireless communications service providers.
Service providers typically prefer to deal with a single multi-site tower
operator owning clusters of towers in a region than to deal with several
smaller, local tower operators.
The Company believes that the services of tower operators with large,
regional networks of towers are more attractive to wireless service providers in
part because such providers are required to file plans with the FCC showing that
their transmitter locations ensure adequate coverage in a market. In coverage
areas where one tower operator offers multiple sites for rent, customers tend to
plan and design their networks around and license multiple sites from such
operator. Further, wireless communications service providers must design and
license their systems with the FCC based on the location of antennae sites. Once
a provider establishes its coverage pattern, there may be compelling regulatory
and operating reasons to maintain that configuration. In some instances, service
providers that change antennae site locations must re-file for a license with
the FCC. Additional costs result from relocation because all equipment, which
includes antennae and cable (which are generally not reusable) and transmitters,
must be removed from the existing tower site and the new or used equipment
installed at the new tower site.
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<PAGE> 33
The following chart illustrates the decreased coverage radius of higher
frequency applications:
RADIO FREQUENCY RANGE VS. RADIUS OF CELL SITE SIGNAL
[GRAPH]
THE AMERICAN TOWER SOLUTION
In light of the increasing demand for wireless communications services and
the ongoing development of new wireless technologies and networks, American
Tower believes there are significant opportunities to expand its business. The
Company's growth strategy is to maximize the capacity utilization of its
existing tower sites and to construct and acquire new tower sites either in
markets in which the Company already has a presence, filling in the existing
"footprint", or in new geographic markets in which the construction or
acquisition of several, well-placed towers would create a cluster in that
market. This approach ensures that the Company has multiple, well-positioned
tower sites within the markets in which it operates. Further, it allows the
Company to take advantage of operators' preference for dealing with a
consolidated tower operator. Moreover, the Company maintains a comprehensive
site maintenance, security and monitoring program which prevents breaches of
network integrity and insures prompt customer notification upon the occurrence
of any major system or equipment failures.
In addition, the Company emphasizes systems and procedures which increase
the speed and efficiency with which a customer can begin to provide service in a
given market. The Company's experience in administering new tower construction
is often an important element in meeting the coverage needs of its customers. In
addition, the Company's licensing representatives have experience in regulatory
compliance and offer customers support in gaining requisite FCC approvals. The
Company offers standardized and master license agreements and predictable
pricing which allow wireless carriers to make quick decisions about tower rental
arrangements with assurance that the terms of the licensing agreement are in
accordance with the operator's policy. Finally, American Tower seeks to provide
uniform tower maintenance, safety, security and monitoring throughout its tower
network. All of the foregoing services decrease the time it takes for a wireless
operator to establish a network and begin providing service, which is often a
key factor in success or failure in the competitive wireless communications
market.
GROWTH STRATEGY
Internal Growth through Sales and Marketing Activities. A key component of
American Tower's growth strategy is to maximize the utilization of its tower
sites. The Company targets wireless providers that are expanding their existing
network infrastructure as well as those deploying new technologies. The Company
also focuses on acquiring towers sites with underutilized capacity (defined by
the Company as annual revenues of less than $25,000) which it believes can be
filled through the implementation of the Company's sales and marketing
techniques. Because the costs of operating a tower site are largely fixed,
increasing tower utilization
32
<PAGE> 34
results in improved site operating margins. When a specific tower reaches full
antennae attachment capacity, American Tower is often able to construct an
additional tower at the same location, enabling it to further leverage its
investment in land leases, tower monitoring costs and certain initial capital
expenditures, such as utilities and telephone service. The value derived from
the Company's sales and marketing activities is further enhanced by the low
churn rate (less than 1% annually) among customers once they enter into a tower
lease.
Growth by Construction. American Tower intends to continue constructing
towers to "fill in" its tower network in existing markets and to enter new
markets. By locating new towers in areas identified by its customers as optimal
for their network expansion requirements, the Company attempts to secure
commitments for licensing space prior to commencing construction. Further,
master planned communities and other neighborhoods with zoning or regulatory
bodies which have previously opposed tower construction are increasingly seeking
a single tower rental company which can offer an integrated and efficient tower
construction plan to meet their growing wireless needs. The Company is seeking
opportunities to build towers in such communities and is currently constructing
five tower sites in The Woodlands, a master planned community north of Houston.
The Company believes that its experience in site analysis and tower construction
provides it with a competitive advantage in procuring such exclusive
construction agreements.
Growth by Acquisition. American Tower intends to continue to make
strategic acquisitions in the fragmented tower rental industry. The Company will
target acquisitions in markets where the Company already owns clusters of
towers, as well as new markets. The Company seeks to increase revenues and
operating margins at acquired tower sites through expanded sales and marketing
efforts, improved service and elimination of redundant overhead. The Company
evaluates acquisitions using numerous criteria, including customer requirements,
tower location, tower height, competition, and existing capacity utilization.
Acquisition candidates include local tower owners, private communication
networks (such as those previously used by railroad or energy companies),
independent tower rental competitors and the tower networks of wireless
communications companies. In order to capitalize on industry consolidation, the
Company has begun to hire additional personnel to support expanded acquisition
activities.
BUSINESS STRATEGY
Create Regional Clusters of Tower Sites. A large portion of the Company's
tower network is aggregated or "clustered" in major MSAs including Houston,
Dallas, Baltimore, San Antonio, Atlanta, Jacksonville, Kansas City, Albuquerque
and Nashville. These clusters enable the Company to accommodate regional and
national customers which have multi-site requirements. The tower density
necessary to support certain wireless carriers' networks is increasing due to
the transmission standards of high frequency technologies (such as PCS) and the
demand for higher quality in existing technologies. The Company's tower network
represents an attractive starting point for customers with such requirements and
provides the Company with an opportunity to develop additional towers to meet
its customers' needs.
Provide Nationally Recognizable Branded Service. In addition to providing
multiple tower sites in existing and emerging markets, the Company desires to
create a national premium tower rental product by offering a high level of
customer service that is recognizable as the "American Tower" brand of business.
Among the premium services offered by the Company are (i) remote monitoring
capabilities which ensure compliance with FCC regulations and quickly identify
breaches of customer network integrity; (ii) regulatory compliance expertise
which can accelerate a customer's speed to market by decreasing the time and
costs associated with FAA, FCC and/or local zoning or regulatory compliance; and
(iii) standardized licensing and pricing terms which simplify the contracting
process by allowing a customer's field personnel to secure the tower locations
by entering into a location and equipment schedule which incorporates by
reference the terms of a previously negotiated master license agreement. The
Company believes that its customers prefer to deal with a consolidated tower
provider and that offering a consistent level of value-added services will
motivate customers to seek to lease space on the Company's towers when they are
expanding within an existing market or moving into a new market.
33
<PAGE> 35
Maintain Diversified and Stable Customer Base. The Company seeks to
provide rental tower services to a wide range of wireless communications service
providers. The Company's customers represent several diverse industries
including major communications common carriers, government agencies and
multinational energy and transportation companies. The Company currently has
over 600 customers with a total of 6,000 separate antennae, and as of December
31, 1996, no customer represented more than 10% of total revenues. As a result
of its diversified customer base and growing network of towers, the Company
believes that it is well positioned to benefit from the growth in wireless
communications regardless of which particular technologies or applications
prevail. The Company is investing capital in the lowest technology portion of
the wireless network -- the physical tower, land and equipment shelter, and
therefore does not believe it is subject to technological obsolescence.
TOWER SITE OPERATIONS
The Company's primary business is the leasing of antenna space on its
towers. The Company also provides customers with space in equipment shelters
located at or near the base of its towers to house associated transmitters,
receivers and other equipment. An average tower in the Company's network has a
height of 300 feet and is capable of holding approximately 25 antennae
attachments. A transmitter's height on a tower determines the line-of-sight of
such transmitter with the horizon and, consequently, the distance a signal can
be transmitted. Some users, such as paging companies and SMR users in rural
areas, need higher elevations for broader coverage. Other businesses such as
ESMR, PCS and cellular companies in metropolitan areas do not necessarily need
to place their equipment at the highest tower point to maximize transmission
distance and quality. As a result, a 400 to 600 foot tower can provide optimum
tower space locations to a variety of users.
Customers are responsible for the installation of their own equipment, and
the Company is responsible for maintenance of the tower and equipment facilities
in accordance with FAA and FCC regulations. Tower maintenance requires painting,
re-lamping, re-guying (replacing the guy wires that secure the towers) and
tensioning tower structures. In addition, the Company provides regular
maintenance services for the tower site grounds and equipment shelters.
Equipment shelter maintenance primarily involves servicing air conditioning
systems (to prevent damage to equipment caused by overheating) and ensuring that
facilities remain secure. During 1995, management implemented a long-term
maintenance program that, among other things, involves providing strobe lighting
systems and centralized air-conditioning units. Management believes this program
will reduce the Company's long-term maintenance expenditures and allow its tower
sites to operate more efficiently.
Generally, each tower site is secured by a chain link fence encompassing
the tower base and equipment shelter with security and access provided by coded
locks. Each customer has access to the tower and tower shelter at all times. The
Company monitors each tower and tower site either through an automated, remote
monitoring system or through the use of tower watchers. Approximately 30% of the
Company's towers are equipped with automated monitoring systems.
34
<PAGE> 36
The Company's tower network currently consists of 599 towers located on
approximately 550 tower sites. The Company's towers span 30 states in the
following regions:
THE COMPANY'S TOWER NETWORK
<TABLE>
<CAPTION>
NUMBER OF
U.S. REGION TOWERS PRINCIPAL METROPOLITAN MARKETS
- ----------- --------- ------------------------------
<S> <C> <C>
Southwest............... 352 Houston, Dallas, Austin, San Antonio, New
Orleans, Tulsa, Oklahoma City, Wichita, Little
Rock, Kansas City
West.................... 101 Riverside County (CA), Reno, Albuquerque,
Denver, Salt Lake City
Southeast............... 84 Atlanta, Nashville, Memphis, Louisville,
Jacksonville
Midwest................. 35 Cincinnati, Columbus, Chicago, Detroit, Omaha
Northeast............... 27 New York, Washington D.C., Baltimore,
Pittsburgh, Philadelphia
---
Total(1)...... 599
===
</TABLE>
- ---------------
(1) Includes 40 towers under construction and the pending acquisition of five
towers.
35
<PAGE> 37
CUSTOMERS AND CONTRACTS
The Company has approximately 600 customers, 3,000 separate tower space
license or rental agreements and 6,000 antennae attachments on its tower
network. For the year ended December 31, 1996, no customer accounted for more
than 10% of the Company's annual revenues. The following is a list of some of
the Company's leading customers by industry segment and the percentage of the
Company's revenues at year end 1996 (on an annualized basis) derived from each
industry segment:
CUSTOMERS BY INDUSTRY
<TABLE>
<CAPTION>
PERCENTAGE OF
REVENUES BY
INDUSTRY SELECTED CUSTOMERS INDUSTRY SEGMENT(1)
- -------- ------------------ -------------------
<S> <C> <C>
Paging......................... Mobile Telecommunications, Inc., 34%
Mobilfone Service, Inc., MobileMedia,
Inc., PageMart, Inc., Pagenet, Inc.
Cellular....................... Bell South Mobility, Inc., Century 6%
Telephone Enterprises, GCC License
Corporation, GTE Mobilnet of South
Texas, Houston Cellular
PCS............................ Aerial Communications, PageMart, Inc., 4%
PCS PrimeCo L.P.
SMR/ESMR....................... Motorola, Inc., Nextel Communications, 7%
Inc., Pittencrief Communications,
Inc., Ram Mobile Data U.S.A., Saber
Communications
Microwave...................... Century Telephone Enterprises, CSX 17%
Transportation, Inc., Exxon Company
USA, Shell Offshore Services Co.,
Western Gulf Microwave
Private Industrial Users....... Air Logistics, Champion Communication 17%
Services, Inc., Federal Express
Corporation, Petroleum Helicopters,
Inc., Phillips Petroleum, Inc.
Governmental Agencies.......... Bureau of Alcohol, Tobacco and 5%
Firearms, Drug Enforcement Agency,
Federal Bureau of Investigation,
Internal Revenue Service, U.S. Secret
Service
</TABLE>
- ---------------
(1) The remainder of the Company's revenues are derived from tower space rentals
related to broadcasting, vehicle tracking, data transmission, and other
wireless services, as well as related customer charges.
SALES AND MARKETING
The Company's sales and marketing personnel target wireless carriers
expanding their network capabilities as well as carriers entering new markets.
The Company's sales and marketing staff consists of ten employees, each of whom
has telecommunications industry experience and uses outbound telemarketing to
identify sales opportunities. The Company minimizes hurdles to purchasing
decisions by offering standardized master license agreements which correspond to
internal requirements of wireless operators. The Company also offers
standardized system pricing in areas in which it operates tower clusters which
enable potential customers to obtain pricing information for an entire service
area rather than on a tower-by-tower basis. The Company believes that
recommendations from its current customers are an additional source of new
customers.
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<PAGE> 38
REGULATORY MATTERS
Federal Regulations. Both the FCC and FAA regulate towers used for
wireless communications transmitters and receivers. Such regulations control the
siting and marking of towers and may, depending on the characteristics of
particular towers, require licensing of tower facilities. Wireless
communications devices operating on towers are separately regulated and
independently licensed based upon the particular frequency used.
Pursuant to the requirements of the Communications Act of 1934, as amended,
the FCC, in conjunction with the FAA, has developed standards to consider
proposals for new or modified antenna structures. These standards mandate that
the FCC and the FAA consider the height of proposed antenna structures, the
relationship of the structure to existing natural or man-made obstructions and
the proximity of the antenna structure to runways and airports. All proposals to
construct or to modify existing antenna structures are reviewed by both the FCC
and the FAA to ensure the structure will not present a hazard to aviation. If
either agency determines that there is a potential hazard, the FCC will require
special lighting and painting to maximize the visibility of the structure.
Owners of wireless communications towers may have an obligation to maintain
painting and lighting to conform to FCC standards. Tower owners may also bear
the responsibility of notifying the FAA of any tower lighting outage. The
Company generally indemnifies its customers against any failure to comply with
applicable regulatory standards. Failure to comply with the applicable
requirements may lead to civil penalties.
The Telecommunications Act of 1996 (the "Telecom Act") amended the
Communications Act of 1934 by giving state and local zoning authorities
jurisdiction over the construction, modification and placement of towers. The
new law preserves local zoning authority but clarifies preemption of such
authority by the FCC. The Telecom Act prohibits any action that would (i)
discriminate between different providers of personal wireless services or (ii)
ban altogether the construction, modification or placement of radio
communications towers. Finally, the Telecom Act requires the federal government
to help licensees for wireless communications services gain access to preferred
sites for their facilities. This may require that federal agencies and
departments work directly with licensees to make federal property available for
tower facilities.
All antenna structures must comply with the National Environmental Policy
Act of 1969 ("NEPA") as well as other federal environmental statutes. The FCC's
environmental rules place responsibility on each applicant to investigate any
potential environmental effects of operations and to disclose any significant
effects on the environment in an environmental assessment prior to constructing
a tower. In the event the FCC determines the proposed tower would have a
significant environmental impact based on the standards the FCC has developed,
the FCC would be required to prepare an environmental impact statement. This
process could significantly delay the licensing of a particular tower site.
Local Regulations. Local regulations include city and other local
ordinances, zoning restrictions and restrictive covenants imposed by community
developers. These regulations vary greatly, but typically require tower owners
to obtain approval from local officials or community standards organizations
prior to tower construction. Recently the Company has been approached by a
high-end master planned community in the Houston area to develop a tailored
tower construction program to satisfy wireless communication demand in the
community while minimizing any adverse impact communication towers may have, or
be perceived to have, on the community's architectural development standards. In
this role, the Company is using its expertise to engineer the least intrusive
tower network for the community.
COMPETITION
The Company competes with wireless carriers which own and operate their own
tower networks, site development companies which acquire space on existing
towers, building tops and other antennae sites for wireless providers, other
independent tower companies and traditional local independent tower operators.
Wireless service providers which own and operate their own tower networks
generally are substantially larger and have greater financial resources than the
Company. The Company believes that tower location and capacity, price, quality
of service and density within a geographic market historically have been and
will continue to be the most significant competitive factors affecting tower
rental companies.
37
<PAGE> 39
The Company competes for acquisition and new tower construction
opportunities with wireless service providers, site developers and other
independent tower operating companies. The Company believes that competition for
tower site acquisitions will increase and that additional competitors will enter
the tower market, some of which may have greater financial resources than the
Company.
PROPERTIES
The Company's interests in its tower sites are comprised of a variety of
fee interests, leasehold interests created by long-term lease agreements,
private easements, and easements, licenses or rights-of-way granted by
government entities. In rural areas, a tower site typically consists of a three
to five acre tract which supports towers, equipment shelters and guy wires to
stabilize the structure. Less than 3,000 square feet are required for a
self-supporting tower structure of the kind typically used in metropolitan
areas. The Company's land leases generally have five- or ten-year terms and
frequently contain one or more renewal options. Some land leases provide
"trade-out" arrangements whereby the Company allows the landlord to use tower
space in lieu of paying all or part of the land rent. As of December 31, 1996,
the Company had approximately 392 land leases. Pursuant to the Credit Facility,
the Company's senior lenders have liens on a substantial number of the Company's
land leases and other property interests.
LEGAL PROCEEDINGS
The Company is occasionally involved in legal proceedings that arise in the
ordinary course of business. While the outcome of these proceedings cannot be
predicted with certainty, management does not expect any pending matters to have
a material adverse effect on the Company's financial condition or results of
operations.
EMPLOYEES
The Company currently employs 26 people and considers its employee
relations to be satisfactory.
38
<PAGE> 40
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Company's Board of Directors currently has six members. In accordance
with the Bylaws of the Company, the members of the Board of Directors are
divided into three classes and are elected for a term of office expiring at the
third succeeding annual stockholders' meeting following their election to office
or until a successor is duly elected and qualified. The Bylaws also provide that
such classes shall be as nearly equal in number as possible. The terms of office
of the Class I, Class II and Class III directors expire at the annual meeting of
stockholders in 1998, 1999 and 2000, respectively. The officers of the Company
are elected by, and serve until their successors are elected by, the Board of
Directors.
The following table sets forth certain information with respect to the
directors and executive officers of the Company:
<TABLE>
<CAPTION>
EXPIRATION OF
NAME AGE POSITION TERM AS DIRECTOR
- ---- --- -------- ----------------
<S> <C> <C> <C>
Fred R. Lummis...................... 43 Chairman of the Board, President and 2000
Chief Executive Officer
Marty L. Jimmerson.................. 33 Vice President -- Finance
William D. Sharp.................... 51 Vice President -- Operations
Leslie R. Stevens................... 49 Vice President -- Sales and
Marketing
Max Bowen........................... 69 Director 1999
Arnold L. Chavkin................... 45 Director 1998
Mark D. Ein......................... 32 Director 1998
George B. Kelly..................... 47 Director 1999
William K. Luby..................... 37 Director 2000
</TABLE>
Fred R. Lummis has served as Chairman, Chief Executive Officer and
President of the Company since its organization in October 1994. Mr. Lummis has
been the President of Summit Capital Inc. ("Summit Capital"), a private
investment firm, since 1990. From 1988 to 1992, Mr. Lummis was Chairman of the
Board of AppleTree Markets, Inc. ("AppleTree"), a regional chain of 95
supermarkets. AppleTree filed a voluntary petition under Section 11 of the
Federal Bankruptcy Code on January 2, 1992. Mr. Lummis became Chief Executive
Officer of AppleTree shortly thereafter, and the Company emerged from Chapter 11
on September 30, 1992 pursuant to a consensual plan of reorganization. Mr.
Lummis continued to serve as AppleTree's CEO until December 31, 1992. Mr. Lummis
currently serves on the board of several private companies and is a trustee of
the Baylor College of Medicine. Mr. Lummis graduated from Vanderbilt University
with a B.A. and from the University of Texas with an M.B.A.
Marty L. Jimmerson, Vice President -- Finance, joined the Company in
October 1995. Mr. Jimmerson served as Controller and Chief Accounting Officer of
Chiles Offshore Corporation from July 1990 to October 1995. Mr. Jimmerson was
employed by Arthur Anderson & Co. from January 1986 to July 1990. Mr. Jimmerson
is responsible for finance, treasury, accounting and administration. He is a
graduate of Baylor University and is a certified public accountant.
William D. Sharp, Vice President -- Operations, has 24 years of experience
in the communications industry and has been employed by the Company since its
organization in October 1994. From 1991 to 1994, Mr. Sharp was employed by
Bowen-Smith, the independent tower operating company acquired by the Company in
October 1994. Prior to joining Bowen-Smith, Mr. Sharp was employed by Motorola,
Inc. for 15 years in various sales management positions. Mr. Sharp's
responsibilities with the Company include site maintenance and monitoring, real
estate and new tower development. He attended the University of New Mexico.
Leslie R. Stevens has been the Vice President -- Sales and Marketing of the
Company since February 1997. Mr. Stevens was the Vice President of People's
Choice TV Corporation from 1995 until joining the Company. From 1993 to 1995,
Mr. Stevens served as Vice President of Ranger American Security Inc. From
39
<PAGE> 41
1989 to 1993, Mr. Stevens served as Director of Support Services for SCH Global,
Inc., an international telecommunications company. His responsibilities with the
Company include new market development and sales and marketing. He is a graduate
of Texas Tech University.
Max Bowen has served as a director of the Company since October 1994. Mr.
Bowen was the founder and principal stockholder of Bowen-Smith and has more than
40 years of experience in the communication tower industry. Mr. Bowen is
currently the owner of Allied Tower Company, a tower fabrication company.
Arnold L. Chavkin has served as a director of the Company since June 1996.
Mr. Chavkin has been a General Partner of Chase Capital Partners (formerly
Chemical Venture Partners) since January 1992 and has served as the president of
Chemical Investments, Inc. since March 1991. From 1986 to March 1991, Mr.
Chavkin was a member of Chemical Bank's merchant banking group and a member of
its corporate finance group. Mr. Chavkin serves as a director of Reading & Bates
Corporation, Forcenergy Inc., American Radio Systems, Inc., Bell Sports
Corporation, Wireless One, Inc. and several private companies.
Mark D. Ein has served as a director of the Company since December 1996.
Mr. Ein is a Principal of The Carlyle Group, a private investment firm. Mr. Ein
is currently a director of LCC International, Inc., as well as several private
companies. Prior to joining Carlyle in 1992, Mr. Ein worked for Brentwood
Associates, a private equity investment firm, from 1989 to 1990, and for
Goldman, Sachs & Co. from 1986 to 1989.
George B. Kelly has served as a director of the Company since October 1994.
Mr. Kelly has been the Chairman of Summit Capital since 1990. Mr. Kelly is the
Chairman of the Board of Doane Products Company, a producer of dry pet food
products. He also serves as a director of several private companies.
William K. Luby has been a director of the Company since October 1994. Mr.
Luby has been a partner at CEA Capital Partners USA, L.P., a private equity fund
investing in media, telecommunications and information services, since October
1996. Mr. Luby is also the President of Two River Capital, a position he has
held since May 1996. Mr. Luby was a Managing Director at Chase Manhattan Capital
from 1990 to 1996. He is also a director of Wireless One, Inc.
VOTING AGREEMENT
Each of the Company's directors has been elected pursuant to an agreement
among the Company's existing stockholders. The securityholders agreement
provides that each stockholder will vote their respective shares of Common Stock
and take such further actions as may be necessary to ensure that the Board of
Directors consists of not more than nine members and include two nominees of
Summit Capital, two nominees of Chase Capital Partners and Max Bowen or his
designee. The voting agreement will terminate in accordance with its terms upon
completion of the Offering.
COMMITTEES
The Company's Board of Directors has established Audit and Compensation
Committees. The Audit Committee consists of Messrs. Ein, Kelly and Luby. The
Audit Committee meets separately with representatives of the Company's
independent auditors and with representatives of senior management. The Audit
Committee reviews the general scope of audit coverages, the fees charged by the
independent auditors, matters relating to the Company's internal control
systems, and other matters related to audit functions.
The Compensation Committee consists of Messrs. Bowen, Chavkin, Kelly, and
Luby. The Compensation Committee administers the Company's stock option plan and
in this capacity makes all option grants to Company employees, including
executive officers, under such plans. In addition, the Compensation Committee is
responsible for making recommendations to the Board of Directors with respect to
the compensation of the Company's Chief Executive Officer and its other
executive officers, and is responsible for the establishment of policies dealing
with various compensation and employee benefit matters for the Company.
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<PAGE> 42
EXECUTIVE COMPENSATION
None of the Company's executive officers or other employees earned
compensation in excess of $100,000 during 1996. The Company's President and
Chief Executive Officer, Fred R. Lummis, has served without direct compensation
by the Company since its organization in October 1994. Mr. Lummis is one of two
principal stockholders of Summit Capital, a private investment firm and a
significant stockholder of the Company. Summit Capital is a party to a
consulting agreement with the Company, pursuant to which Summit Capital has
received compensation in exchange for providing management services to the
Company in the amount of $25,000, $121,000 and $127,000 for the years ended
December 31, 1994, 1995 and 1996, respectively. The Summit Capital consulting
agreement will be terminated upon consummation of the Offering. See "Certain
Transactions." Mr. Lummis' annual salary for 1997 is $132,000 and he will be
entitled to bonus compensation as determined by the Board of Directors in its
sole discretion. The Company does not have employment contracts with any of its
executive officers.
COMPENSATION OF DIRECTORS
No compensation has been paid by the Company to its directors prior to the
Offering. Upon completion of the Offering, directors who are not employees of
the Company will receive directors fees which will be determined by the Board of
Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Bowen, Chavkin, Kelly, and
Luby. Upon completion of the Offering these individuals may be deemed to be the
beneficial owners of 8.2%, 24.1%, 6.0% and 6.0%, respectively, of the Company's
outstanding Common Stock. See "Principal and Selling Stockholders." Mr. Kelly is
one of the two principals of Summit Capital, the other principal being the
Company's President and Chief Executive Officer. For a description of certain
transactions between the Company, its affiliates and affiliates of Mr. Kelly and
Mr. Bowen, see "Certain Transactions."
STOCK OPTION PLAN
The Company has adopted the 1995 Stock Option Plan as amended and restated
effective as of March 3, 1997 (the "Plan"), and 1,200,000 shares of Common Stock
have been reserved for issuance pursuant to the Plan. Under the Plan, the
Company may grant both incentive stock options intended to qualify under Section
422 of the Code and options that are not qualified as incentive stock options.
The price at which a share of Common Stock may be purchased upon exercise of an
option granted under the Plan will be determined by the Compensation Committee
and will be no less than the fair market value of the Common Stock on the date
that the option is granted. The exercise price may be paid in cash, in shares of
Common Stock (valued at fair market value at the date of exercise) or by a
combination of such means of payment, as may be determined by the Compensation
Committee. The Plan provides that stock appreciation rights may be granted to
employees in conjunction with options. Stock appreciation rights give the
holder, among other things, the right to receive a payment in an amount equal to
the difference between the fair market value of the Common Stock at the date of
exercise and the option exercise price. Such payment may be made, at the
election of the holder (subject to the consent or disapproval of the
Compensation Committee of any election to receive cash), in cash, in shares of
Common Stock (valued at fair market value at the date of exercise), or by a
combination thereof. The maximum number of shares of Common Stock that may be
subject to options granted under the Plan to any one individual during any
calendar year may not exceed 300,000.
The Plan provides that the total number of shares covered by such plan, the
number of shares that may be subject to options granted to any one individual
during any calendar year, the number of shares covered by each option, and the
exercise price per share under each option will be proportionately adjusted in
the event of a stock split, reverse stock split, stock dividend, or similar
capital adjustment effected without receipt of consideration by the Company.
All employees of the Company and its subsidiaries (including an employee
who may also be a director of any such company) are eligible to receive options
under the Plan. The Plan is administered by the
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<PAGE> 43
Compensation Committee of the Board of Directors. Subject to the terms of the
Plan, the Compensation Committee is authorized to select the recipients of
options from among those eligible and to establish the number of shares that may
be issued under each option.
No options may be granted under the Plan after March , 2007, which is ten
years from the date the Plan was amended and restated by the Board of Directors.
The Plan will remain in effect until all options granted under the Plan have
been exercised or expired. The Board of Directors in its discretion may
terminate the Plan at any time with respect to any shares of Common Stock for
which options have not been granted. The Plan may be amended, other than to
increase the maximum aggregate number of shares that may be issued under the
Plan or to change the class of individuals eligible to receive options under the
Plan, by the Board of Directors without the consent of the stockholders of the
Company. No change in any option previously granted under the Plan may be made
which would impair the rights of the holder of such option without the approval
of the holder.
As of February 28, 1997, options to purchase a total of 456,250 shares of
Common Stock have been granted and are outstanding, of which 43,800 have an
exercise price of $1.37 per share and 412,450 have an exercise price of $6.51
per share. All of the currently outstanding options will become fully vested on
the third or fourth anniversary of the date of the grant and, once vested, will
be exercisable until the tenth anniversary of the date of the grant. No stock
appreciation rights have been granted under the Plan.
During 1996, the Company granted to Fred R. Lummis options to purchase
219,000 shares of Common Stock at an exercise price of $6.51 per share. Mr
Lummis' options vest in equal amounts over four years from the date of grant and
have a ten-year term.
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<PAGE> 44
CERTAIN TRANSACTIONS
The Company acquired all of the stock of Bowen-Smith in October 1994 for
total consideration of $31.25 million, consisting of cash, a subordinated note,
common stock and warrants to purchase common stock. Max Bowen, who became a
director of the Company upon consummation of the Bowen-Smith Acquisition, or his
affiliates were the principal stockholders of Bowen-Smith at the time of the
acquisition. For a description of Mr. Bowen's holdings of Common Stock and
warrants to purchase Common Stock, see "Principal and Selling Stockholders." In
connection with the Bowen-Smith acquisition, the Company entered into a
consulting agreement with Mr. Bowen's affiliate Max Bowen Enterprises. The
Company made payments of $38,000, $150,000 and $150,000 pursuant to this
consulting agreement in 1994, 1995 and 1996, respectively. Future payments
required under this consulting agreement total $150,000 in 1997 and 1998, and
$112,000 in 1999.
The Company leases land for certain of its tower sites from Max Bowen
Enterprises . During 1994, 1995 and 1996, rental expense relating to these land
leases totaled $12,500, $33,000 and $35,000, respectively. Additionally, the
Company leases its former headquarters facility in Webster, Texas from Max Bowen
Enterprises. Annual rental expense totals $48,000 until expiration of the lease
in December 1997. The Company believes that the cost of these leases is no less
favorable than could have been obtained from third parties.
In January 1997, the Company entered into a letter agreement with Max Bowen
which provides for the sale to Mr. Bowen of 45 non-strategic communications
towers acquired in the Prime Acquisition at a purchase price of $700,000. The
Company expects to close the sale in March 1997. Mr. Bowen holds a subordinated
note from the Company in the aggregate principal amount of $3.0 million (the
"Bowen Note"), which was issued to him in connection with the Bowen-Smith
Acquisition in October 1994. The principal amount of the Bowen Note will be
reduced by $700,000 in exchange for the sale of the towers to Mr. Bowen. The
remainder of the Bowen Note will be repaid from the proceeds of the Offering.
Mr. Bowen is President and the principal owner of Allied Tower Company
("Allied"), a tower fabrication and construction company. The Company has
acquired the majority of its new towers from Allied at prices and on terms it
considers no less favorable than could have been obtained from other vendors.
The Company is under no obligation to purchase towers from Allied, but expects
to continue to purchase a substantial portion of its new tower equipment from
Mr. Bowen's company. During 1994, 1995 and 1996, the Company made payments of
$0, $304,000 and $1,710,000, respectively, to Allied.
The Company paid Summit Capital a financial advisory fee of $600,000 in
connection with the Bowen-Smith Acquisition in October 1994. Summit Capital is a
private investment firm and significant stockholder of the Company. Fred Lummis,
the Company's Chairman, Chief Executive Officer and President, and George Kelly,
a director of the Company, are the principal executive officers of Summit
Capital. The Company also has a consulting agreement with Summit Capital
pursuant to which it made payments of $25,000, $121,000 and $127,000 during
1994, 1995 and 1996, respectively. The consulting agreement has a term of five
years commencing on October 1994. Summit Capital has agreed to terminate its
consulting agreement at the closing of the Offering. The Company has agreed to
pay Summit Capital a fee of $275,000 for its services in connection with the
Offering.
In October 1996, the Company acquired substantially all of the tower sites
and selected assets of Prime for $15.3 million. For additional information
regarding the Prime Acquisition, see "Pro Forma Condensed Consolidated Financial
Information." Mr. Ein became a director of the Company following the Prime
Acquisition and is a principal of The Carlyle Group, which was the general
partner of Carlyle-Prime Investors, L.P. Carlyle-Prime Investors, L.P. was the
principal investor in Prime. See "Principal and Selling Stockholders."
In February 1997, the Company acquired two additional towers from
affiliates of The Carlyle Group. The Company acquired a tower in Plano, Texas
for $1.1 million in cash from a joint venture controlled by Ultra Towers, L.L.C.
("Ultra"). Two partnerships affiliated with The Carlyle Group are the majority
owners in Ultra. The Company also acquired a tower in Euless, Texas from Ultra
for aggregate consideration of $1.8 million. The consideration for the Euless
acquisition consisted of $0.8 million in cash and an agreement to issue shares
of Common Stock with a value of $1.0 million based upon the initial public
offering price upon consummation of the Offering.
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<PAGE> 45
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock currently and as adjusted to reflect the
Offering, by (i) each director; (ii) each executive officer; (iii) each person
who is known by the Company to own beneficially 5% or more of the Common Stock;
and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
OWNERSHIP BEFORE OWNERSHIP AFTER
OFFERING OFFERING
------------------- SHARES TO -------------------
NAME OF BENEFICIAL OWNER(1) SHARES PERCENT BE SOLD SHARES PERCENT
- --------------------------- --------- ------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Chase Manhattan Capital Corporation(2).......... 1,970,635 24.1%
BOCP II, Limited Liability Company(3)........... 909,726 11.1%
Equus Equity Appreciation Fund, L.P.(4)......... 704,815 8.6%
Max Bowen Enterprises(5)........................ 674,155 8.2%
RHS Investments, L.L.C.(6)...................... 556,625 6.8%
Archery Partners(7)............................. 492,750 6.0%
Carlyle-Prime Investors, L.P.(8)................ 274,626 3.4%
Banc One Capital Partners II, Ltd.(3)........... 260,610 3.2%
Carlyle-Prime Partners I, L.P.(8)............... 198,487 2.4%
Fred R. Lummis(9)............................... 467,565 5.7%
Marty L. Jimmerson(10).......................... 6,059 *
Dudley G. Norman................................ -- --
William D. Sharp(10)............................ 6,059 *
Leslie R. Stevens............................... -- --
Max Bowen(5).................................... 674,155 8.2%
Arnold L. Chavkin(2)............................ 1,970,635 24.1%
Mark D. Ein(8).................................. 473,113 5.8%
William K. Luby(7).............................. 492,750 6.0%
George B. Kelly(11)............................. 484,355 5.9%
All executive officers and directors as a
group (10 persons)(2)(5)(7)(8)(9)(10)(11)..... 4,574,691 55.9%
</TABLE>
- ---------------
* Less than 1%
(1) Except as otherwise noted, each stockholder has sole voting and investment
power with respect to the shares beneficially owned.
(2) Of the shares indicated beneficially owned by Mr. Chavkin, 1,531,540 are
shares held by Chase Manhattan Capital Corporation and 439,095 are issuable
to Chase Manhattan Capital Corporation upon exercise of warrants for a
nominal exercise price. All of the shares are included because of Mr.
Chavkin's affiliation with Chase Manhattan Capital Corporation. The address
of Mr. Chavkin and Chase Manhattan Capital Corporation is 380 Madison
Avenue, 12th Floor, New York, New York, 10017. Mr. Chavkin disclaims
beneficial ownership of these shares within the meaning of Rule 13d-3 under
the Exchange Act.
(3) BOCP II, Limited Liability Company and Banc One Capital Partners II, Ltd.
are limited liability companies the managing member of which is BOCP
Holdings Corporation. The address of BOCP Holdings Corporation is 150 East
Gay Street, 24th Floor, Columbus, Ohio, 43215.
(4) Equus Equity Appreciation Fund, L.P. is a limited partnership, the general
partner of which is Equus Capital Corporation. The address of Equus Capital
Corporation is 2929 Allen Parkway, Suite 2500, Houston, Texas, 77019.
(5) Of the shares indicated owned by Mr. Bowen and Max Bowen Enterprises,
302,950 are shares held by Max Bowen Enterprises and 371,205 are shares
issuable upon the exercise of warrants for a nominal price to Max Bowen
Enterprises and are included because of Mr. Bowen's affiliation with Max
Bowen Enterprises. The address of Mr. Bowen and Max Bowen Enterprises is
12450 Old Galveston Road, Webster, Texas, 77598.
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<PAGE> 46
(6) RHS Investments, L.L.C. is a limited liability company, the managing member
of which is Richard H. Stewart, a former director of the Company. The
address of Mr. Stewart and RHS Investments, L.L.C. is 77 East Crossville
Rd., Suite 310, Roswell, Georgia, 30075.
(7) Of the shares indicated beneficially owned by Mr. Luby, 382,885 are shares
held by Archery Partners and 109,865 are shares issuable to Archery
Partners upon the exercise of warrants for a nominal price. Mr. Luby is a
general partner of Archery Partners and all of the shares are included
because of Mr. Luby's affiliation therewith. The address of Mr. Luby and
Archery Partners is 179 Bingham Ave., Rumson, New Jersey, 07760.
(8) Of the shares indicated beneficially owned by Mr. Ein, 274,626 shares are
held by Carlyle-Prime Investors, L.P. and 198,487 are held by Carlyle-Prime
Partners I, L.P. Both Carlyle-Prime Investors, L.P. and Carlyle-Prime
Partners I, L.P. are limited partnerships and the general partner of each
is TCG Towers L.L.C. The address of The Carlyle Group and Mr. Ein is 1001
Pennsylvania Avenue, N.W., Washington, D.C., 20004. Mr. Ein disclaims
beneficial ownership of these shares within the meaning of Rule 13d-3 under
the Exchange Act. This figure does not include the shares of Common Stock
to be issued to an affiliate of The Carlyle Group in connection with a
recently completed acquisition. See "Certain Transactions."
(9) Of the shares indicated beneficially owned by Mr. Lummis, 365,000 shares
are held by Summit Capital and are included because of Mr. Lummis's
affiliation therewith. Of the remaining 102,565 shares, 5,475 shares are
held by Mr. Lummis, 53,290 shares are held by a trust for the benefit of
Mr. Lummis who is the trustee and 43,800 shares are held by several trusts,
of which Mr. Lummis is the trustee, for the benefit of Mr. Lummis's
children. Mr. Lummis' address is 3411 Richmond Avenue, Suite 400, Houston,
Texas, 77046. Mr. Lummis disclaims beneficial ownership of the 43,800
shares held in trusts for the benefit of his children within the meaning of
Rule 13d-3 under the Exchange Act.
(10) The shares beneficially owned by Messrs. Jimmerson and Sharp are issuable
within 60 days upon the exercise of stock options.
(11) Of the shares indicated beneficially owned by Mr. Kelly, 365,000 shares are
held by Summit Capital and are included because of Mr. Kelly's affiliation
therewith. Of the remaining 119,335 shares, 5,475 shares are held by Mr.
Kelly, 89,425 are held by GBK Tower Partners, a partnership of which Mr.
Kelly is the general partner, and 24,455 are issuable to GBK Tower Partners
upon the exercise of warrants for a nominal price. The address of GBK Tower
Partners and Mr. Kelly is Eight Greenway Plaza, Suite 714, Houston, Texas,
77046. Mr. Kelly disclaims beneficial ownership of the 113,880 shares held
by or issuable to GBK Tower Partners within the meaning of Rule 13d-3 under
the Exchange Act.
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<PAGE> 47
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of the Company upon the consummation of the
Offering will consist of 45,000,000 shares of Common Stock, par value $.01 per
share, and 5,000,000 shares of Preferred Stock, par value $.01 per share. Upon
consummation of the Offering, the Company will have shares of Common
Stock outstanding and no shares of Preferred Stock outstanding.
The Company currently has authorized 212,500 shares of Class A Common
Stock, par value $.01 per share, 37,500 shares of Class B Common Stock, par
value $.01 per share, and 22,500 shares of Preferred Stock, par value $.01 per
share. The Company's outstanding stock consists of 112,058 shares of Class A
Common Stock and 22,500 shares of Preferred Stock which have been designated as
the Series A Redeemable Preferred Stock. The Class B Common Stock has no voting
rights, except as otherwise required by law. Prior to the consummation of the
Offering, the Company will amend and restate its Certificate of Incorporation to
reclassify the shares of Class A Common Stock into shares of Common Stock and
will effect a 73 to one share stock split. The following description is a
summary of the material terms of the Company's capital stock. For a complete
description of the terms of the capital stock, reference is made to the
Company's Amended and Restated Certificate of Incorporation (the "Certificate of
Incorporation") and Bylaws, which are included as exhibits to the Registration
Statement.
COMMON STOCK
Holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders. Holders of Common
Stock do not have the right to cumulate their votes in the election of
directors. Holders of Common Stock are entitled to receive dividends when, as
and if declared by the Board of Directors of the Company out of funds legally
available therefor, subject to any dividend preferences of any outstanding
shares of Preferred Stock. See "Divided Policy." In the event of the
liquidation, dissolution or winding up of the Company, holders of Common Stock
have the right to share ratably in any assets remaining after the satisfaction
in full of the liabilities of the Company and of all liquidation preferences on
any outstanding shares of Preferred Stock. Holders of Common Stock have no
preemptive or preferential rights to purchase or subscribe for any part of any
additional securities or rights to convert their Common Stock into other
securities and are not subject to future calls or assessments by the Company.
PREFERRED STOCK
Generally. The Preferred Stock may be issued from time to time by the
Board of Directors as shares of one or more classes or series. Subject to the
provisions of the Certificate of Incorporation and limitations prescribed by
law, the Board of Directors is expressly authorized to adopt resolutions to
issue the shares, to fix the number of shares and to change the number of shares
constituting any series and to provide for or change the voting powers,
designations, preferences and relative, participating, optional or other special
rights, qualifications, limitations or restrictions thereof, including dividend
rights (including whether dividends are cumulative), dividend rates, terms of
redemption (including sinking fund provisions), redemption prices, conversion
rights and liquidation preferences of the shares constituting any class or
series of the Preferred Stock, in each case without any further action or vote
by the holders of Common Stock.
Although the Company has no present intention to issue shares of Preferred
Stock, the issuance of shares of Preferred Stock, or the issuance of rights to
purchase such shares, could be used to discourage an unsolicited acquisition
proposal. For example, the issuance of a series of Preferred Stock might impede
a business combination by including class voting rights that would enable the
holders to block such a transaction; or such issuance might facilitate a
business combination by including voting rights that would provide a required
percentage vote of the stockholders. In addition, under certain circumstances,
the issuance of Preferred Stock could adversely affect the voting power of the
holders of the Common Stock. Although the Board of Directors is required to make
any determination to issue such stock based on its judgment as to the
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<PAGE> 48
best interests of the stockholders of the Company, the Board of Directors could
act in a manner that would discourage an acquisition attempt or other
transaction that some or a majority of the stockholders might believe to be in
their best interests or in which stockholders might receive a premium for their
stock over the then-market price of such stock. The Board of Directors does not
at present intend to seek stockholder approval prior to any issuance of
currently authorized stock, unless otherwise required by law or the rules of any
market on which the Company's securities are traded.
Series A Redeemable Preferred Stock. The Company has outstanding 22,500
shares of Series A Preferred Stock. Holders of the Series A Preferred Stock are
not entitled to receive dividends. The Company at its option may, at any time
and from time to time, redeem all or any part of the outstanding Series A
Preferred Stock at a redemption price payable in cash equal to $200 per share.
Upon the occurrence of a Public Offering (as defined) or a Change of Control (as
defined), the Company is required to redeem all of the shares of Series A
Preferred Stock at a redemption price payable in cash equal to $200 per share.
The Offering will be a Public Offering as defined in the certificate of
designations relating to the Series A Preferred Stock. Shares of the Series A
Preferred Stock redeemed, purchased, or otherwise acquired by the Company shall
be deemed retired and shall be canceled and may not thereafter be issued or
otherwise disposed of by the Company.
Except as required by law, the holders of the Series A Preferred Stock have
no voting rights with respect to the Series A Preferred Stock, and their consent
is not required for taking any corporate action. However, so long as any share
of Series A Preferred Stock remains outstanding, the Company may not, without
the affirmative vote or written consent of the holders of more than 50% of the
outstanding shares of Series A Preferred Stock, (i) amend or repeal any
provision of, or add any provision to, the Certificate of Incorporation or
Bylaws of the Company if such action would alter or change the preferences,
rights, privileges or powers of, or the restrictions provided for the benefit
of, the Series A Preferred Stock, or increase or decrease the authorized number
of shares of the Series A Preferred Stock; (ii) authorize or issue shares of any
class of stock, or any class of bonds, debentures, notes or other obligations
convertible into or exchangeable for, or having option rights to purchase, any
shares of any other class or series of stock of the Company, having any
preference or priority as to assets superior to or on a parity with the Series A
Preferred Stock; or (iii) reclassify any Junior Stock (as defined) into shares
having any preference or priority as to assets superior to or on a parity with
any preference or priority of the Series A Preferred Stock.
Upon any liquidation, dissolution or winding up of the affairs of the
Company, after payments or provision for payments of the debts and liabilities
of the Company, the holders of the Series A Preferred Stock will be entitled to
receive, out of the remaining assets of the Company, the sum of $200 per share
of Series A Preferred Stock or, in the case that the remaining assets of the
Company are insufficient to permit the payment of $200 per outstanding share,
then the entire assets of the Company shall be distributed ratably among the
holders of the Series A Preferred Stock then outstanding.
CERTAIN PROVISIONS OF THE COMPANY'S CERTIFICATE OF INCORPORATION AND BYLAWS
Delaware law authorizes corporations to limit or eliminate the personal
liability of directors to corporations and their stockholders for monetary
damages for breach of a director's fiduciary duty of care. The duty of care
requires that, when acting on behalf of the corporation, directors must exercise
an informed business judgment based on all material information reasonably
available to them. Absent the limitations authorized by Delaware law, directors
are accountable to corporations and their stockholders for monetary damages for
conduct constituting gross negligence in the exercise of their duty of care.
Delaware law enables corporations to limit available relief to equitable
remedies such as injunction or rescission. The Certificate of Incorporation
limits the liability of directors of the Company to the Company or its
stockholders to the fullest extent permitted by Delaware law. Specifically,
directors of the Company will not be personally liable for monetary damages for
breach of a director's fiduciary duty as a director, except for liability (i)
for any breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for unlawful
payments of dividends or unlawful stock repurchases or redemptions as provided
in Section 174 of the Delaware General Corporation Law (the "DGCL") or (iv) for
any transaction from which the director derived an improper personal benefit.
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<PAGE> 49
The inclusion of this provision in the Certificate of Incorporation may
have the effect of reducing the likelihood of derivative litigation against
directors and may discourage or deter stockholders or management from bringing a
lawsuit against directors for breach of their duty of care, even though such an
action, if successful, might otherwise have benefited the Company and its
stockholders. The Company's Bylaws provide indemnification to the Company's
officers and directors and certain other persons with respect to certain
matters, and the Company has entered into agreements with each of its directors
and executive officers for indemnification with respect to certain matters.
The Certificate of Incorporation provides that stockholders may act only at
an annual or special meeting of stockholders and may not act by written consent.
The Bylaws provide that special meetings of the stockholders can be called only
by the Chairman of the Board, the President or a majority of the Board of
Directors.
The Certificate of Incorporation provides that the Board of Directors shall
consist of three classes of directors serving for staggered terms. As a result,
it is currently contemplated that approximately one-third of the Company's Board
of Directors will be elected each year. The classified board provision could
prevent a party who acquires control of a majority of the outstanding voting
stock of the Company from obtaining control of the Board of Directors until the
second annual stockholders meeting following the date the acquirer obtains the
controlling interest.
The Certificate of Incorporation provides that the number of directors
shall be as determined by the Board of Directors from time to time, but shall
not be less than five. It also provides that directors may be removed only for
cause, and then only by the affirmative vote of the holders of at least a
majority of all outstanding voting stock entitled to vote. This provision, in
conjunction with the provisions of the Certificate of Incorporation authorizing
the Board of Directors to fill vacant directorships, will prevent stockholders
from removing incumbent directors without cause and filling the resulting
vacancies with their own nominees.
The Company's Bylaws contain provisions (i) requiring that advance notice
be delivered to the Company of any business to be brought by a stockholder
before an annual meeting of stockholders and (ii) establishing certain
procedures to be followed by stockholders in nominating persons for election to
the Board of Directors. Generally, such advance notice provisions provide that
written notice must be given to the Secretary of the Company by a stockholder
(i) in the event of business to be brought by a stockholder before an annual
meeting, not less than 90 days prior to the anniversary date of the immediately
preceding annual meeting of stockholders (with certain exceptions if the date of
the annual meeting is different by more than specified amounts from the
anniversary date), and (ii) in the event of nominations of persons for election
to the Board of Directors by any stockholder, (a) with respect to an election to
be held at the annual meeting of stockholders, not less than 90 days prior to
the anniversary date of the immediately preceding annual meeting of stockholders
(with certain exceptions if the date of the annual meeting is different by more
than specified amounts from the anniversary date), and (b) with respect to an
election to be held at a special meeting of stockholders for the election of
directors, not later than the close of business on the 10th day following the
day on which notice of the date of the special meeting was mailed to
stockholders or public disclosure of the date of the special meeting was made,
whichever first occurs. Such notice must set forth specific information
regarding such stockholder and such business or director nominee, as described
in the Company's Bylaws. The foregoing summary is qualified in its entirety by
reference to the Company's Bylaws, which are filed as an exhibit to the
Registration Statement of which this Prospectus is a part.
DELAWARE BUSINESS COMBINATION STATUTE
The Company is subject to the provisions of Section 203 of the DGCL
("Business Combination Statute"). In general, the Business Combination Statute
prohibits a publicly-held Delaware corporation from engaging in certain
"business combinations" with an "interested stockholder" for a period of three
years after the date such person became an interested stockholder, unless (i)
before such person became a stockholder, the board of directors approved either
the proposed business combination or the proposed acquisition of stock resulting
in such person's becoming an interested stockholder; (ii) the interested
stockholder acquired at least 85% of the voting stock of the corporation in the
transaction in which it became an interested stockholder; or
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<PAGE> 50
(iii) the business combination is approved by a majority of the board of
directors and by the affirmative vote of the holders of two-thirds of the
outstanding shares of the corporation's voting stock other than shares held by
the interested stockholder at a meeting of the stockholders. A "business
combination" is defined broadly to include a merger, consolidation, sale or
other disposition of assets and certain other transactions resulting in the
receipt of financial benefits by the interested stockholder. An "interested
stockholder" is defined as a person who, together with affiliates and
associates, beneficially owns (or within the preceding three years, did
beneficially own) 15% or more of the corporation's voting stock.
Under Section 203, these restrictions also do not apply to certain business
combinations proposed by an interested stockholder following the announcement or
notification of one of certain extraordinary transactions involving the Company
and a person who was not an interested stockholder during the previous three
years or who became an interested stockholder with the approval of a majority of
the Company's directors, if that extraordinary transaction is approved or not
opposed by a majority of the directors who were directors before any person
became an interested stockholder in the previous three years or who were
recommended for election or elected to succeed such directors by a majority of
such directors then in office.
TRANSFER AGENT
The transfer agent of the Common Stock has not been selected.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have a total of
shares of Common Stock outstanding ( if the Underwriters'
over-allotment options are exercised in full). The shares of Common Stock sold
in the Offering will be freely tradeable by persons other than "affiliates" or
persons deemed to be acting as "underwriters" (as defined under the Securities
Act) of the Company. The remaining shares of Common Stock (the "Restricted
Shares") were issued by the Company in private transactions in reliance upon the
exemption from registration contained in Section 4(2) of the Securities Act and
may not be sold unless they are registered under the Securities Act or are sold
pursuant to an applicable exemption from registration, including pursuant to
Rule 144.
In general, under Rule 144, as currently in effect, a person (or persons
whose shares are required to be aggregated) who has beneficially owned, for at
least two years, shares of Common Stock that have not been registered under the
Securities Act or that were acquired from an "affiliate" of the Company is
entitled to sell within any three-month period the number of shares of Common
Stock which does not exceed the greater of one percent of the number of then
outstanding shares or the average weekly reported trading volume during the four
calendar weeks preceding the sale. Sales under Rule 144 are also subject to
certain notice requirements and to the availability of current public
information about the Company and must be made in unsolicited brokers'
transactions or to a market maker. A person (or persons whose shares are
aggregated) who is not an "affiliate" of the Company under the Securities Act
during the three months preceding a sale and who has beneficially owned such
shares for at least three years is entitled to sell such shares under Rule 144
without regard to the volume, notice, information and manner of sale provisions
of such Rule. Rule 144 does not require the same person to have held the
securities for the applicable periods. The SEC has recently approved an
amendment to Rule 144 that would shorten the two- and three-year holding periods
described above to one year and two years, respectively.
After the Offering, the Company intends to file a registration statement on
Form S-8 to register the shares of Common Stock issuable upon exercise of
options granted or to be granted pursuant to the Plan. Accordingly, shares
issued upon exercise of such options will be freely tradeable by holders who are
not affiliates of the Company and, subject to the volume and other limitations
of Rule 144, by holders who are affiliates of the Company.
The Company, its executive officers and directors, all holders of options
to purchase Common Stock under the Plan and certain stockholders of the Company
have agreed that, for a period of 180 days from the date of this Prospectus,
they will not offer, sell or otherwise dispose of any shares of Common Stock or
options
49
<PAGE> 51
to acquire Common Stock without the prior written consent of Montgomery
Securities, other than the issuance by the Company of options to purchase Common
Stock or shares of Common Stock issuable upon the exercise thereof and issuances
of Common Stock by the Company in connection with acquisitions of towers and
related assets, provided that such options shall not become exercisable and such
shares issuable upon exercise of options or pursuant to acquisitions shall not
be transferable prior to the end of the 180-day period.
Prior to the Offering, there has been no market for the Common Stock. No
predictions can be made of the effect, if any, that market sales of shares of
Common Stock or the availability of such shares for sale will have on the market
price prevailing from time to time. Nevertheless, sales of significant amounts
of Common Stock could adversely affect the prevailing market price of Common
Stock, as well as impair the ability of the Company to raise capital through the
issuance of additional equity securities.
50
<PAGE> 52
UNDERWRITING
The underwriters named below, represented by Montgomery Securities, Alex.
Brown & Sons Incorporated and Prudential Securities Incorporated (the
"Representatives") have severally agreed, subject to the terms and conditions
contained in the underwriting agreement (the "Underwriting Agreement") by and
among the Company, the Selling Stockholder and the Underwriters, to purchase
from the Company and the Selling Stockholder the number of shares of Common
stock indicated below opposite their respective names at the initial public
offering price less the underwriting discount set forth on the cover page of
this Prospectus. The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters are committed to purchase all of such shares if they purchase any.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------ ---------
<S> <C>
Montgomery Securities.......................................
Alex. Brown & Sons Incorporated.............................
Prudential Securities Incorporated..........................
---------
Total.............................................
=========
</TABLE>
The Representatives have advised the Company and the Selling Stockholder
that the Underwriters propose initially to offer the shares of Common Stock to
the public on the terms set forth on the cover page of this Prospectus. The
Underwriters may allow to selected dealers a concession of not more than
$ per share, and such dealers may reallow a concession of $
per share on sales to certain other dealers. After the offering, the public
offering price and other selling terms may be changed by the Representatives.
The Common Stock is offered subject to receipt and acceptance by the
Underwriters, and to certain other conditions, including the right to reject an
order in whole or in part.
The Company has granted an option to the Underwriters, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to a maximum
of additional shares of Common Stock to cover over-allotments, if
any, at the same price per share as the initial shares to be
purchase by the Underwriters. To the extent that the Underwriters exercise this
option, the Underwriters will be committed, subject to certain conditions, to
purchase such additional shares in approximately the same proportion as set
forth in the above table. The Underwriters may purchase such shares only to
cover over-allotments made in connection with the Offering.
The Underwriting Agreement provides that the Company and the Selling
Stockholder will indemnify the Underwriters against certain liabilities,
including civil liabilities under the Securities Act, or will contribute to
payments the Underwriters may be required to make in respect thereof.
The Representatives have informed the Company that the Underwriters do not
expect to make sales of Common Stock offered by this Prospectus to accounts over
which they exercise discretionary authority in excess of 5% of the shares of
Common Stock offered hereby.
Prior to this offering, there has been no public trading market for the
Common Stock. Consequently, the initial public offering price was determined by
negotiations among the Representatives, the Company and the Selling Stockholder.
Among the factors considered in such negotiations were the history of, and the
prospects for, the Company and the industry in which it competes, an assessment
of the Company's management, its past and present earnings and the trend of such
earnings, the prospects for future earnings of the Company, the present state of
the Company's development, the general condition of securities markets at the
time of the Offering and the market price of publicly traded stock of comparable
companies in recent periods.
51
<PAGE> 53
The Company, its directors and executive officers, certain of its
stockholders (including the Selling Stockholder) and all holders of options to
purchase Common Stock have agreed that, for a period of 180 days from the date
of this Prospectus, they will not offer, sell or otherwise dispose of any shares
of Common Stock or options to acquire shares of Common Stock without the prior
written consent of Montgomery Securities, other than the issuance by the Company
of options to purchase Common Stock or shares of Common Stock issuable upon the
exercise thereof and issuances of Common Stock by the Company in connection with
acquisitions of towers and related assets, provided that such options shall not
become exercisable and such shares issuable upon exercise of options or pursuant
to acquisitions shall not be transferable prior to the end of the 180-day
period.
The underwriters are reserving up to shares of Common Stock
offered hereby for sale to officers, directors and employees of the Company and
their friends, relatives and other affiliates. The price of such shares to such
persons will be the initial public offering price set forth on the cover of this
Prospectus. The number of shares available to the general public will be reduced
to the extent those persons purchase reserved shares. Any shares not so
purchased will be offered hereby at the initial public offering price set forth
on the cover of this Prospectus.
The Company will apply to list the shares on the Nasdaq National Market. In
connection with the listing of the Common Stock, the Underwriters will undertake
to sell round lots of 100 shares or more to a minimum of 400 beneficial owners.
In connection with the Offering, certain Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock.
Such transactions may include stabilization transactions effected in accordance
with Rule 104 of Regulation M, pursuant to which such persons may bid for or
purchase Common Stock for the purpose of stabilizing its market price. The
Underwriters also may create a short position for the account of the
Underwriters by selling more Common Stock in connection with the Offering than
they are committed to purchase from the Company and the Selling Stockholder, and
in such case may purchase Common Stock in the open market following completion
of the Offering to cover all or a portion of such short position. The
Underwriters may also cover all or a portion of such short position, up to
shares of Common Stock, by exercising the Underwriters' over-allotment
option referred to above. In addition, Montgomery Securities, on behalf of the
Underwriters, may impose "penalty bids" under contractual arrangements with the
Underwriters whereby it may reclaim from an Underwriter (or dealer participating
in the Offering) for the account of the other Underwriters, the selling
concession with respect to Common Stock that is distributed in the Offering but
subsequently purchased for the account of the Underwriters in the open market.
Any of the transactions described in this paragraph may result in the
maintenance of the price of the Common Stock at a level above that which might
otherwise prevail in the open market. None of the transactions described in this
paragraph are required, and, if undertaken, may be discontinued at any time.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Vinson & Elkins L.L.P., Houston, Texas. Certain legal
matters relating to the Common Stock offered hereby will be passed upon by Locke
Purnell Rain Harrell (A Professional Corporation), Dallas, Texas, as counsel for
the Underwriters.
EXPERTS
The consolidated financial statements and schedule of American Tower
Corporation and subsidiaries as of December 31, 1996 and 1995, and for each of
years in the two year period ended December 31, 1996, the period from October
15, 1995 to December 31, 1994 (Successor) and the period from January 1, 1994 to
December 31, 1994 (Predecessor), have been included herein and in the
registration statement in reliance upon the reports of KPMG Peat Marwick LLP,
independent certified public accountants appearing elsewhere herein and in the
registration statement, and upon the authority of said firm as experts in
accounting and auditing.
52
<PAGE> 54
The consolidated financial statements of Prime Communication Sites
Holdings, L.L.C. for the year ended December 31, 1995, appearing in this
Prospectus and Registration Statement have been audited by KPMG Peat Marwick
LLP, independent auditors, as set forth in their reports thereon appearing
elsewhere herein. Such consolidated financial statements are included in
reliance on such reports given upon the authority of such firm as experts in
accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-1 (as amended and together with all exhibits thereto, the "Registration
Statement") under the Securities Act, with respect to the offer and sale of
Common Stock pursuant to this Prospectus. This Prospectus constitutes a part of
the Registration Statement and does not contain all of the information set forth
in the Registration Statement, certain parts of which are omitted as permitted
by the rules and regulations of the Commission. Statements made in this
Prospectus concerning the contents of any contract, agreement or other document
filed as an exhibit to the Registration Statement are summaries of the terms of
such contracts, agreements or documents and are not necessarily complete.
Reference is made to each such exhibit for a more complete description of the
matters involved and such statements shall be deemed qualified in their entirety
by such reference. The Registration Statement and the exhibits and schedules
thereto filed with the Commission may be inspected, without charge, and copies
may be obtained at prescribed rates, at the public reference facility maintained
by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549 and at the regional offices of the Commission located at 7 World Trade
Center, 13th Floor, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60621-2511. In addition, the
Registration Statement can be inspected and copied at the offices of the Nasdaq
National Market, 1735 K Street, N.W., Washington, D.C. 20006-1500.
As a result of the Offering, the Company will become subject to the
information and periodic reporting requirements of the Securities Exchange Act
of 1934, as amended, and, in accordance therewith, will file periodic reports,
proxy statements and other information with the Commission. Such periodic
reports, proxy statements and other information will be available for inspection
and copying at the public reference facilities, regional offices and stock
exchange referred to above. In addition, these reports, proxy statements and
other information may also be obtained from the web site that the Commission
maintains at http://www.sec.gov.
53
<PAGE> 55
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
Independent Auditors' Report................................ F-2
Consolidated Balance Sheets as of December 31, 1995 and
1996...................................................... F-3
Consolidated Statements of Operations -- Predecessor for the
period from January 1, 1994 to October 14, 1994
and -- Successor for the period from October 15, 1994 to
December 31, 1994 and the years ended December 31, 1995
and 1996.................................................. F-4
Consolidated Statements of Stockholders' Equity
(Deficit) -- Predecessor for the period from January 1,
1994 to October 14, 1994 and -- Successor for the period
from October 15, 1994 to December 31, 1994 and the years
ended December 31, 1995 and 1996.......................... F-5
Consolidated Statements of Cash Flows -- Predecessor for
the period from January 1, 1994 to October 14, 1994
and -- Successor for the period from October 15, 1994
to December 31, 1994 and the years ended December 31,
1995 and 1996.......................................... F-6
Notes to Consolidated Financial Statements.................. F-7
PRIME COMMUNICATION SITES HOLDING, L.L.C. AND SUBSIDIARY
Independent Auditors' Report................................ F-18
Consolidated Balance Sheet as of December 31, 1995.......... F-19
Consolidated Statement of Operations for the year ended
December 31, 1995......................................... F-20
Consolidated Statement of Members' Equity for the year ended
December 31, 1995......................................... F-21
Consolidated Statement of Cash Flows for the year ended
December 31, 1995......................................... F-22
Notes to Consolidated Financial Statements.................. F-23
</TABLE>
F-1
<PAGE> 56
INDEPENDENT AUDITORS' REPORT
The Board of Directors
American Tower Corporation:
We have audited the accompanying consolidated balance sheets of American
Tower Corporation and Subsidiaries as of December 31, 1995 and 1996, and the
related consolidated statements of operations, stockholders' equity (deficit)
and cash flows -- Predecessor for the period from January 1, 1994 to October 14,
1994 -- Successor for the period from October 15, 1994 to December 31, 1994 and
the years ended December 31, 1995 and 1996. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of American
Tower Corporation and Subsidiaries as of December 31, 1995 and 1996 and the
results of their operations and their cash flows -- Predecessor for the period
from January 1, 1994 to October 14, 1994 -- Successor for the period from
October 15, 1994 to December 31, 1994 and the years ended December 31, 1995 and
1996 in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Houston, Texas
January 17, 1997
F-2
<PAGE> 57
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, 1995 AND 1996
ASSETS
<TABLE>
<CAPTION>
1995 1996
------- -------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 1,905 92
Accounts receivable, net of allowance for doubtful
accounts of $30 and $104, respectively................. 598 816
Prepaid expenses and other current assets................. 682 793
Assets held for resale.................................... -- 700
------- -------
Total current assets................................... 3,185 2,401
Land........................................................ 4,177 5,301
Rental towers and related fee based assets, net of
accumulated depreciation of $1,729 and $3,984,
respectively.............................................. 42,056 61,556
Other assets, net of accumulated amortization of $486 and
$836, respectively........................................ 4,364 6,269
------- -------
Total assets.............................................. $53,782 75,527
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 489 720
Accrued interest payable.................................. 539 598
Deferred revenues and other current liabilities........... 1,395 978
Current portion of long-term debt......................... 1,580 1,075
------- -------
Total current liabilities................................. 4,003 3,371
Long-term debt, less current portion........................ 31,875 49,771
Other liabilities........................................... 541 450
Deferred income taxes....................................... 6,306 6,337
------- -------
Total liabilities......................................... 42,725 59,929
------- -------
Commitments and contingencies
Redeemable preferred stock, $.01 par value. Authorized,
issued and outstanding, 22,500 shares..................... 3,633 4,000
Stockholders' equity:
Common stock, $.01 par value. Authorized 45,000,000
shares; 4,927,500 and 5,499,163 shares issued and
outstanding, respectively.............................. 49 55
Additional paid-in capital................................ 7,876 11,997
Accumulated deficit....................................... (501) (454)
------- -------
Total stockholders' equity............................. 7,424 11,598
------- -------
Total liabilities and stockholders' equity............. $53,782 75,527
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 58
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
----------- --------------------------------------------
JANUARY 1, OCTOBER 15,
1994 1994 YEAR YEAR
THROUGH THROUGH ENDED ENDED
OCTOBER 14, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1994 1995 1996
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Total revenues............................ $ 5,218 1,948 8,277 12,366
Operating expenses:
Direct tower costs...................... 1,151 402 1,868 2,849
Selling, general and administrative..... 2,137 380 1,601 2,049
Depreciation and amortization........... 2,106 403 1,908 2,709
-------- --------- --------- ---------
Total operating expenses........ 5,394 1,185 5,377 7,607
-------- --------- --------- ---------
Operating income (loss)................... (176) 763 2,900 4,759
Interest expense.......................... 2,117 576 3,068 3,808
Other expenses............................ 93 66 414 150
-------- --------- --------- ---------
Income (loss) before income taxes and
extraordinary items..................... (2,386) 121 (582) 801
Income tax (expense) benefit.............. -- (50) 217 (303)
-------- --------- --------- ---------
Income (loss) before extraordinary
items................................... (2,386) 71 (365) 498
Extraordinary loss, net of tax benefit of
$117 and $272, respectively............. -- -- (207) (451)
-------- --------- --------- ---------
Net income (loss)......................... $ (2,386) 71 (572) 47
======== ========= ========= =========
Earnings (loss) per common share:
Income (loss) before extraordinary
loss................................. (318.13)
Extraordinary loss, net................. --
-------- --------- --------- ---------
Net income (loss) per common share...... 318.13
======== ========= ========= =========
Weighted average common shares and common
stock equivalents outstanding........... 7,500
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 59
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
PREDECESSOR
-----------------------------------------------------
ADDITIONAL TOTAL
COMMON PAID-IN ACCUMULATED STOCKHOLDERS'
STOCK CAPITAL DEFICIT DEFICIT
------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Balances at December 31, 1993................. $ -- -- (1,716) (1,716)
Net loss...................................... -- -- (2,386) (2,386)
------- ------- ------- -------
Balances at October 14, 1994.................. $ -- -- (4,102) (4,102)
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
SUCCESSOR
-----------------------------------------------------
ADDITIONAL TOTAL
COMMON PAID-IN ACCUMULATED STOCKHOLDERS'
STOCK CAPITAL DEFICIT EQUITY
------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Beginning balances at October 15, 1994........ $ -- -- -- --
Sale of 4,927,500 shares of common stock...... 49 6,701 -- 6,750
Allocation of warrant value to equity......... -- 675 -- 675
Net income.................................... -- -- 71 71
------- ------- ------- -------
Balances at December 31, 1994................. 49 7,376 71 7,496
Allocation of warrant value to equity......... -- 500 -- 500
Net loss...................................... -- -- (572) (572)
------- ------- ------- -------
Balances at December 31, 1995................. 49 7,876 (501) 7,424
Shares of common stock issued
in acquisition.............................. 5 4,122 -- 4,127
Conversion of warrants to 98,550 shares of
common stock................................ 1 (1) -- --
Net income.................................... -- -- 47 47
------- ------- ------- -------
Balances at December 31, 1996................. $ 55 11,997 (454) 11,598
======= ======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 60
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
----------- ------------------------------------------
JANUARY 1, OCTOBER 15,
1994 1994 YEAR YEAR
THROUGH THROUGH ENDED ENDED
OCTOBER 14, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1994 1995 1996
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)................................... $(2,386) 71 (572) 47
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization..................... 2,106 403 1,908 2,709
Accretion of discounts............................ -- 41 202 808
Deferred income taxes............................. -- 50 (334) 31
Deferred loan costs written-off................... -- -- 324 --
Increase in accounts receivable, net.............. (47) (14) (203) (218)
Decrease in prepaid expenses and other current
assets.......................................... (142) (143) (109) (111)
Increase in accounts payable...................... 51 23 59 231
Increase (decrease) in accrued interest payable... (81) 380 14 59
Increase (decrease) in deferred revenues and
other........................................... 235 (469) 332 (417)
Accrual for imputed interest on Predecessor
subordinated debt............................... 2,000 -- -- --
------- ------- ------ -------
Total adjustments............................ 4,122 271 2,193 3,092
------- ------- ------ -------
Net cash provided by operating activities.... 1,736 342 1,621 3,139
------- ------- ------ -------
Cash flows from investing activities:
Payment for purchase of towers and related assets... (999) (444) (7,351) (14,249)
Proceeds from the sale of land...................... 48 -- 24 --
Purchases of land................................... -- (55) (500) (1,124)
Payment for acquisition of predecessor.............. -- (9,692) -- --
------- ------- ------ -------
Net cash used in investing activities........ (951) (10,191) (7,827) (15,373)
------- ------- ------ -------
Cash flows from financing activities:
Proceeds from borrowings on long-term debt.......... -- 21,000 4,646 39,850
Net payments on Predecessor revolving line of
credit............................................ (440) -- -- --
Proceeds from Predecessor expansion loan............ 486 -- -- --
Proceeds from issuance of Successor common stock.... -- 6,750 -- --
Proceeds from issuance of preferred stock........... -- -- 4,133 367
Payments of long-term debt.......................... -- -- (1,680) (28,736)
Payments of deferred loan costs and interest rate
cap............................................... -- (496) (98) (1,060)
Payments of Predecessor long-term debt.............. (1,116) (14,699) -- --
Payment of Predecessor employment contracts......... -- (941) -- --
Payment of Predecessor selling costs................ -- (744) -- --
------- ------- ------ -------
Net cash provided by (used in) financing
activities................................. (1,070) 10,870 7,001 10,421
------- ------- ------ -------
Net increase (decrease) in cash and cash
equivalents................................ (285) 1,021 795 (1,813)
Cash and cash equivalents at beginning of period...... 374 89 1,110 1,905
------- ------- ------ -------
Cash and cash equivalents at end of period............ $ 89 1,110 1,905 92
======= ======= ====== =======
Supplemental disclosure of cash flow
information -- cash paid during the period for
interest............................................ $ 197 -- 2,915 2,925
======= ======= ====== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 61
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1995 AND 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Formation and Organization
The accompanying consolidated financial statements reflect the financial
position, results of operations, and cash flows of American Tower Corporation
and its wholly-owned subsidiaries, collectively referred to as ATC or the
Company. All significant intercompany transactions and balances have been
eliminated.
ATC was created for the purpose of acquiring 100% of the outstanding common
stock of Bowen-Smith Holdings, Inc., which was completed in October 1994. This
acquisition was accounted for as a purchase. The cost of the acquisition was
allocated on the basis of the estimated fair values of the assets acquired and
the liabilities assumed. The financial information for the period from January
1, 1994 to October 14, 1994 reflects Bowen-Smith Holdings, Inc.'s historical
cost of the assets and liabilities. As a result of the acquisition and different
cost basis with respect to the assets and liabilities of the Company, financial
information for periods before and after October 15, 1994 is not comparable. For
purposes of identification and description, Bowen-Smith Holdings, Inc. is
referred to as the "Predecessor" for the period prior to the acquisition; ATC is
the "Successor" for the period subsequent to the acquisition.
(b) Description of Business
The primary business of the Company is the leasing of antenna and
transmitter space on communication towers to companies using or providing
cellular telephone, paging, microwave and specialized mobile radio services. ATC
currently owns and operates approximately 550 communication tower sites located
in thirty states primarily in the western, eastern and southern United States.
(c) Cash Equivalents
Cash equivalents consist of short-term investments with an original
maturity of three months or less. Cash equivalents include an interest-bearing
money market account with a balance of approximately $1,834,000 at December 31,
1995 and $12,000 at December 31, 1996.
(d) Rental Towers and Related Fee Based Assets
Rental towers and related fee based assets are stated at cost. Depreciation
on rental towers and related fee based assets is calculated on the straight-line
method over the estimated useful lives of the assets which range from 3 to 25
years.
(e) Other Assets
Other assets include licenses and permits which are amortized on a
straight-line basis over their expected period of benefit, 25 years, and a
noncompete agreement with the Predecessor majority stockholder which is
amortized on a straight-line basis over its seven year term. Also included are
deferred loan costs associated with various debt issuances which are amortized
over the terms of the related debt based on the amount of outstanding debt using
the interest method.
(f) Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of
The Company adopted the provisions of SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, on
January 1, 1996. This Statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows
F-7
<PAGE> 62
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or the fair value
less costs of disposal. Adoption of this Statement did not have a material
impact on the Company's financial position, results of operations, or liquidity.
(g) Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
(h) Fair Value of Financial Instruments
In December 1991, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards 107, Disclosure about Fair Value of
Financial Instruments. This Statement requires the Company to disclose estimated
fair values for its financial instruments.
Fair value estimates are made at discrete points in time based on relevant
market information. These estimates may be subjective in nature and involve
uncertainties and matters of significant judgment and therefore, cannot be
determined with precision.
The Company believes that the carrying amounts of its current assets and
current liabilities approximate the fair value of such items due to their
short-term nature. The carrying amount of long-term debt approximates its fair
value because the interest rates approximate market.
(i) Revenue Recognition
Revenues are recognized as tower services are provided. Amounts billed or
received prior to services being performed are deferred until such time as the
revenue is earned.
(j) Stock Option Plan
Prior to January 1, 1996, the Company accounted for its stock option plan
in accordance with the provisions of Accounting Principles Board (APB) Opinion
No. 25, Accounting for Stock Issued to Employees, and related interpretations.
On January 1, 1996, the Company adopted SFAS No. 123, Accounting for Stock-Based
Compensation, which permits entities to recognize as expense over the vesting
period the fair value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 also allows entities to continue to apply the
provisions of APB Opinion No. 25 and provide pro forma net income and pro forma
earnings per share disclosures for employee stock option grants made in 1995 and
future years as if the fair-value-based method defined in SFAS No. 123 had been
applied. The Company has elected to continue to apply the provisions of APB
Opinion No. 25 and provide the pro forma disclosure provisions of SFAS No. 123.
(k) Earnings (Loss) per Common Share
Earnings (loss) per common share are based on the weighted average number
of common stock outstanding during the respective periods adjusted for common
stock equivalents when dilutive and significant except as described below.
Pursuant to certain Securities and Exchange Commission (SEC) Staff Accounting
Bulletins, common stock issued for consideration below the assumed initial
public offering (IPO) price and
F-8
<PAGE> 63
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
stock options and warrants granted with exercise prices below the assumed IPO
price during the 12-month period prior to the date of the initial filing of the
Registration Statement, even when antidilutive, have been included in the
calculation of net income (loss) per share, using the treasury stock method
based on the assumed IPO price, as if they were outstanding for all periods
presented prior to their issuance or grant.
Fully diluted earnings per share are not presented for 1994, 1995 and 1996
because they do not materially differ from primary earnings per share.
(l) Interest Rate Cap Agreements
The Company is party to a financial instrument to reduce its exposure to
fluctuations in interest rates. The purchase price of the interest rate cap
agreements is capitalized and included in prepaid expenses in the accompanying
consolidated balance sheets and amortized over the life of the agreements using
the straight-line method.
(m) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
(n) Reclassifications
Certain reclassifications have been made to prior period amounts in order
to conform to the 1996 presentation.
(2) ASSET ACQUISITIONS
In December 1995, the Company acquired in a single transaction
substantially all of the tower sites and locations of CSX Realty Development
Corporation (CSX) for $9,750,000 which was funded through cash and seller
financed debt. In addition during 1995, the Company acquired 81 other tower
sites in several unrelated transactions. In October 1996, the Company acquired
in a single transaction substantially all of the tower sites and locations of
Prime Communications Sites Holding, L.L.C. and its subsidiary (Prime) for
approximately $15.3 million which was funded through borrowings under the
Company's credit facility, seller financed debt and the issuance of common stock
of the Company to the seller. In addition, during 1996 the Company acquired four
other tower sites in two unrelated transactions. The purchase price was
allocated to the land, towers and related fee based assets and licenses and
permits based on their respective estimated fair values.
The following unaudited proforma consolidated results of operations give
effect to the above acquisitions as though the 1995 and 1996 acquisitions had
occurred on January 1, 1995:
<TABLE>
<CAPTION>
1995 1996
--------- ---------
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
<S> <C> <C>
Rental revenues........................................ $10,575 $13,565
Operating income....................................... $ 3,737 $ 4,855
Net loss............................................... $(1,492) $ (346)
Net loss per common share.............................. $ $
</TABLE>
F-9
<PAGE> 64
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
(3) PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets at December 31, 1995 and 1996
consisted of the following:
<TABLE>
<CAPTION>
1995 1996
----- -----
(IN THOUSANDS)
<S> <C> <C>
Prepaid land leases......................................... $474 $619
Materials and supplies...................................... 52 --
Other current assets........................................ 156 174
---- ----
$682 $793
==== ====
</TABLE>
(4) OTHER ASSETS
Other assets at December 31, 1995 and 1996 consisted of the following:
<TABLE>
<CAPTION>
1995 1996
------ ------
(IN THOUSANDS)
<S> <C> <C>
Deferred loan costs, net.................................... $ 145 $1,009
Licenses and permits, net................................... 3,366 4,428
Non-compete costs, net...................................... 823 623
Other assets................................................ 30 209
------ ------
$4,364 $6,269
====== ======
</TABLE>
(5) DEFERRED REVENUES AND OTHER CURRENT LIABILITIES
Deferred revenues and other current liabilities at December 31, 1995 and
1996 consisted of the following:
<TABLE>
<CAPTION>
1995 1996
------ ------
(IN THOUSANDS)
<S> <C> <C>
Deferred revenues........................................... $ 447 $ 201
Deferred compensation contracts............................. 525 300
Accrued expenses and other.................................. 423 477
------ ------
$1,395 $ 978
====== ======
</TABLE>
(6) LONG-TERM DEBT
On October 11, 1996, the Company entered into a new senior credit facility
(credit facility) in connection with the acquisition of the communication towers
from Prime as discussed in Note 2.
The credit facility includes a $23 million revolving line of credit, which
included a sub-allotment for letters of credit, and a $37 million term loan
facility. The Company utilized the proceeds of the term loan to (i) repay $21.6
million of principal and interest to its existing senior lenders, (ii) prepay in
full $6.1 million of principal and interest to its senior subordinated lender,
and (iii) to fund $8.6 million of the purchase price for the Prime acquisition.
The Company had borrowed an additional $2.8 million under the revolving credit
facility as of December 31, 1996.
The credit facility currently bears interest at LIBOR plus 275 basis points
for interest periods ranging up to five months; thereafter, the credit facility
bears interest at LIBOR plus an applicable margin, not to exceed 275 basis
points, based upon a defined leverage ratio, for interest periods of one, three
or six months. The term loan portion of the credit facility requires principal
amortization with quarterly payments totaling $5.6 million in 1999, $7.4 million
in 2000 and 2001, $9.3 million in 2002 and $7.3 million in 2003. The revolving
credit
F-10
<PAGE> 65
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
facility requires the maximum amount outstanding to be reduced quarterly
beginning in January 1999. The maximum amount allowed to be outstanding under
the revolving credit facility in 1999 is $22.4 million, in 2000 is $19.6
million, in 2001 is $15.0 million, in 2002 is $10.4 million, in 2003 is $4.6
million with a final maturity of October 2003. The credit facility contains
restrictions on payment of dividends, and sets forth minimum operating cash
flows, as defined, to be attained by the Company.
Immediately prior to entering into the credit facility in October 1996, the
Company owed its senior lenders $21.5 million under a term loan, revolving line
of credit and acquisition line of credit facilities which had been amended and
extended in December 1995. The outstanding balance of the prior senior agreement
bore interest at LIBOR plus 275 basis points. In connection with entering into
the credit facility, the Company expensed $451,000, net of taxes, of deferred
loan and other financing costs associated with prior credit facilities. In
connection with the amendment of the Company's senior credit agreement in
December 1995, the Company expensed $207,000, net of taxes, of deferred loan and
other financing costs associated with prior credit facilities. Such deferred
loan and other financing costs written off in 1996 and 1995 have been reflected
as extraordinary losses in the consolidated statements of operations.
Seller Acquisition Financing
In connection with the acquisition of the towers and related sites in
October 1996 as more fully discussed in Note 2 and above, the Company issued an
aggregate of $2.5 million of subordinated term notes to certain sellers. Payment
terms require (i) a single installment on October 11, 2004 or (ii) immediate
payment upon an initial public offering. The subordinated term notes bear
interest at 11% payable quarterly commencing January 1997.
F-11
<PAGE> 66
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
Long-term debt as of December 31, 1995 and 1996 consisted of the following:
<TABLE>
<CAPTION>
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Term note payable, due in quarterly payments beginning in
January 1999, interest at 8.38% until May 1997 at which
time interest is LIBOR plus a maximum of 2.75%............ $18,480 $39,850
Seller financing, noninterest bearing secured note payable,
due in annual installments commencing December 20, 1996
through December 20, 2000................................. 7,313 6,313
Senior subordinated note, interest payable in quarterly
installments at 12.75% per annum; principal payments due
and payable in prescribed amounts beginning on April 1,
2001; original principal reduced by value of stock warrant
(see Note 9).............................................. 6,000 --
Subordinated note payable to shareholder, interest payable
in quarterly installments at 10.5% per annum; payment of
principal due in annual installments beginning November
15, 2001; original principal reduced by value of stock
warrant (see Note 9)...................................... 3,000 3,000
Subordinated notes payable, interest payable in quarterly
installments at 11.0% per annum; single installment due
October 2004, or immediately upon an initial public
offering.................................................. -- 2,561
Noninterest bearing unsecured note payable, maturing in
1999...................................................... 500 500
Noninterest bearing unsecured note payable, due in two
installments on July 1, 1995 and January 1, 1996.......... 500 --
Note payable, due in quarterly installments commencing
January 1, 1995 bearing interest at 10.0%................. 400 300
Other....................................................... 129 43
Discount associated with noninterest bearing obligations.... (2,221) (1,671)
Discount assigned to stock warrants (see Note 9)............ (646) (50)
------- -------
Total long-term debt.............................. 33,455 50,846
Less current portion........................................ 1,580 1,075
------- -------
Long-term debt excluding current portion.................. $31,875 $49,771
======= =======
</TABLE>
The Company is a party to a financial instrument in order to reduce its
exposure to fluctuations in interest rates. The agreement provides for the third
parties to make payments to the Company whenever a defined floating interest
rate exceeds 10 percent per annum. No such payments were made in 1995 or 1996.
Payments on the interest rate cap agreements are based on the notional principal
amount of the agreements; no funds were actually borrowed or are to be repaid as
of December 31, 1996. The unamortized portion of the purchase price was
approximately $107,000 and $50,000 at December 31, 1995 and 1996, respectively.
$5,000,000 under this interest rate cap agreement expired in 1995 and the
remaining $9,000,000 agreement expires in December 1997.
F-12
<PAGE> 67
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
The aggregate annual maturities of long-term debt (not reduced for discount
rates on non-interest bearing obligations and value of warrants) for each of the
five years subsequent to December 31, 1996 are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, (IN THOUSANDS)
------------ --------------
<S> <C>
1997........................... $ 1,075
1998........................... 1,107
1999........................... 7,157
2000........................... 10,747
2001........................... 8,910
Thereafter..................... 23,571
-------
$52,567
=======
</TABLE>
(7) FEDERAL INCOME TAXES
Income tax expense for the successor period ended December 31, 1994, and
the years ended December 31, 1995 and 1996 consisted of the following:
<TABLE>
<CAPTION>
1994 1995 1996
---- ------ -----
(IN THOUSANDS)
<S> <C> <C> <C>
Current.................................................... $-- $ -- $ --
Deferred................................................... 50 (217) 303
--- ------ -----
$50 $ (217) $ 303
=== ====== =====
</TABLE>
Income tax expense at December 31, 1994, 1995 and 1996 differed from the
amounts computed by applying the U.S. federal income tax rate of 34% to income
before taxes and extraordinary items as follows:
<TABLE>
<CAPTION>
1994 1995 1996
---- ----- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Computed "expected" tax expense (benefit)................... $41 $(198) $272
State taxes................................................. 2 29 28
Other....................................................... 7 (48) 3
--- ----- ----
Total....................................................... $50 $(217) $303
=== ===== ====
</TABLE>
At December 31, 1996, the Company had net operating loss carryforwards
(NOLs) of approximately $9,258,000 for U.S. Federal income tax purposes. The
NOLs, if unused, will expire between 2004 and 2008. The portion of the NOLs
which existed prior to October 15, 1994 are subject to annual limitations
imposed by the Internal Revenue Code under Section 382.
F-13
<PAGE> 68
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1995 and 1996 are as follows:
<TABLE>
<CAPTION>
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Operating loss and alternative minimum tax credit
carryforward........................................... $ 1,968 $ 3,472
Accrued liabilities....................................... 400 64
Other..................................................... 27 72
------- -------
Deferred tax assets.................................... 2,395 3,608
Deferred tax liability - rental towers and related fee based
assets, principally due to differences in basis for
financial reporting purposes and tax purposes............. 8,701 9,945
------- -------
Net deferred tax liability................................ $ 6,306 $ 6,337
======= =======
</TABLE>
There is no valuation allowance at December 31, 1995 and 1996 recorded
against the deferred tax assets. It is the opinion of management that the
scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies will more likely than not result in the realization
of the deferred tax assets.
(8) REDEEMABLE PREFERRED STOCK
In December 1995, the Company commenced a private placement offering to its
existing security holders to sell up to 22,500 newly created shares of Series A
Redeemable Preferred Stock, $0.01 par value (Series A Preferred Stock), at $200
per share. Net proceeds to the Company were approximately $4,500,000. As of
December 31, 1995, the Company had received $4,133,000 in cash for the offering.
The remaining $367,000 was received in January 1996.
The shares of Series A Preferred Stock were sold together with 10-year
warrants to purchase a total of 1,642,500 shares of Common Stock at a nominal
exercise price. The Company determined the warrants to have an estimated fair
value of $500,000 at the offering date which was recorded as additional paid-in
capital and a reduction of the outstanding Series A Preferred Stock.
Each share of Series A Preferred Stock has a liquidation preference of $200
per share. The Company at its option can redeem any or all the outstanding
shares of preferred stock for $200 per share. The Company is required to redeem
all such shares at a price of $200 per share upon the occurrence of (i) a public
offering or (ii) a change of control. The preferred shares have no voting or
dividend rights.
(9) STOCKHOLDERS' EQUITY
In conjunction with the purchase of the common stock of the predecessor,
the Company issued warrants to the senior subordinated debt holder for 909,726
shares of common stock with an exercise price of $.01 per share. This warrant is
immediately exercisable into common stock of the Company. The Company determined
this warrant to have an estimated value of $600,000 at the acquisition date
which was recorded as additional paid-in capital and a reduction of the
outstanding principal of the senior subordinated note payable. The Company
recorded accretion of the debt discount of $16,000, $75,000 and $59,000 for the
successor period ended December 31, 1994, and the years ended December 31, 1995
and 1996, respectively. As discussed further in Note 6, the Company prepaid the
senior subordinated debt holder in connection with the October 1996 amendment
and extension of the Company's senior credit facility. The remaining unamortized
debt discount of $450,000 was included as an extraordinary loss on the
consolidated statement of operations for the year ended December 31, 1996. The
senior subordinated warrant holder can require the Company to purchase the stock
warrants beginning in October 2002 (put right). The put amount is defined in the
warrant
F-14
<PAGE> 69
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
agreement with the senior subordinated lender. At December 31, 1995 and 1996,
the accompanying consolidated financial statements include an accrual for
$115,000 and $174,000, respectively, related to the put feature of the warrants
granted to the senior subordinated lender. A warrant was also issued to one of
the previous sellers for 227,395 shares of common stock with a nominal exercise
price. Due to certain restrictions as to the exercisability of this warrant, it
was determined to have a value of $75,000. This amount is reduced against the
principal amount of the seller note. The Company recorded accretion of the debt
discount of $12,000 for each of the years ended December 31, 1995 and 1996.
(10) STOCK OPTION PLAN
In 1995, the Company adopted a stock option plan (the Plan) pursuant to
which the Company's Board of Directors may grant stock options to officers and
key employees. The Plan authorizes grants of options to purchase up to 673,863
shares of common stock. Stock options are granted with an exercise price equal
to the stock's fair market value at the date of grant. All stock options have
10-year terms and vest and become fully exercisable after a range of 3 to 4
years from the date of grant.
At December 31, 1996, there were 217,613 additional shares available for
grant under the Plan. The per share weighted-average value of stock options
granted during 1995 and 1996 was $.50 and $2.63, respectively, on the date of
grant, using the Black Scholes model with the following assumptions: risk-free
interest rate of 5.71% for the 1995 options and 6.58% for the 1996 options,
expected life of 8 years, expected volatility of 0%, and an expected dividend
yield of 0%.
The Company applies APB Opinion No. 25 in accounting for its Plan and,
accordingly, no compensation cost has been recognized for its stock options in
the consolidated financial statements. Had the Company determined compensation
cost based on the fair value at the grant date for its stock options under SFAS
No. 123, the Company's net income would have been reduced to the pro forma
amounts indicated below:
<TABLE>
<CAPTION>
1995 1996
---- ----
(IN THOUSANDS,
EXCEPT PER SHARE
DATA)
<S> <C> <C>
Net income(loss)
As reported............................................... (572) $ 47
Pro forma................................................. (579) (231)
Earnings (loss) per share
As reported...............................................
Pro forma.................................................
</TABLE>
At December 31, 1996 the range of exercise prices and weighted-average
remaining contractual life of outstanding options was $1.37-$6.51 and 3.7 years,
respectively. Stock option activity during the periods indicated is as follows:
<TABLE>
<CAPTION>
NUMBER OF WEIGHTED-AVERAGE
SHARES EXERCISE PRICE
--------- ----------------
<S> <C> <C>
Balance at December 31, 1994.............................. -- $ --
Granted................................................. 80,300 1.37
-------- ------
Balance at December 31, 1995.............................. 80,300 1.37
Granted................................................. 412,450 6.51
Forfeited............................................... (36,500) 1.37
-------- ------
Balance at December 31, 1996.............................. 456,250 $6.02
======== ======
</TABLE>
F-15
<PAGE> 70
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
At December 31, 1996, the number of options exercisable was 12,118 and the
weighted-average exercise price of these options was $1.37 per share.
(11) RELATED PARTY TRANSACTIONS AND COMMITMENTS
Leases
In the ordinary course of business the Company leases land and buildings
under long-term (ranging from one to ten years) operating leases. Total rent
expense relating to land and building leases was approximately $112,000,
$459,000 and $665,000 for the successor period ended December 31, 1994 and the
years ending December 31, 1995 and 1996, respectively.
Minimum future lease payments for the years ending December 31, are as
follows:
<TABLE>
<S> <C>
1997.............................. $1,107,000
1998.............................. 787,000
1999.............................. 677,000
2000.............................. 600,000
2001.............................. 623,000
Thereafter........................ 2,738,000
----------
Total minimum lease
payments................... $6,532,000
==========
</TABLE>
Related Party Transactions
The Company has entered into consulting agreements with three shareholders.
The total management payments under these agreements was approximately $38,000
for the successor period ended December 31, 1994 and $300,000 for each of the
years ended December 31, 1995 and 1996, respectively, and future minimum
payments required by these management agreements are $300,000, $300,000 and
$262,500 for the years ended December 31, 1997, 1998 and 1999, respectively.
The Company has entered into a management agreement with a private
investment firm which is a significant shareholder of the Company. The Company
paid $121,000 and $127,000 to this investment firm during the years ended
December 31, 1995 and 1996, respectively. In addition, the Company paid the
investment firm a financial advisory fee of $600,000 in connection with the
Bowen-Smith Holdings, Inc. acquisition in October 1994. The Company's president
and chairman, as well as another director are the principal executive officers
in the private investment firm. The Company has also agreed to pay the private
investment firm a fee of $275,000 for its services in connection with an
anticipated public offering of common stock.
The Company leases land for certain of its tower sites from an entity owned
by a shareholder. During the period from October 15 to December 31, 1994 and the
years ended December 31, 1995 and 1996, rental expense relating to these land
leases totaled $12,500, $33,000 and $35,000, respectively. Additionally, the
Company leases its office facility from the same entity. Annual expense for the
office facility totals $48,000 per year. The same shareholder is President of a
tower fabrication and construction company. The Company has acquired the
majority of its new towers from this entity at prices and on terms it considers
no less favorable than could have been obtained from other vendors. During the
years ended 1995 and 1996, the Company made payments of $304,000 and $1,710,000,
respectively, to this entity.
F-16
<PAGE> 71
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
(12) SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES
The Company had the following noncash financing and investing activities:
<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Note payable issued for CSX acquisition.................. $ -- $7,664 $ --
Notes payable issued for tower acquisitions.............. -- 500 2,361
Common stock issued for Prime acquisition................ -- -- 4,127
Notes payable issued for noncompete agreements........... 1,000 160 --
Accrued acquisition costs................................ -- 150 --
Accrued debt refinancing costs........................... -- 100 --
Note payable issued in Acquisition....................... 3,000 -- --
Note payable to employee trust assumed................... 500 -- --
Deferred compensation contracts assumed.................. 846 -- --
</TABLE>
(13) SUBSEQUENT EVENTS (UNAUDITED)
Tower Acquisitions
Subsequent to December 31, 1996, the Company purchased a total of 27 towers
for aggregate consideration of approximately $10,400,000. In addition, the
Company has letters of intent to acquire six additional towers for aggregate
consideration of approximately $9,500,000 which the Company expects to close on
or before April 1997.
Authorized Shares and Stock Split
The Company intends to amend its Articles of Incorporation to increase the
number of authorized shares of common stock to 45,000,000 and to authorize
5,000,000 shares of undesignated preferred stock. The Company's Board of
Directors has the authority, without further action by the shareholders, to
issue such preferred stock in one or more series and to fix the terms and rights
of the preferred stock.
The Board of Directors intends to effect a 73 to 1 split of its common
stock. The stock split has been reflected retroactively in the financial
statements for all periods presented.
Tower Disposal
On January 13, 1997, the Company entered into a binding letter agreement
with a related shareholder and director to sell 45 communication towers for a
purchase price of $700,000. The closing of this transaction is expected to occur
on or before March 31, 1997. Under the letter agreement, the Company will
receive $700,000 in cash or reduce principal payments owed under the
subordinated note payable issued in October 1994. See Note 6 for further
discussion. Due to the agreement, the related assets have been reflected as
assets held for resale on the December 31, 1996 balance sheet.
F-17
<PAGE> 72
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Prime Communication Sites Holding, L.L.C.:
We have audited the accompanying consolidated balance sheet of Prime
Communication Sites Holding, L.L.C. and subsidiary as of December 31, 1995 and
the related consolidated statements of operations, members' equity and cash
flows for the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Prime
Communication Sites Holding, L.L.C. and subsidiary as of December 31, 1995, and
the results of their operations and their cash flows for the year then ended, in
conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Dallas, Texas
August 14, 1996, except as to note 6,
which is as of October 11, 1996
F-18
<PAGE> 73
PRIME COMMUNICATION SITES HOLDING, L.L.C. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1995
ASSETS
<TABLE>
<S> <C>
Current assets:
Cash and cash equivalents................................. $ 42,547
Accounts receivable, net of allowance for doubtful
accounts of $22,102.................................... 204,323
Prepaids and other........................................ 88,317
-----------
Total current assets......................... 335,187
-----------
Property and equipment:
Towers and equipment...................................... 7,058,696
Vehicles.................................................. 16,113
Office equipment and furniture............................ 52,726
Land...................................................... 12,300
-----------
7,139,835
Accumulated depreciation.................................. (619,888)
-----------
Net property and equipment................... 6,519,947
-----------
Intangible assets, net of accumulated amortization of
$243,577.................................................. 2,319,172
Other assets................................................ 34,405
-----------
Total assets................................. $ 9,208,711
===========
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 120,831
Accrued expenses.......................................... 76,371
Deferred revenue.......................................... 17,737
Customer advances......................................... 33,733
Current portion of long-term debt (note 2)................ 730,771
-----------
Total current liabilities.................... 979,443
Long-term debt, excluding current portion (note 2).......... 2,783,612
Members' equity (note 3):
Members' capital.......................................... 6,721,382
Accumulated deficit....................................... (1,275,726)
-----------
Total members' equity........................ 5,445,656
Commitments and contingencies (note 5)
-----------
Total liabilities and members' equity........ $ 9,208,711
===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-19
<PAGE> 74
PRIME COMMUNICATION SITES HOLDING, L.L.C. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
Revenue:
Telecommunications services............................... $ 1,179,203
Rental income............................................. 2,700
-----------
Total revenue..................................... 1,181,903
Operating expenses:
Selling, general and administrative....................... 466,226
Depreciation and amortization............................. 863,465
Other..................................................... 866,865
-----------
Total operating expenses.......................... 2,196,556
Other income (expense):
Interest expense.......................................... (266,747)
Other..................................................... 5,674
-----------
Net loss.......................................... $(1,275,726)
===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-20
<PAGE> 75
PRIME COMMUNICATION SITES HOLDING, L.L.C. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF MEMBERS' EQUITY
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
TOTAL
ACCUMULATED MEMBERS'
UNITS AMOUNT DEFICIT EQUITY
------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Formation of Company effective
January 1, 1995 (notes 3 and 4):
Issuance for cash......................... 409,946 $3,994,558 -- 3,994,558
Issuance for property..................... 27,267 2,726,824 -- 2,726,824
------- ---------- ---------- ----------
Net loss.................................... -- -- (1,275,726) (1,275,726)
Balance, December 31, 1995.................. 437,213 $6,721,382 (1,275,726) 5,445,656
======= ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-21
<PAGE> 76
PRIME COMMUNICATION SITES HOLDING, L.L.C. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss.................................................. $(1,275,726)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation and amortization........................ 863,465
Changes in operating assets and liabilities:
Increase in accounts receivable................... (204,323)
Increase in prepaids and other assets............. (122,722)
Increase in accounts payable and accrued
expenses.......................................... 182,420
-----------
Net cash used by operating activities........... (556,886)
-----------
Cash flows used in investing activities -- expenditures for
property and equipment.................................... (6,098,614)
-----------
Cash flows from financing activities:
Proceeds from issuance of long-term debt.................. 3,018,208
Payments on long-term debt................................ (314,719)
Proceeds from issuance of members' capital................ 3,994,558
-----------
Net cash provided by financing activities....... 6,698,047
-----------
Net increase in cash and cash equivalents................... 42,547
Cash and cash equivalents at January 1, 1995................ --
-----------
Cash and cash equivalents at December 31, 1995.............. $ 42,547
===========
SUPPLEMENTAL DISCLOSURE
Cash paid for interest.................................... $ 212,178
===========
</TABLE>
NONMONETARY TRANSACTIONS
During 1995, the Company acquired all of the assets of Brad Communication
Services, Inc. and B.R.A.D. Communications Services by assuming $66,252 in
accounts payable and $810,894 in long-term debt and by issuing $2,726,824 in
member' units as discussed in note 3.
See accompanying notes to consolidated financial statements.
F-22
<PAGE> 77
PRIME COMMUNICATION SITES HOLDING, L.L.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) General and Business
Prime Communication Sites Holding, L.L.C. (the "Company") was formed by and
among Carlyle-Prime Investors, L.P., Carlyle-Prime Partners I, L.P., Brad
Communication Services, Inc., B.R.A.D. Communication Services, Warren Harkins,
Dale Harkins and Bill Kubena, in January 1995. Brad Communication Services, Inc.
and B.R.A.D. Communication Services are partnerships wholly owned by Warren
Harkins, Dale Harkins and Bill Kubena, all of whom are Class B Members in the
Company. The contributions into the Company were as follows: Brad Communication
Services, Inc. and B.R.A.D. Communication Services contributed all of their
properties and assets. The net assets contributed to the Company by Brad
Communication Services, Inc. and B.R.A.D. Communication Services are reflected
at their estimated fair value at the date of contribution in the accompanying
consolidated financial statements. Carlyle-Prime Investors, L.P. and
Carlyle-Prime Partners I, L.P., both of whom are Class A Members in the Company,
contributed a combined total of $3,994,558.
The Company is a majority owner of Prime Communication Sites, L.L.C.
("PCS"). PCS purchased 137 towers from Prime Communication Sites, Inc. ("Prime,
Inc."), an unrelated third party.
The Company owns towers which are utilized by customers for radio
transmitters and antennas throughout the United States. The Company's primary
customers are national and multi-regional cellular, personal communication
services, specialized mobile radio, pager companies, local radio stations, two
way radio users and VHS and UHF television stations.
(b) Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its majority owned subsidiary Prime Communication Sites, L.L.C. All
significant intercompany balances and transactions have been eliminated in
consolidation.
(c) Telecommunications Services and Rental Revenue
Revenue from telecommunications services is recognized monthly as services
are provided. Rental income is recognized monthly as earned. Deferred revenue
represents billings for certain telecommunication services which have not yet
been rendered.
(d) Property and Equipment
Property and equipment contributed by Brad Communication Services, Inc. and
B.R.A.D. Communication Services are stated at estimated fair value at date of
transfer, and all other additions are stated at cost. Depreciation of property
and equipment are calculated on the straight-line method over the estimated
useful lives of the assets as follows:
<TABLE>
<S> <C>
Towers and equipment........................................ 10 years
Office equipment and furniture.............................. 5-10 years
Vehicles.................................................... 5 years
</TABLE>
(e) Income Taxes
Federal income taxes on net earnings of the Company are payable by the
members resulting from the formation of the Company as a limited liability
corporation (LLC). LLCs are taxed for federal income tax purposes as
partnerships, so that all income, losses and credits flow to the tax returns of
the members. For state
F-23
<PAGE> 78
PRIME COMMUNICATION SITES HOLDING, L.L.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
income tax purposes, several states (including Texas) do not recognize LLCs as
"flow through" entities for tax purposes.
(f) Financial Instruments
The Company's financial instruments include cash, accounts receivable,
accounts payable, and long-term debt. The carrying amount of cash, accounts
receivable and accounts payable approximates fair value because of the short
maturity of these instruments. The fair values of fixed rate long-term debt
(including current installments), representing the amount at which the debt
could be exchanged on the open market, are determined based on the Company's
current incremental borrowing rate for similar types of borrowing arrangements.
The Company does not anticipate any significant refinancing activities which
would settle long-term debt at fair value (see note 2).
(g) Cash and Cash Equivalents
For purposes of the consolidated statement of cash flows, the Company
considers all highly liquid debt instruments with original maturities of three
months or less to be cash equivalents.
(h) Use of Estimates
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(i) Intangible Assets
The Company allocates the fair values of certain non-monetary assets
contributed as discussed in note 3 based on the estimated fair values of the
tangible and intangible identifiable assets acquired.
Intangible assets consists primarily of customer contracts and similar
assets and are being amortized on a straight-line basis over the expected
periods to be benefited, 10 years. The Company assesses the recoverability of
these intangible assets by determining whether the amortization of the balance
over its remaining life can be recovered through undiscounted future operating
cash flows of the acquired assets. The amount of impairment, if any, is measured
based on projected discounted future operating cash flows using a discount rate
reflecting the Company's average cost of funds.
F-24
<PAGE> 79
PRIME COMMUNICATION SITES HOLDING, L.L.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
(2) LONG-TERM DEBT
Long-term debt at December 31, 1995 consisted of:
<TABLE>
<S> <C>
8.0% note payable to Bergh Towers in monthly installments
of $4,182, including interest, with final payment due
June 8, 2013. The note payable is secured by property
purchased.............................................. $ 423,788
Note payable to Stainless Construction Co. in monthly
installments of $4,167, including interest, with final
payment due July 5, 1997. The note payable bears
interest at prime plus 1% (10.0% at December 31, 1995)
and is secured by the tower building and equipment
purchased.............................................. 79,167
Notes payable to First State Bank in monthly installments
of $9,016, including interest, with final payments due
between September 1996 and July 2000. All but one notes
payable bear interest at the bank's index plus 1.5%
(10.5% at December 31, 1995). The fixed rate note
payable is 10%. The notes payable are secured by the
property purchased..................................... 382,247
Notes payable to Sunwest Bank in monthly installments of
$5,163, with final payments due September 1, 2000. The
notes payable bear interest at the bank's index plus
2.5% (11.25% at December 31, 1995). The notes payable
are secured by the property purchased.................. 227,845
8% note payable to Carlyle Group (Members), with full
payment due January 31, 1996........................... 100,000
8% note payable to Prime Communication Sites, Inc. in
quarterly installments of $68,000, with final payment
due January 10, 2010. The note payable is secured by
the towers and equipment purchased..................... 2,370,588
----------
Total long-term debt................................... 3,514,383
Less current installments................................. 730,771
----------
Long-term debt, excluding current...................... $2,783,612
----------
</TABLE>
Aggregate maturities of long-term debt are approximately $731,000,
$577,000, $416,000, $415,000 and $380,000 for the five years ending December 31,
2000, respectively.
The fair value of long-term debt (including current installments) is
determined based on the Company's current incremental borrowing rate for similar
types of borrowing arrangements. At December 31, 1995, the estimated fair value
amounted to $3,431,896.
(3) MEMBERS' CAPITAL
Pursuant to the Limited Liability Company Agreement of Prime Communication
Sites Holding, L.L.C., there are two classes of membership in the Company. Class
A Members (Carlyle-Prime Investors, L.P. and Carlyle-Prime Partners I, L.P.)
receive Class A Units which are denominated to equal the cash capital
contributions made plus the amount of unfunded commitment, divided by 100. Class
A Member, Carlyle-Prime Investors, L.P., continue to be committed to contribute
an additional $37,000,000 to the Company. Class A Members are permitted to elect
three managers to the Management Committee.
F-25
<PAGE> 80
PRIME COMMUNICATION SITES HOLDING, L.L.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
Class B Members (Dale Harkins, Warren Harkins and Bill Kubena) receive
Class B Units which are denominated to equal the capital contributions made
divided by 100. Class B Members are permitted to elect two managers to the
Management Committee.
<TABLE>
<CAPTION>
MEMBERS' CAPITAL CONTRIBUTIONS UNITS CLASS
---------------- ------------- ------- -----
<S> <C> <C> <C>
Carlyle-Prime Investors, L.P.......................... $1,504,558 385,046 A
Carlyle-Prime Partners I, L.P......................... 2,490,000 24,900 A
Dale Harkins.......................................... 908,941 9,089 B
Warren Harkins........................................ 908,941 9,089 B
Bill Kubena........................................... 908,942 9,089 B
---------- -------
$6,721,382 437,213
========== =======
</TABLE>
(4) RELATED PARTY TRANSACTIONS
The Company was partially formed with the contribution of assets from Brad
Communication Services Inc. and B.R.A.D. Communication Services. The partners in
B.R.A.D. Communication Services include Dale Harkins, Warren Harkins and Bill
Kubena, all of whom are Class B members. The Carlyle-Prime Investors, L.P. and
Carlyle-Prime Partners I, L.P. are Class A members and majority owners of the
Company and they contributed cash of $3,994,558. The contribution of net assets
from Brad Communication Services, Inc. and B.R.A.D. Communication Services was
accounted for at fair value using the purchase method. Accordingly, the towers
and other identifiable intangible assets acquired were assigned an estimated
fair value of $1,041,221 and $2,562,749, respectively, and the liabilities
assumed amounted to $877,146. The contribution of these net assets amounting to
$2,726,824 were credited to members' equity.
(5) LEASES
The Company leases land for tower sites and corporate office space under
various noncancelable operating leases. Lease and rental costs charged to
expense during the year ended December 31, 1995 were approximately $275,000.
Future minimum lease payments under noncancelable operating leases are
approximately $335,000, $326,000, $327,000, $326,000 and $328,000 for the five
years ending December 31, 2000, respectively.
(6) SUBSEQUENT EVENTS
The Company entered into an agreement on October 11, 1996 to merge its
assets with another company. The merger is scheduled to close by October 16,
1996.
F-26
<PAGE> 81
================================================================================
No person has been authorized to give any information or to make any
representation other than those contained in this Prospectus and, if given or
made, such information or representation must not be relied upon as having been
authorized. This Prospectus does not constitute an offer to sell or the
solicitation of an offer to buy any securities other than the securities to
which it relates or any offer to sell or the solicitation of an offer to buy
such securities under any circumstances in which such offer or solicitation is
unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of the Company since the date hereof or that the
information contained herein is correct as of any time subsequent to its date.
----------------------------
TABLE OF CONTENTS
----------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary.......................
Risk Factors.............................
Use of Proceeds..........................
Dividend Policy..........................
Dilution.................................
Capitalization...........................
Unaudited Pro Forma Condensed
Consolidated Financial Statements......
Selected Consolidated Historical and Pro
Forma Financial Data...................
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.............................
Business.................................
Management...............................
Certain Transactions.....................
Principal and Selling Stockholders.......
Description of Capital Stock.............
Shares Eligible for Future Sale..........
Underwriting.............................
Legal Matters............................
Experts..................................
Available Information....................
Index to Consolidated Financial
Statements............................. F-1
</TABLE>
----------------------------
Until , 1997 (25 days after the date of this Prospectus), all
dealers effecting transactions in the common stock, whether or not participating
in this distribution, may be required to deliver a Prospectus. This is in
addition to the obligation of dealers to deliver a Prospectus when acting as
Underwriters and with respect to their unsold allotments or subscriptions.
================================================================================
================================================================================
SHARES
[AMERICAN TOWER LOGO]
COMMON STOCK
------------------------
PROSPECTUS
------------------------
MONTGOMERY SECURITIES
ALEX. BROWN & SONS
INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
, 1997
================================================================================
<PAGE> 82
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses of the offering are estimated to be as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $17,424
NASD filing fee............................................. 6,250
NASDAQ listing fee.......................................... *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Blue Sky fees and expenses (including legal fees)........... *
Printing expenses........................................... *
Transfer Agent fees......................................... *
Miscellaneous............................................... *
-------
TOTAL..................................................... $ *
=======
</TABLE>
- ---------------
* To be provided by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Delaware law, a corporation may include provisions in its certificate
of incorporation that will relieve its directors of monetary liability for
breaches of their fiduciary duty to the corporation, except under certain
circumstances, including a breach of the director's duty of loyalty, acts or
omissions of the director not in good faith or which involve intentional
misconduct or a knowing violation of law, the approval of an unlawful payment of
a dividend or an unlawful purchase by the corporation of stock or any
transaction from which the director derived an improper personal benefit. The
Company's Amended and Restated Certificate of Incorporation provides that the
Company's directors are not liable to the Company or its stockholders for
monetary damages for breach of their fiduciary duty, subject to the described
exceptions specified by Delaware law.
Section 145 of the Delaware General Corporation Law grants to the Company
the power to indemnify each officer and director of the Company against
liabilities and expenses incurred by reason of the fact that he is or was an
officer or director of the Company if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Company
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The Bylaws of the Company provide for
indemnification of each officer and director of the Company to the fullest
extent permitted by Delaware law.
Section 145 of the Delaware General Corporation Law also empowers the
Company to purchase and maintain insurance on behalf of any person who is or was
an officer or director of the Company against liability asserted against or
incurred by him in any such capacity, whether or not the Company would have the
power to indemnify such officer or director against such liability under the
provisions of Section 145. The Company intends to provide directors' and
officers' liability insurance coverage.
Reference is made to the Underwriting Agreement filed as Exhibit 1.1 to
this Registration Statement for a description of indemnification arrangements
related to the Offering.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
In October 1994, the Company issued an aggregate of 4,927,500 shares of its
Class A Common Stock to Chase Manhattan Capital Corporation, Equus Equity
Appreciation Fund, L.P., Max Bowen Enterprises, Summit Capital Inc. ("Summit
Capital") and other private investors, including persons affiliated with Summit
Capital for an aggregate of $6.75 million. Summit Capital received a financial
advisory fee of
II-1
<PAGE> 83
$600,000 in connection with this placement and the Bowen-Smith Acquisition. No
other discounts or commissions were paid in connection with the financing. In
October 1994, the Company also issued warrants to purchase 909,726 and 227,395
shares of Common Stock to BOCP II, Limited Liability Company (formerly Banc One
Capital Partners II, L.P.) and Max Bowen Enterprises. These warrants have a
nominal exercise price.
The Company issued 1,642,500 shares of its Series A Preferred Stock,
together with warrants to purchase 1,642,500 shares of Common Stock, in December
1995 for aggregate proceeds of $4.5 million. The offering was made solely to the
Company's existing stockholders.
In October 1996 the Company issued 274,626 and 198,487 shares of Common
Stock to Carlyle-Prime Investors, L.P. and Carlyle-Prime Partners I, L.P.,
respectively, as a portion of the consideration for the Prime Acquisition.
On December 31, 1996, a holder of warrants to purchase 98,550 shares of
Common Stock acquired in connection with the Series A Preferred Stock offering
exercised the warrant and acquired 98,550 shares of Common Stock for cash
consideration of $13.50.
In February 1997, the Company agreed to issue a number of shares of Common
Stock having a value of $1.0 million based upon the initial public offering
price in the Offering to an entity affiliated with The Carlyle Group as a
portion of the consideration for the acquisition of a communications tower. The
shares will be delivered upon consummation of the Offering.
[Describe additional exercises of warrants if any occur prior to filing]
The Company relied on an exemption from registration under Section 4(2) of
the Securities Act in connection with each sale of securities described herein.
The Company obtained representations that each purchaser was an "accredited
investor" as defined under Regulation D of the Securities Act. [On February ,
1997, each outstanding share of Class A Common Stock was reclassified into
shares of Common Stock, and to the extent such reclassification constituted a
sale subject to the Securities Act, was exempt from registration thereunder by
virtue of Section 3(a)(9) of the Securities Act.]
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
<TABLE>
<S> <S> <C>
*1.1 -- Form of Underwriting Agreement
*3.1 -- Form of Amended and Restated Certificate of Incorporation of
the Company
*3.2 -- Form of Amended and Restated Bylaws of the Company
*4.1 -- Form of Specimen Common Stock certificate
4.2 -- Certificate of Designations of the Series A Redeemable
Preferred Stock
*5.1 -- Opinion of Vinson & Elkins L.L.P.
10.1 -- Securityholders Agreement dated October 12, 1994
10.2 -- Contribution and Transfer Agreement among Prime
Communication Sites Holding, L.L.C., ATC Holdings Corp., ATC
Merger Corp. and TCG Towers, L.L.C., Carlyle-Prime
Investors, L.P., Carlyle-Prime Partners I, L.P., Bill
Kubena, Dale Harkins, Warren D. Harkins, and B.R.A.D.
Communications Services, Inc. dated October 11, 1996
10.3 -- Credit Agreement dated as of October 11, 1996 between The
First National Bank of Boston, as Agent, and ATC Tower Corp.
10.4 -- Security Agreement dated as of October 11, 1996 between The
First National Bank of Boston, as Managing Agent, Wells
Fargo Bank (Texas) National Association, as Collateral Agent
and ATC Tower Corp.
10.5 -- Guarantee Agreement dated as of October 11, 1996 between The
First National Bank of Boston, as Managing Agent, American
Tower Corporation, ATC Holdings Corp., ATC Tower Corp.,
Gritz Tower Maintenance Company, Westark Tower,
Incorporated, ATC-Prime I, L.L.C. and ATC-Prime II, L.L.C.
</TABLE>
II-2
<PAGE> 84
10.6 -- Pledge Agreement dated as of October 11, 1996 between The
First National Bank of Boston, as Managing Agent, and ATC
Holdings Corp.
10.7 -- Management Agreement dated as of October 12, 1994 between
Bowen-Smith Corp. and Summit Capital Inc.
10.8 -- Non-Competition Agreement dated as of October 12, 1994
between Max Bowen and American Tower Corporation
10.9 -- Consulting Agreement by and between Max Bowen and
Bowen-Smith Corp. dated as of October 17, 1994
*10.10 -- American Tower Corporation 1995 Stock Option Plan
10.11 -- Lease Agreement between Max Bowen and Bowen-Smith Corp.
10.12 -- Letter Agreement among ATC Tower Corp. and Max Bowen
Enterprises
10.13 -- Agreement among Ultra Towers, L.L.C. and American Tower
Corporation dated as of March 5, 1997
*11.1 -- Computation of Earnings per share
*21.1 -- List of subsidiaries of the Company
23.1 -- Consent of KPMG Peat Marwick LLP
23.2 -- Consent of Vinson & Elkins L.L.P. (contained in Exhibit 5.1
hereto)
24.1 -- Power of Attorney (included on the signature page to this
Registration Statement)
- ---------------
* To be filed by amendment.
Certain instruments defining the rights of holders of long-term debt which
do not exceed 10% of the total assets of the Company have been omitted in
accordance with the rules of the Commission. Copies of such instruments will be
furnished to the Commission upon request.
(b) Consolidated Financial Statement Schedules, Years ended December 31,
1994, 1995 and 1996.
The following Consolidated Financial Statement Schedule is included in
Part II of this Registration Statement:
<TABLE>
<S> <C> <C>
Independent Auditors' Report -- S-1
Schedule I -- Condensed Financial Information of Registrant -- S-2
</TABLE>
All other schedules are omitted because the required information is
inapplicable or the information is presented in the Consolidated Financial
Statements or related notes.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes to provide at the closing
specified in the underwriting agreement certificates in such denominations and
registered in such names as required by the underwriters to permit prompt
delivery to each purchaser.
II-3
<PAGE> 85
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 86
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the day of March, 1997.
American Tower Corporation
By /s/ FRED R. LUMMIS
------------------------------------
Fred R. Lummis
President and Chief Executive
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Fred R. Lummis and Marty L. Jimmerson, or either
of them, his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including, without limitation,
post-effective amendments) to this Registration Statement and any subsequent
registration statement filed by the Registrant pursuant to Rule 462(b) of the
Securities Act of 1933, which relates to this Registration Statement, and to
file the same with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and ratifying and confirming all that said
attorney-in-fact and agent or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ FRED R. LUMMIS Chairman of the Board, and
- ----------------------------------------------------- Chief Executive Officer
Fred R. Lummis
/s/ MARTY L. JIMMERSON Vice President -- Finance
- ----------------------------------------------------- (Principal Financial
Marty L. Jimmerson Officer and Principal
Accounting Officer)
Director
- -----------------------------------------------------
Max Bowen
/s/ ARNIE L. CHAVKIN Director
- -----------------------------------------------------
Arnie L. Chavkin
/s/ MARK D. EIN Director
- -----------------------------------------------------
Mark D. Ein
/s/ GEORGE B. KELLY Director
- -----------------------------------------------------
George B. Kelly
/s/ WILLIAM K. LUBY Director
- -----------------------------------------------------
William K. Luby
</TABLE>
II-5
<PAGE> 87
INDEPENDENT AUDITORS' REPORT
The Board of Directors
American Tower Corporation:
The audits referred to in our report dated January 17, 1997, included the
related financial statement schedule as of December 31, 1996, and for each of
the years in the two-year period ended December 31, 1996, included in the
registration statement. This financial statement schedule is the responsibility
of the Company's management. Our responsibility is to express an opinion on this
financial statement schedule based on our audits. In our opinion, the financial
statement schedule, when considered in relation to the basic consolidated
financial statements, taken as a whole, present fairly in all material respects
the information set forth therein.
KPMG PEAT MARWICK LLP
Houston, Texas
January 17, 1997
S-1
<PAGE> 88
SCHEDULE I
AMERICAN TOWER CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(PARENT COMPANY)
CONDENSED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1995 1996
------- -------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 1,389 $ 5
Intercompany receivable..................................... 2,000 2,165
Investment in subsidiaries, at equity....................... 7,703 13,428
------- -------
Total assets...................................... $11,092 $15,598
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 35 $ --
Redeemable Preferred Stock, $.01 par value, 22,500 shares
authorized, issued, and outstanding....................... 3,633 4,000
Shareholders' equity:
Common stock, $.01 par value, 45,000,000 shares
authorized; 4,927,500 and 5,499,163 shares issued and
outstanding, respectively.............................. 49 55
Additional paid-in capital................................ 7,876 11,997
Accumulated deficit....................................... (501) (454)
------- -------
Total shareholders' equity........................ 7,424 11,598
------- -------
Total liabilities and shareholders' equity........ $11,092 $15,598
======= =======
</TABLE>
S-2
<PAGE> 89
SCHEDULE I
(CONTINUED)
AMERICAN TOWER CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(PARENT COMPANY)
CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------
1995 1996
----- -----
<S> <C> <C>
Total revenues.............................................. $ -- $ --
Operating expenses:
Direct tower costs........................................ -- --
Selling, general, and administrative...................... -- 4
Depreciation and amortization............................. -- --
----- -----
Total operating expenses.......................... -- 4
----- -----
Operating income (loss)................................... -- (4)
Interest income............................................. 5 203
Equity in subsidiaries' losses.............................. (577) (152)
----- -----
Net income (loss)........................................... $(572) $ 47
===== =====
</TABLE>
S-3
<PAGE> 90
SCHEDULE I
(CONTINUED)
AMERICAN TOWER CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(PARENT COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------
1995 1996
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)......................................... $ (572) $ 47
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Decrease in equity in loss of subsidiary............... 577 152
Changes in assets and liabilities:
Accounts payable..................................... -- (35)
------- -------
Net cash provided by operating activities.............. 5 164
------- -------
Cash flows from investing activities:
Capital contributions to subsidiaries..................... (250) (1,750)
------- -------
Net cash used in investing activities.................. (250) (1,750)
------- -------
Cash flows from financing activities:
Increase in intercompany receivable....................... (2,000) (165)
Proceeds from issuance of preferred stock................. 3,633 367
------- -------
Net cash provided by financing activities.............. 1,633 202
------- -------
Net increase (decrease) in cash and cash equivalents... 1,388 (1,384)
Cash and cash equivalents at beginning of year.............. 1 1,389
------- -------
Cash and cash equivalents at end of year.................... $ 1,389 $ 5
======= =======
Supplemental disclosure of noncash financing activity:
Common stock issued for acquisition of towers and related
assets................................................. $ -- $ 4,127
======= =======
</TABLE>
S-4
<PAGE> 91
SCHEDULE I
(CONTINUED)
AMERICAN TOWER CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(PARENT COMPANY)
NOTES TO CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(A) GUARANTEES
American Tower Corporation (ATC) has guaranteed its subsidiary's borrowings
under the October 1996 Credit Facility which totaled $39.8 million at December
31, 1996.
(B) REDEEMABLE PREFERRED STOCK
In December 1995, ATC commenced a private placement offering to its
existing security holders to sell up to 22,500 newly created shares of Series A
Redeemable Preferred Stock (Series A Preferred Stock), $0.01 par value, at $200
per share. Net proceeds to ATC were approximately $4,500,000. As of December 31,
1995, ATC had received $4,133,000 in cash for the offering. The remaining
$367,000 was received in January 1996.
The shares of Series A Preferred Stock were sold together with 10-year
warrants to purchase a total of 1,642,500 shares of Common Stock at a nominal
exercise price. ATC determined the warrants to have an estimated fair value of
$500,000 at the offering date which was recorded as additional paid-in capital
and a reduction of the Series A Preferred Stock.
Each share of Series A Preferred Stock has a liquidation preference of $200
per share. ATC at its option can redeem any or all the outstanding shares of
preferred stock for $200 per share. ATC is required to redeem all such shares at
a price of $200 per share upon the occurrence of (i) a public offering or (ii) a
change of control. The preferred shares have no voting or dividend rights.
(C) DIVIDENDS FROM SUBSIDIARIES
No dividends have been paid to ATC by its subsidiaries as of December 31,
1996. The subsidiaries are restricted from paying dividends to ATC pursuant to
the October 1996 Credit Facility.
(D) AFFILIATED TRANSACTIONS
A subsidiary paid to ATC $5,000 and $203,000 in 1995 and 1996,
respectively, for interest on intercompany receivables.
S-5
<PAGE> 92
INDEX TO EXHIBITS
*1.1 -- Form of Underwriting Agreement
*3.1 -- Form of Amended and Restated Certificate of Incorporation of
the Company
*3.2 -- Form of Amended and Restated Bylaws of the Company
*4.1 -- Form of Specimen Common Stock certificate
4.2 -- Certificate of Designations of the Series A Redeemable
Preferred Stock
*5.1 -- Opinion of Vinson & Elkins L.L.P.
10.1 -- Securityholders Agreement dated October 12, 1994
10.2 -- Contribution and Transfer Agreement among Prime
Communication Sites Holding, L.L.C., ATC Holdings Corp., ATC
Merger Corp. and TCG Towers, L.L.C., Carlyle-Prime
Investors, L.P., Carlyle-Prime Partners I, L.P., Bill
Kubena, Dale Harkins, Warren D. Harkins, and B.R.A.D.
Communications Services, Inc. dated October 11, 1996
10.3 -- Credit Agreement dated as of October 11, 1996 between The
First National Bank of Boston, as Agent, and ATC Tower Corp.
10.4 -- Security Agreement dated as of October 11, 1996 between The
First National Bank of Boston, as Managing Agent, Wells
Fargo Bank (Texas) National Association, as Collateral Agent
and ATC Tower Corp.
10.5 -- Guarantee Agreement dated as of October 11, 1996 between The
First National Bank of Boston, as Managing Agent, American
Tower Corporation, ATC Holdings Corp., ATC Tower Corp.,
Gritz Tower Maintenance Company, Westark Tower,
Incorporated, ATC-Prime I, L.L.C. and ATC-Prime II, L.L.C.
10.6 -- Pledge Agreement dated as of October 11, 1996 between The
First National Bank of Boston, as Managing Agent, and ATC
Holdings Corp.
10.7 -- Management Agreement dated as of October 12, 1994 between
Bowen-Smith Corp. and Summit Capital Inc.
10.8 -- Non-Competition Agreement dated as of October 12, 1994
between Max Bowen and American Tower Corporation
10.9 -- Consulting Agreement by and between Max Bowen and
Bowen-Smith Corp. dated as of October 17, 1994
*10.10 -- American Tower Corporation 1995 Stock Option Plan
10.11 -- Lease Agreement between Max Bowen and Bowen-Smith Corp.
10.12 -- Letter Agreement among ATC Tower Corp. and Max Bowen
Enterprises
10.13 -- Agreement among Ultra Towers, L.L.C. and American Tower
Corporation dated as of March 5, 1997
*11.1 -- Computation of Earnings per share
*21.1 -- List of subsidiaries of the Company
23.1 -- Consent of KPMG Peat Marwick LLP
23.2 -- Consent of Vinson & Elkins L.L.P. (contained in Exhibit 5.1
hereto)
24.1 -- Power of Attorney (included on the signature page to this
Registration Statement)
- ---------------
* To be filed by amendment.
<PAGE> 1
EXHIBIT 4.2
AMERICAN TOWER CORPORATION
CERTIFICATE OF DESIGNATIONS, POWERS AND
RIGHTS OF SERIES A REDEEMABLE PREFERRED STOCK
American Tower Corporation, a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Company" or
"Issuer"), DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors by the
Company's Certificate of Incorporation, as amended, and pursuant to the
provisions of Section 151 of the General Corporation Law of the state of
Delaware, as amended, said Board of Directors, pursuant to a Unanimous Consent
to Action Without a Meeting, dated as of December 13, 1995, unanimously adopted
the following resolutions providing for the creation and issuance of a new
series of shares of the Company's authorized preferred stock designated as
"Series A Redeemable Preferred Stock":
RESOLVED, that the Board of Directors hereby establishes and designates
a new class of the Company's authorized but unissued preferred stock and that
the designation and amount thereof and the relative rights, preferences,
qualifications, limitations and restrictions thereof are as follows:
1. Designation and Amount. The shares of this series of preferred
stock shall be designated as "Series A Redeemable Preferred Stock," par value
$0.01 per share, and the number of shares constituting this series shall be
22,500.
2. Certain Definitions. The following terms shall have the
respective meanings indicated.
Affiliate means, with respect to any Person, any other Person
controlling, controlled by, or under common control with that first
Person. As used in this definition, the term "control" means the
possession, directly or indirectly, of the power to direct, or cause the
direction of, the management and policy of the controlled Person.
Change of Control means such time as a "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended), other than a person or group
comprised solely of the initial holders of the shares of Preferred
Stock, has become the beneficial owner, by way of merger, consolidation,
stock purchase or otherwise, of more than 50% of the voting power of all
classes of voting securities of the Company.
Common Stock means Issuer's Class A and/or Class B Common Stock,
par value $0.01 per share, and any capital stock of Issuer which has the
right to participate in the distribution of earnings and assets of
Issuer without limit as to amount or percentage.
<PAGE> 2
Delaware Act means the General Corporation Law of the State of
Delaware, as amended from time to time.
Junior Stock means the Common Stock and any other capital stock
of the Company other than the Preferred Stock.
Options means rights, options or warrants to subscribe for,
purchase other otherwise acquire Common Stock.
Person means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or a political
subdivision, agency or instrumentality thereof or other entity or
organization of any kind.
Preferred Stock means the Company's Series A Redeemable Preferred
Stock having a par value of $0.01 per share.
Public Offering means an underwritten public offering of Common
Stock of the Corporation pursuant to a registration statement filed
under the Securities Act of 1933, as amended (other than any
registration statement relating to warrants, options or shares of
capital stock granted or to be granted or sold primarily to employees,
directors, or officers of the Corporation, a registration statement
filed pursuant to Rule 145 under the Securities Act of 1933, as amended,
or any successor rule, a registration statement relating to employee
benefit plans or interests therein and any registration statement
covering preferred stock or securities issued in connection with any
debt or preferred stock financing of the Corporation) wherein the
aggregate net proceeds (after deducting all costs, discounts,
commissions and other expenses of the offering) to the Corporation, the
selling stockholders or the Corporation and the selling stockholders are
at least $15,000,000.
Subsidiary means any corporation of which the shares of stock
having a majority of the general voting power in the electing the board
of directors are, at the time as of which any determination is being
made, owned by the Company either directly or indirectly through a
Subsidiary.
3. Dividends. The holders of the Preferred Stock shall not be
entitled to any dividends as a result of owning the Preferred Stock.
4. Redemption.
4.1 Optional Redemption. The Company, at its option and
subject to the conditions hereinafter stated, may, at any time and from time to
time, redeem all or any part of the outstanding Preferred Stock at a redemption
price payable in cash equal to $200 per share.
4.2 Mandatory Redemption. Upon the occurrence of (i) the
consummation of a Public Offering or (ii) a Change of Control, the Company
will, immediately prior to or simultaneous
-2-
<PAGE> 3
with the consummation of either of the foregoing events, redeem all of the
shares of Preferred Stock then outstanding at a redemption price payable in
cash equal to $200 per share.
4.3 Redemption Procedures. The right of the Company to make
any redemption pursuant to Section 4.1 or Section 4.2 shall be subject to
satisfaction, at or prior to such redemption, of the following conditions.
(a) Any redemption effected pursuant to Section 4.1 shall be
made on a pro rata basis among the holders of the Preferred Stock in
proportion to the shares of Preferred Stock then held by them.
(b) Any redemption pursuant to Section 4.1 or Section 4.2
shall be effected by written or printed notice by certified mail,
postage prepaid, return receipt requested, to the holders of record of
the Preferred Stock being redeemed, such notice to be addressed to each
holder at the address shown in the Company's records which notice shall
(i) specify the date of redemption, (ii) the number of shares of the
holder to be redeemed (which shall be all shares upon a redemption under
Section 4.2), (iii) the place at which holders of the Preferred Stock
shall surrender their certificate or certificates and obtain payment of
the redemption price and (iv) such other information, if any, as the
Company's Board of Directors may deem appropriate. Such notice shall be
given no more than 60 but no less than 5 days prior to the date fixed
for redemption.
(c) On or after the date of redemption as specified in the
notice specified in Section 4.3(b), each holder shall surrender to the
Company, at the place specified in such notice, its certificate or
certificates (or comply with applicable lost certificate provisions) for
the Preferred Stock to be redeemed as stated in the notice. Provided
such notice is duly given and provided that on the redemption date
specified there shall be a source of funds legally available for such
redemption and the redemption price necessary for the redemption shall
have been paid, then all rights with respect to such shares shall, after
the specified redemption date, terminate, whether or not said
certificates have been surrendered, excepting only in the latter
instance the rights of the holder to receive the redemption price
thereof, without interest, upon such surrender (or compliance with lost
certificate provisions).
4.4 No Reissue of Shares. Any shares of the Preferred Stock
redeemed, purchased, or otherwise acquired by the Company shall be deemed
retired and shall be canceled and may not under any circumstances thereafter be
issued or otherwise disposed of by the company.
5. Voting Rights. Except as otherwise from time to time required by
law, the holders of Preferred Stock will have no voting rights with respect to
the Preferred Stock, and their consent will not be required for taking any
corporate action.
-3-
<PAGE> 4
6. Liquidation Preference.
6.1 General.
(a) Upon any liquidation, dissolution, or winding up of the
affairs of the Company, whether voluntary or involuntary, after payment
or provision for payment of the debts and liabilities of the Company,
the holders of the Preferred Stock shall be entitled to receive, out of
the remaining assets of the Company, the sum of $200 per share of
Preferred Stock, before any distribution shall be made to the holders of
any shares of Junior Stock. If upon any liquidation, dissolution or
winding up of the affairs of the Company, whether voluntary or
involuntary, the assets of the Company available for distribution to
shareholders shall be insufficient to permit the payment to the holders
of the Preferred Stock of the aforesaid preferential amount, then the
entire assets of the Company shall be distributed ratably among the
holders of the Preferred Stock then outstanding according to the number
of shares held by each.
(b) After payment to the holders of the Preferred Stock of the
amounts set forth in Section 6.1(a) above, the entire remaining assets
and funds of the Company legally available for distribution, if any,
shall be distributed among the holders of shares of Junior Stock
according to the relative rights and preferences.
6.2 Fair Value. The fair value of the assets or property to
be distributed to the holders of the Preferred Stock in the event of a
liquidation, dissolution or winding up of the Company pursuant to Section 6.1
shall be determined by the Board of Directors of the Company in good faith.
6.3 No Restriction on Surplus. No provision of this Section 6
shall in any manner, prior to any liquidation, dissolution, or winding up of
the affairs of the Company, whether voluntary or otherwise, create or be deemed
to create any restrictions upon the surplus of the Company or prohibit the
payment of dividends on the capital stock of the Company out of the funds of
the Company legally available therefor, nor shall any such restrictions or
prohibition be in any manner inferred from the provisions of this Section 6.
7. Covenants of the Company. So long as any share of Preferred
Stock remains outstanding, the Company shall not, without first obtaining the
affirmative vote or written consent of the holders of more than 50% of the
outstanding shares of Preferred Stock:
7.1 Amend or repeal any provision of, or add any provision to,
the Company's Certificate of Incorporation or Bylaws if such action would alter
or change the preferences, rights, privileges or powers of, or the restrictions
provided for the benefit of, the Preferred Stock, or increase or decrease the
number of shares of the Preferred Stock authorized hereby;
7.2 Authorize or issue shares of any class of stock having any
preference or priority as to assets superior to or on a parity with any
preference or priority of the Preferred Stock, or authorize or issue shares of
stock of any class or any bonds, debentures, notes or other obligations
-4-
<PAGE> 5
convertible into or exchangeable for, or having option rights to purchase, any
shares of any other class or series of stock of the Company having any
preference or priority as to assets superior or on a parity with any preference
or priority of the Preferred Stock;
7.3 Reclassify any Junior Stock into shares having any
preference or priority as to assets superior to or on a parity with any
preference or priority of the Preferred Stock.
IN WITNESS WHEREOF, the Company has caused this Certificate to be signed
by Fred R. Lummis, its President, and attested by Marty L. Jimmerson, its
Assistant Secretary, this 15th day of December, 1995.
AMERICAN TOWER CORPORATION
By: /s/ FRED R. LUMMIS
-------------------------------------
Fred R. Lummis, President
ATTEST:
/s/ MARTY L. JIMMERSON
- -----------------------------------
Marty L. Jimmerson, Assistant Secretary
-5-
<PAGE> 1
EXHIBIT 10.1
SECURITYHOLDERS AGREEMENT
This Securityholders Agreement ("Agreement"), dated as of October 12,
1994, is among American Tower Corporation, a Delaware corporation (the
"Corporation"), the persons and entities whose signatures appear on the
signature pages hereof (referred to herein individually as a "Securityholder"
and collectively as the "Securityholders") and, where applicable, the
respective spouses of the Securityholders.
1. Introduction. The Corporation and the Securityholders believe
that it is in the best interests of each, to restrict transfers of the Common
Stock and Warrants and to agree upon certain voting matters with respect
thereto with a view to, among other things, (i) minimizing the likelihood of
discord and deadlocks; (ii) maximizing the likelihood that the ownership of
Common Stock and Warrants will remain with those who are active in the
Corporation's affairs, thus enhancing motivation and incentive of such owners;
(iii) avoiding defaults in or accelerations of payment obligations under
material agreements to which the Corporation is or may be a party; and (iv)
otherwise assuring the orderly continuity of management, the non-attainment of
any of which would result in adverse consequences to the Corporation.
Accordingly, in consideration of the mutual promises contained herein, and
subject to the terms and conditions herein set forth, the parties have entered
into this Agreement.
2. Certain Definitions. As used in this Agreement:
2.1 The term "Acquisition Proposal" means a bona fide written
proposal for the acquisition of Common Stock or Warrants by the person
or entity making such proposal.
2.2 The term "Affiliate" of a Securityholder shall mean (i) an
entity or person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, such Securityholder or (ii) an entity or person that owns
beneficially at least 5% of the equity of such Securityholder. As used
in this definition, the term "control", including the correlative terms
"controlling", "controlled by" and "under common control with" shall
mean possession, directly or indirectly, of the power to direct or cause
the direction of management or policies (whether through ownership of
securities or any partnership or other ownership interest, by contract
or otherwise) of a person, corporation or other entity. If the
Securityholder is an individual person, then the term "Affiliate" shall
also mean, solely for purposes of Section 5, (a) any member of the
immediate family of an individual Securityholder, including parents,
siblings, spouse and children (including those by adoption); the
parents, siblings, spouse or children (including those by adoption) of
such immediate family member; and in any such case any trust whose
primary beneficiary is such individual Securityholder or one or more
members of such immediate family and/or such Securityholder's lineal
descendants, and (b) the legal representative or guardian of such
individual Securityholder or of any such immediate family member in the
event such individual Securityholder or any such immediate family member
becomes mentally incompetent.
<PAGE> 2
2.3 The term "BOCP" means Banc One Capital Partners II,
Limited Partnership, a Delaware limited partnership.
2.4 The term "Board" means the Board of Directors of the
Corporation and any duly authorized committee thereof. All
determinations made in good faith by the Board required pursuant to the
terms of this Agreement to be made by the Board shall be binding and
conclusive.
2.5 The term "Bowen" means Max Bowen Enterprises, a Texas
general partnership.
2.6 The term "Bowen Sub Debt" shall mean the indebtedness of the
Corporation to Bowen evidenced by that certain promissory note of even
date herewith in the original principal amount of $3 million.
2.7 The term "Change of Control Proposal" shall have the
meaning given such term in Section mean 13.2.
2.8 The term "Chase" means Chase Manhattan Capital
Corporation, a subsidiary of The Chase Manhattan Bank, N.A.
2.9 The term "Common Stock" means (a) all shares of common
stock of the Corporation owned by each of the Securityholders on the
date hereof, (b) all shares of common stock hereafter issued by the
Corporation to or acquired by any Securityholder, whether in connection
with a purchase, issuance, grant, stock split, stock dividend,
reorganization, warrant, option, convertible security, right to acquire
or otherwise, and (c) all securities of the Corporation or any other
corporation or entity which any Securityholder acquires in respect of
the shares described in clause (a) or (b) above in connection with any
exchange, merger, recapitalization, consolidation, reorganization or
other transaction to which the Corporation is a party. All references
herein to Common Stock owned by a Securityholder include the community
interest or similar marital property interest, if any, of the spouse of
such Securityholder in such Common Stock. The term "common stock" as
used in clauses (a) and (b) above shall mean any stock of any class of
the Corporation which has no preference in respect of dividends or of
amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation and which is
not subject to redemption by the Corporation (whether or not shares of
such class have voting rights).
2.10 The term "Disposition" means, with respect to Common Stock
or Warrants, any direct or indirect transfer, assignment, sale, gift,
pledge, hypothecation or other encumbrance, or any other disposition,
thereof (or any interest therein or right thereto), of all or part of
the voting power associated therewith (or any interest therein)
whatsoever, or any other transfer of beneficial ownership thereof
whether voluntary or involuntary, including, without limitation (a) as a
part of any liquidation of the Securityholder's assets
<PAGE> 3
or (b) as a part of any reorganization of a Securityholder pursuant to
the United States or other bankruptcy law or other similar debtor relief
laws; provided, that the participation by Securityholders in a proposed
underwritten public offering of common stock of the Corporation
(including the entry into an underwriting agreement, a custody agreement
and other agreements ordinarily executed by selling stockholders in
connection therewith), which public offering, if consummated, would
constitute an Initial Public Offering (as defined below) or pursuant to
the exercise of registration rights granted under Section 14, and the
consummation thereof, shall not constitute a Disposition, it being
understood that, if such proposed underwritten public offering is
terminated or abandoned prior to consummation or is not consummated in a
manner which constitutes an Initial Public Offering, the Common Stock
and the Warrants of such participating Securityholders shall remain
subject to this Agreement and no Disposition thereof (whether pursuant
to agreements entered into in connection with such proposed underwritten
public offering or otherwise) shall be permitted hereunder without
compliance with the terms of this Agreement.
2.11 The term "Exercise Price" shall mean, with respect to each
Warrant, the exercise price for such Warrant as adjusted from time to
time pursuant to the terms of the relevant Warrant Purchase Agreement
pursuant to which such Warrant was purchased.
2.12 The term "Initial Public Offering" shall mean the
consummation of an underwritten public offering of common stock of the
Corporation pursuant to a registration statement filed under the
Securities Act after the date hereof (other than any registration
statement relating to warrants, options or shares of capital stock
granted or to be granted or sold primarily to employees, directors, or
officers of the Corporation, a registration statement filed pursuant to
Rule 145 under the Securities Act or any successor rule, a registration
statement relating to employee benefit plans or interests therein and
any registration statement covering preferred stock or securities issued
in connection with any debt or preferred stock financing of the
Corporation) wherein the aggregate net proceeds (after deducting all
costs, discounts, commissions and other expenses of the offering) to the
Corporation, the selling stockholders or the Corporation and the selling
stockholders are at least $20 million.
2.13 The term "Offer" shall mean a Section 3.1 Offer, a Section
3.2 Offer, a Section 3.3 Offer or a Section 3.4 Offer, as applicable.
2.14 The term "Offerees" shall mean the Corporation and (i)
with respect to a Section 3.1 Offer, all Securityholders other than the
Section 3.1 Offeror, (ii) with respect to a Section 3.2 Offer, all
Securityholders other than the Divorced Securityholder, (iii) with
respect to a Section 3.3 Offer, all Securityholders other than the
Surviving Securityholder and (iv) with respect to a Section 3.4 Offer,
all Securityholders other than the Securityholder affected by the events
described in Section 3.4.
-3-
<PAGE> 4
2.15 The term "Purchase Price" shall mean, except with respect
to an Acquisition Proposal or Change of Control Proposal, (i) with
respect to each share of Common Stock, shall mean the per share fair
market value of the outstanding common stock of the Corporation as
determined in good faith by the Board, (ii) with respect to each
Warrant, the Purchase Price for each share of Common Stock covered by
such Warrant less the Exercise Price for each share of Common Stock
issuable upon the exercise of such Warrant. If the transferor of the
Common Stock or the Warrant shall disagree with the Purchase Price as so
determined by the Board pursuant to clause (i) preceding, such
transferor may give written notice of such disagreement to the
Corporation and the Corporation shall promptly cause an independent
third party appraiser (who shall be satisfactory to the Corporation and
such transferor) to determine the per share value of the outstanding
common stock as of the most recent practicable date prior to the Offer.
The determination by such appraiser shall be deemed the Purchase Price
for such transaction and shall be final and binding on the Corporation
and such transferor. All fees and expenses of such appraisers shall be
borne equally by the transferor and the Corporation unless (x) the
appraiser's determination exceeds the Board's determination by more than
10% in which case the Corporation shall bear 75% and the transferor
shall bear 25% of such fees or (y) the appraiser's determination is
lower than the Board's determination by more than 10% in which case the
transferor shall bear 75% and the Corporation shall bear 25% of such
fees. Neither the Corporation nor any officer, director, employee or
agent thereof shall have any liability with respect to valuation of
shares of Common Stock or Warrants bought or sold at the Purchase Price,
as determined pursuant to this Section, even though the Purchase Price
as so determined may be more or less than actual fair market value, and
shall be fully protected in relying in good faith upon the records of
the Corporation and upon such information, opinions, reports or
statements presented to the Corporation by any person as to matters
which the Corporation or such director, officer, employee or agent
reasonably believes are within such other person's professional or
expert competence and who has been selected with reasonable care by or
on behalf of the Corporation. As used in this Section, the term "per
share fair market value" for purposes of clause (i) above shall mean (a)
the value of the common equity of the Corporation, taken as a whole,
based on the Corporation continuing as a going concern divided by (b)
the number of shares of common equity of the Corporation outstanding on
the date of the Offer. For purposes of determining the "per share fair
market value" for purposes of clause (i) above, the number of shares of
Common Stock outstanding at the time of determination shall be deemed to
include the shares issuable upon the exercise of any outstanding
Warrants. The per share fair market value shall not be discounted for
minority shareholder interests or for reasons of illiquidity. The term
"Purchase Price" shall mean, with respect to an Acquisition Proposal or
Change of Control Proposal, the per share consideration (whether cash,
stock or other property) and other payment and credit terms offered
pursuant to the terms of such proposal or the reasonably equivalent
value, as determined by the Board in good faith.
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2.16 The term "Required Voting Percentage" shall mean the
holders of at least 66-2/3% of the then outstanding Common Stock and
Common Stock issuable upon exercise of the Warrants.
2.17 The term "Section 3.1 Offer" shall have the meaning given
such term in Section 3.1.
2.18 The term "Section 3.2 Offer" shall have the meaning given
such term in Section 3.2.
2.19 The term "Section 3.3 Offer" shall have the meaning given
such term in Section 3.3.
2.20 The term "Section 3.4 Offer" shall have the meaning given
such term in Section 3.4.
2.21 The term "Section 3.1 Offeror" shall have the meaning
given such term in Section 3.1.
2.22 The term "Securities Act" shall mean the Securities Act of
1933, as amended, and the rules and regulations thereunder.
2.23 The term "Securities Subject to the Offer" shall mean (a)
with respect to a Section 3.1 Offer, all shares of Common Stock and/or
Warrants subject to such Acquisition Proposal, and no others, (b) with
respect to a Section 3.2 Offer, all shares of Common Stock and/or
Warrants transferred to or retained by or vested in the Divorced
Securityholder's Spouse (as defined in Section 3.2) and not elected to
be purchased by the Divorced Securityholder (as defined in Section 3.2)
within the time limits specified therein, and no others, (c) with
respect to a Section 3.3 Offer, all shares of Common Stock and/or
Warrants vesting in or transferable to any heir or legatee of the
deceased spouse other than the Surviving Securityholder (as defined in
Section 3.3) and not elected to be purchased by the Surviving
Securityholder within the time limits specified therein, and no others
and (d) with respect to a Section 3.4 Offer, all shares of Common Stock
and Warrants owned by the Securityholder affected by the events
described in Section 3.4, and no others.
2.24 The term "Stewart" shall mean Richard H. Stewart, an
individual residing in Roswell, Georgia.
2.25 The term "Warrant" shall mean (i) all warrants or options
of BOCP to acquire common stock of the Corporation pursuant to the terms
of the Warrant Purchase Agreement of even date herewith between BOCP and
the Corporation and (ii) all warrants or options of Bowen to acquire
common stock of the Corporation pursuant to the terms of the Warrant
Purchase Agreement of even date herewith between Bowen and the
Corporation.
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3. General Rule. No Securityholder shall make any Disposition,
directly or indirectly, through an Affiliate or otherwise (regardless of the
manner in which such Securityholder initially acquired Common Stock or
Warrants), without compliance with all applicable provisions of this Agreement
including, without limitation, those set forth in this Section 3, Section 4 and
Section 6.
3.1 Acquisition Proposal. In the event any Securityholder
desires, and is permitted under Section 7, to make a Disposition
involving any Common Stock or Warrants, such Disposition may only be
made if an Acquisition Proposal is received by the Securityholder with
respect thereto, and then only in compliance with this Agreement. Upon
receipt of an Acquisition Proposal (other than a Change of Control
Proposal accepted by the Required Voting Percentage in accordance with
Section 13.2) which such Securityholder is permitted hereunder to accept
and desires to accept, the Securityholder desiring to accept the
Acquisition Proposal (the "Section 3.1 Offeror") shall offer (the
"Section 3.1 Offer") by written notice to the Corporation, to sell the
Securities Subject to the Offer to the Offerees for the Purchase Price.
An offer under this Section 3.1 shall (i) be irrevocable for so long as
the Offerees have the right to purchase any Securities Subject to the
Offer, (ii) be sent by the Section 3.1 Offeror to the Corporation, (iii)
state the consideration for and the number of Securities Subject to the
Offer, and (iv) contain a description of and a copy of the Acquisition
Proposal. In addition, the Section 3.1 Offeror shall provide to the
Corporation all other information with respect to the Acquisition
Proposal and the proposed transferee reasonably requested by the
Corporation in order to enable it to evaluate the Acquisition Proposal
and verify the bona fide nature thereof. The Corporation shall promptly
(but in no event more than 5 days after receipt thereof) deliver to each
of the other Offerees copies of the notice conveying the Section 3.1
Offer and any additional information received by the Corporation with
respect to the Acquisition Proposal and the proposed transferee. The
date of such Section 3.1 Offer shall be deemed to be the date such
written notice satisfying the provisions of this Section 3.1 is
delivered to the Corporation.
3.2 Divorce of Securityholder. If the marital relationship of
a Securityholder is terminated by divorce, and pursuant to such divorce
or any property settlement in connection with such divorce, Common Stock
or Warrants (or any interest therein) previously registered in the name
of such Securityholder (the "Divorced Securityholder") is transferred
to, or a community property interest or similar marital property
interest is retained by or vested in, the spouse of the Divorced
Securityholder (the "Divorced Securityholder's Spouse"), the Divorced
Securityholder shall promptly notify the Corporation of such event. The
Divorced Securityholder shall have the option to purchase all of the
Divorced Securityholder's Common Stock and Warrants (and all interests
therein) which has been transferred to or which is retained by or vested
in the Divorced Securityholder's Spouse by virtue of the divorce decree,
property settlement, or by operation of the community property or
similar marital property laws for the Purchase Price, and the Divorced
Securityholder's Spouse shall be obligated to sell such Common Stock and
Warrants (and all interests therein) to the Divorced Securityholder for
the
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<PAGE> 7
Purchase Price. Such option must be exercised, and the purchase
consummated, within thirty (30) days after the Common Stock or Warrants
are transferred to or allowed to be retained by or vested in the
Divorced Securityholder's Spouse. The option shall be exercised by the
giving of written notice of exercise to the Divorced Securityholder's
Spouse. The Divorced Securityholder shall, within five days after the
expiration of such 30 day period, deliver written notice to the
Corporation as to whether the Divorced Securityholder has purchased all
of the Common Stock or Warrants (and all interests therein) so
transferred to or otherwise vested in or retained by the Divorced
Securityholder's Spouse. In the event such written notice states that
the Divorced Securityholder has not purchased all such Common Stock or
Warrants (and all interests therein), or no such notice is delivered to
the Corporation within the time required, the Divorced Securityholder's
Spouse shall be deemed to have made an irrevocable offer (the "Section
3.2 Offer") to sell for the Purchase Price all of such Common Stock and
Warrants (and all interests therein) to the Offerees as of (i) the date
of receipt of such notice by the Corporation if delivered within the
time required or (ii) if such notice is not delivered within the time
required, the date of the receipt by the Corporation of evidence
satisfactory to it that all such Common Stock and Warrants (and all
interests therein) was not purchased by the Divorced Securityholder
within such 30 day period. The Corporation shall promptly (but in no
event more than 5 days after the date referred to in the preceding
sentence) notify the other Offerees of any Section 3.2 Offer.
3.3 Death of Spouse. If the spouse of a Securityholder dies,
and all or any portion of the Common Stock or Warrants registered in the
name of such Securityholder (the "Surviving Securityholder") vests in or
is transferable to any heir or legatee other than the Surviving
Securityholder, the Surviving Securityholder shall promptly notify the
Corporation of such event. The Surviving Securityholder shall have the
option to purchase all of the Common Stock and Warrants vesting in or
transferable to such heir or legatee for the Purchase Price, and the
estate of the deceased spouse or such heir or legatee, as applicable,
shall be obligated to sell such Common Stock and Warrants to the
Surviving Securityholder for the Purchase Price. Such option must be
exercised by the Surviving Securityholder, and the purchase consummated,
within thirty (30) days after the last to occur of (i) the entry of an
order of a probate or similar court (having jurisdiction over the estate
of the deceased spouse) (a) admitting to probate the will of the
deceased spouse, or (b) determining the heirs of the deceased spouse if
the deceased spouse is determined to have died intestate, or (ii) the
appointment of the executor, administrator or legal representative of
the estate of the deceased spouse. The option shall be exercised by the
giving of written notice of exercise to the executor, administrator or
legal representative of the deceased spouse's estate or such heir or
legatee, as applicable. The Surviving Securityholder shall, within five
days after the expiration of such 30 day period, deliver written notice
to the Corporation as to whether the Surviving Securityholder has
purchased all of the Common Stock and Warrants vesting in or
transferable to any such heir or legatee. In the event such written
notice states that the Surviving Securityholder has not purchased all
such Common Stock or Warrants, or no such notice is delivered to the
Corporation within the time required, the estate and all such heirs and
legatees shall be
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<PAGE> 8
deemed to have made an irrevocable offer (the "Section 3.3 Offer") to
sell for the Purchase Price all of such Common Stock or Warrants to the
Offerees as of (A) the date of the receipt of such notice by the
Corporation, if delivered within the time required, or (B) if such
notice is not given within the time required, the date of the receipt by
the Corporation of evidence satisfactory to it that all such Common
Stock or Warrants were not purchased by the Surviving Securityholder
within such 30 day period. The Corporation shall promptly (but in no
event more than 5 days after the date referred to in the preceding
sentence) notify the other Offerees of any Section 3.3 Offer.
3.4 Bankruptcy. If any of the following occur:
(i) any Securityholder or the spouse thereof (a) is voluntarily
adjudicated bankrupt or insolvent, (b) consents to or does not contest
the appointment of a receiver or trustee for himself, herself or itself
or for all or any part of his, her or its property, (c) files a petition
seeking relief under the bankruptcy, rearrangement, reorganization or
other debtor relief laws of the United States or any state or any other
competent jurisdiction, (d) makes a general assignment for the benefit
of his, her or its creditors, or (e) becomes insolvent, or
(ii) a petition is filed against a Securityholder or such
Securityholder's spouse seeking relief under the bankruptcy,
rearrangement, reorganization or other debtor relief laws of the United
States or any state or other competent jurisdiction, or a court of
competent jurisdiction enters an order, judgment or decree appointing a
receiver or trustee for a Securityholder or such Securityholder's
spouse, or for any part of his, her or its property, and such petition,
order, judgment or decree is not discharged or stayed within a period of
60 days after its entry,
then, any such event described in (i) or (ii) above shall be deemed an
irrevocable offer to sell the Securities Subject to the Offer for the
Purchase Price to the Offerees (the "Section 3.4 Offer"), and such
Securityholder or such Securityholder's spouse, as applicable, shall
promptly notify the Corporation of such event and the date of such
Section 3.4 Offer shall be the date such Securityholder or such
Securityholder's spouse, as applicable, so notifies the Corporation (or,
if no such notice is delivered to the Corporation by the Securityholder
or such Securityholder's spouse, as applicable, the Section 3.4 Offer
will be deemed to be made on the date of the Corporation's receipt of
evidence, satisfactory to it, of the occurrence of any of the foregoing
events). The Corporation shall promptly (but in no event more than 5
days after the date of the Section 3.4 Offer) notify the other Offerees
of any offer made hereunder. Notwithstanding the preceding provisions
of this Section 3.4, if the Section 3.4 Offer first arises because of
the above described events occurring to a Securityholder's spouse (the
"Bankrupt Spouse"), such Securityholder shall have the option (and such
option shall be prior to the option in favor of the Offerees) to
purchase all of the Bankrupt Spouse's Common Stock and Warrants (and all
interests therein) which has been transferred to or which is retained by
or invested in the Bankrupt Spouse or any receiver, trustee or estate
formed to administer such Bankrupt Spouse's properties and assets. Such
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Securityholder may exercise such option by giving written notice of
exercise to the Bankrupt Spouse or such spouse's receiver, trustee,
estate or other administrator, as applicable, with a copy to the
Corporation. Such Securityholder may exercise the option granted hereby
within the 30-day period following the date such Securityholder becomes
aware of the occurrence of the events set forth in Section 3.4(i) or
(ii), as applicable. In the event such written notice states that the
Securityholder has not purchased all such Common Stock or Warrants (and
all interests therein), or no such notice is delivered to the
Corporation within the time required, the Bankrupt Spouse shall be
deemed to have made an irrevocable offer to sell to the Offerees for the
Purchase Price all of such Common Stock and Warrants (and all interests
therein) in accordance with this Section 3.4 (but disregarding the
option of the Securityholder).
4. Procedures: Price.
4.1 Corporation. The Corporation shall have the right, for
thirty (30) days following the date of an Offer, to accept the Offer as
to all or any Securities Subject to the Offer. If the Corporation shall
not have sufficient surplus to permit it lawfully to purchase the
Securities Subject to the Offer which the Corporation has accepted in
whole or in part, the Securityholders shall, promptly upon the request
of the Corporation, take such action to vote their respective shares to
reduce the stated capital of the Corporation to the extent permitted by
law or to authorize such other steps as may be appropriate or necessary
in order to enable the Corporation, if possible, lawfully to purchase
such Securities Subject to the Offer.
4.2 Offerees. If the Corporation does not accept an Offer
with respect to all Securities Subject to the Offer within the 30 day
period specified in Section 4.1 above, the Corporation shall notify the
other Offerees of such fact and furnish each of the other Offerees with
all material information in the Corporation's possession (including a
copy of any Acquisition Proposal, if applicable). Each of the other
Offerees shall have the right, for 30 days following the later of (x)
the expiration of the 30-day period described in Section 4.1 or (y) the
date such Offeree receives the notice from the Corporation described
above, to accept the Offer with respect to (i) a number of shares
unanimously agreed upon by all Securityholders, or (ii) in the absence
of any such agreement, a fraction of the Securities Subject to the Offer
equal to the number of shares of Common Stock held by such Offeree
electing to purchase shares pursuant to the Offer divided by the number
of shares of Common Stock held by all Securityholders electing to
purchase shares pursuant to the Offer. For purposes of determining each
Securityholder's proportionate rights under Section 4.2(ii), the number
of shares of Common Stock held by any Securityholder shall be deemed to
include the number of shares of Common Stock to which such
Securityholder would be entitled upon the exercise thereby of any
Warrants owned by such Securityholder. In the event less than all of the
Securities Subject to the Offer are purchased according to the
allocation set forth above in this Section 4.2, such allocation
methodology shall be repeated as many times as is necessary until all
Securities Subject to the Offer have been allocated.
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4.3 Certain Effects of Offers. If the Offerees do not accept
an Offer for all of the Securities Subject to the Offer, and such Offer
is a Section 3.1 Offer, the Section 3.1 Offeror shall be permitted at
any time or times within, but not after, 45 days after the expiration of
all rights to accept such Offer, to make a Disposition of all or a part
of the Securities Subject to the Offer that were not accepted by the
Offerees; provided, however, that no such Disposition shall be made at a
lower price or on more favorable terms or to any person other than
specified in the Acquisition Proposal. Any Securities Subject to the
Offer remaining unsold after application of the procedures set forth
above and after expiration of the time periods set forth above shall
again be subject to the right of first refusal granted in Section 3.1.
4.4 Acceptance: Closing. Offerees who accept an Offer as to
all or any portion of the Securities Subject to the Offer shall evidence
their acceptance by delivering to the transferor and the Corporation a
written notice of intent to purchase such Securities Subject to the
Offer or portion thereof (the "Acceptance Notice"). The Corporation
shall furnish all of the Offerees with a list of those Securityholders
that have delivered an Acceptance Notice. The closing of the
acquisitions of Securities Subject to the Offer by Offerees shall be
consummated within thirty (30) days following the Corporation's receipt
of the last Acceptance Notice delivered in accordance with this
Agreement. In the case of all acquisitions of Securities Subject to the
Offer by Offerees, such acquisitions shall be consummated at a closing
held at the principal offices of the Corporation (unless otherwise
mutually agreed), at which time the Purchase Price (in the form of a
cashier's check or wire transfer) shall be delivered to the transferor
of the Common Stock or Warrants or such transferor's representative, and
the transferor or the transferor's representative shall deliver to the
Offeree(s) purchasing such securities certificates representing all of
the securities so purchased, duly endorsed for transfer or accompanied
by duly executed stock powers, and evidence of good title to the
Securities Subject to the Offer and the absence of liens, encumbrances
and adverse claims with respect thereto and such other matters as are
necessary for the proper transfer of the Securities Subject to the Offer
to the acquiring Offeree(s) on the books of the Corporation.
5. Permitted Dispositions. The following Dispositions shall be
permitted without compliance with the provisions of Sections 3, 4, or 12 (but
the other provisions of this Agreement, including Sections 6 and 7, shall apply
to each of the following Dispositions):
5.1 by such Securityholder to any Affiliate of such
Securityholder, or from an Affiliate of any Securityholder to such
Securityholder;
5.2 upon the death of any Securityholder, to the estate,
heirs, beneficiaries or legatees of such Securityholder;
5.3 by any Securityholder to a bank or other financial
institution for purposes of securing a loan to such Securityholder to
purchase Common Stock and the transfer of title to any such bank or
financial institution required in connection therewith; provided,
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that such bank or financial institution shall have first delivered to
the Corporation its written agreement, in form and substance
satisfactory to the Corporation, that upon any foreclosure or any
transaction in lieu of foreclosure with respect to such Common Stock
such bank or financial institution shall assume and be bound by all the
terms of this Agreement;
5.4 by any Securityholder during his lifetime to (a) a
guardian of the estate of such Securityholder, (b) an inter-vivos trust
for the benefit of such Securityholder or whose primary beneficiary is
one or more of such Securityholder's lineal descendants (including
lineal descendants by adoption), (c) the spouse of such Securityholder
during marriage and not incident to divorce, or (d) such
Securityholder's lineal descendants (including lineal descendants by
adoption); and
5.5 to a Securityholder by (a) a guardian of the estate of
such Securityholder, (b) an inter-vivos trust for the benefit of such
Securityholder or whose primary beneficiary is one or more of such
Securityholder's lineal descendants (including lineal descendants by
adoption), (c) the spouse of such Securityholder during marriage and not
incident to divorce, or (d) such Securityholder's lineal descendants
(including lineal descendants by adoption).
6. Conditions; Additional Parties.
6.1 Conditions To Permitted Transfers. As a condition to the
Corporation's obligation to effect a transfer permitted under any
Section of this Agreement, any transferee of Common Stock or Warrants
(except as specifically provided in Section 6.2) shall be required to
become a party to this Agreement, and shall have all the rights and
obligations of a Securityholder hereunder, by executing an Adoption
Agreement in the form of Exhibit "A" attached hereto or in such other
form that is satisfactory to the Corporation.
6.2 Additional Parties. Any person who acquires common stock
of the Corporation in connection with his employment by the Corporation
or any of its subsidiaries and is approved by the Corporation, and any
other person or entity which acquires any shares of common stock of the
Corporation subsequent to the execution of this Agreement, unless waived
by the Company, shall become a party to this Agreement, with all the
rights and obligations of a Securityholder hereunder, upon executing
(together with such person's spouse, if applicable) an Adoption
Agreement in the form of Exhibit "A" attached hereto or in such other
form that is satisfactory to the Corporation.
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7. Standstill Agreement; Securities Matters.
7.1 Standstill Agreement. At any time that the Corporation is
engaged in an underwritten public offering of its securities, each
Securityholder agrees that he will make no Disposition of Common Stock
or Warrants on any securities exchange or in the over-the-counter or any
other public trading market for whatever period of time the Corporation
(upon the recommendation of its underwriters) requests by written notice
to each Securityholder; provided, however, (i) that such request shall
not be for a period extending longer than 120 days following the later
of (a) the effectiveness of the registration statement to which the
public offering relates or (b) the date of the underwriting agreement.
If a public offering giving rise to the obligations set forth under this
Section 7.1 will terminate this Agreement pursuant to the provisions of
Section 18.5, then the obligations in this Section 7.1 shall survive the
termination of this Agreement for 120 days after the Initial Public
Offering, after which time the obligations in this Section 7.1 shall
terminate.
7.2 Securities Laws. No Securityholder shall make any
Disposition of Common Stock or Warrants at any time if such action would
constitute a violation of any federal or state securities or blue sky
laws or a breach of the conditions to any exemption from registration of
the Common Stock or Warrants under any such laws or a breach of any
undertaking or agreement of a Securityholder entered into pursuant to
such laws or in connection with obtaining an exemption thereunder, and
the Corporation shall not transfer upon its books any shares of Common
Stock or Warrants unless prior thereto the Corporation shall have
received an opinion of counsel in form and substance satisfactory to the
Corporation that such transaction is in compliance with this Section
7.2. Each Securityholder agrees that any certificates representing
shares of Common Stock and Warrants shall bear appropriate legends
restricting the sale or other transfer of such Common Stock and Warrants
in accordance with applicable federal or state securities or blue sky
laws and in accordance with the provisions of this Agreement. This
Section 7.2 shall survive termination of this Agreement for the maximum
period permitted by applicable law.
8. Voting Arrangements.
8.1 (i) With respect to each election or removal of members of
the Board (including, without limitation, any replacement members), the
Securityholders agree to vote their respective interests in the
Corporation and to take such further actions (including, without
limitation, amendments to the Corporation's charter documents) in their
respective powers as may be necessary or appropriate to ensure that the
Board consists of not more than 9 directors to include the following:
(a) So long as Summit Capital and its Affiliates, in
the aggregate, hold beneficially and of record not less than 50%
the number of shares of Common
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Stock issued to Summit Capital as reflected on the signature page
hereto, 2 directors of the Board shall be individuals nominated
by Summit Capital;
(b) So long as Chase holds beneficially and of record
not less than 50% of the number of shares of Common Stock
reflected on the signature page hereto, 2 directors of the Board
shall be individuals nominated by Chase;
(c) So long as (i) any principal or interest remains
outstanding on the Bowen Sub Debt, and (ii) Bowen owns the Bowen
Sub Debt, Max Bowen or a designee of Max Bowen approved of by a
majority of the other members of the Board shall serve as a
director of the Board;
(d) So long as Stewart holds beneficially and of record
not less than 50% of the number of shares of Common Stock
reflected on the signature page hereto, Stewart shall serve as a
director of the Board; and
(ii) Except as expressly provided in Section 8.1(i), the
composition of the Board shall be determined in accordance with the
bylaws of the Corporation.
9. Endorsement of Stock Certificates. All certificates of Common Stock
and Warrants of the Corporation now owned or that may hereafter be acquired by
the Securityholders or any transferee (which transferee is subject to the terms
of this Agreement) shall be endorsed on the reverse side thereof substantially
as follows:
BY THE TERMS OF A SECURITYHOLDERS AGREEMENT, CERTAIN RESTRICTIONS HAVE
BEEN PLACED UPON THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE. THE CORPORATION WILL FURNISH A COPY OF SUCH AGREEMENT TO THE
HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON WRITTEN REQUEST TO THE
CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE.
The foregoing legend shall be in addition to any and all other legends required
by applicable law or contract to be placed on certificates representing Common
Stock or Warrants, including those referred to in Section 7.
10. Business Opportunities.
10.1 Each of the Securityholders agrees and confirms that the
scope of the Corporation's intended activities shall be to, directly or
indirectly, engage in, continue in or carry on the business of renting
or leasing space on, and to own or manage, radio or other communications
towers and to, directly or indirectly, manage communication facilities
on building tops in the continental United States and activities related
thereto (collectively, the "Intended Activities"). During the term of
this Agreement, each Securityholder (other than BOCP, Bowen (to the
extent set forth in Section 10.3), Stewart and his Affiliates (to the
extent set forth in Section 10.2) and Chase (to the extent set forth in
Section 10.4)) agrees that it will not, and will cause its Affiliates
not to, engage in any
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<PAGE> 14
activity similar or related to an Intended Activity without first making
any such opportunity available to the Corporation and agrees not to
engage in any activity in conflict with the Corporation's Intended
Activities. To the extent any opportunity does not fall within the
description of an Intended Activity or if the Corporation rejects an
opportunity that is an Intended Activity, the Corporation and each
Securityholder acknowledges and agrees that any Securityholder and its
Affiliates shall be permitted to pursue any such opportunity without
liability, duty, or obligation to the Corporation or any Securityholder.
10.2 Securityholders acknowledge and affirm that Stewart, a
beneficial Securityholder and director of the Corporation is a
shareholder, officer and director in Grid-Sites Services, Inc. ("Grid
Site") and Grid Towers, L.L.C. ("Grid Towers") both of which are engaged
in activities that are herein above described as Intended Activities of
the Corporation. Securityholders specifically acknowledge that
Stewart's participation in the business activities of Grid Site and Grid
Towers shall be excluded activities for which Stewart shall not be
obligated to provide notice of, or opportunity for participation in, any
such Intended Activities to the extent such Activities are conducted
within any part of the states of Georgia, Alabama or South Carolina; any
part of the State of Florida north of the 28th latitude; any part of the
State of North Carolina west of the 76th longitude; and any part of the
State of Tennessee east of the 88th longitude. Securityholders hereby
waive any conflict or potential claim of Corporate Opportunity related
to the activities of Stewart, Grid Site or Grid Towers within the areas
listed in this Section 10.2.
10.3 The Securityholders acknowledge and agree that Bowen or
its Affiliates shall be permitted to continue the business of
constructing and servicing towers through Allied Tower Company, Inc. as
conducted by Allied Tower Company, Inc. on the date hereof.
10.4 Notwithstanding anything to the contrary contained in this
Section 10, it is understood that the provisions of this Section 10
shall not require any of Chase's Affiliates to offer to the Corporation
the opportunity to participate in, or prevent Chase or any such
Affiliate from offering to any entity engaged in Intended Activities,
investment or commercial banking or other products or services offered
by Chase's Affiliates in the ordinary conduct of their respective
businesses. Chase's Affiliates shall be permitted to offer any such
products or services to any entity whatsoever without restriction by the
terms of this Agreement, whether such products or services are presently
offered by such Affiliates or are developed after the date hereof. In
addition, this Section 10 shall not prevent Chase from providing, or
require Chase to offer, the Corporation the opportunity to participate
in, any debt financing for any entity engaged in Intended Activities,
regardless of whether such debt financing takes the form of debt
securities convertible into or exchangeable for equity securities, or
debt financing accompanied by warrants, options or other rights to
purchase equity securities of an entity engaged in Intended Activities.
11. Right to Participate in Certain Stock Issuances. With respect to
any issuance or portion thereof (other than an Excluded Issuance, as defined
below in this Section) by the
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<PAGE> 15
Corporation of shares of its common stock or securities convertible into common
stock or other equity securities or rights to acquire such common stock or
other equity securities, each Securityholder may elect (but shall not be
obligated) to subscribe for and purchase for the issuance price offered by the
Corporation a pro rata portion of such issuance based on the proportion that
the number of shares of Common Stock then owned by such Securityholder bears to
all of the outstanding shares of Common Stock of the Corporation. For purposes
of determining a Securityholder's proportionate rights under this Section 11,
the number of shares of Common Stock held by any Securityholder shall be deemed
to include the number of shares of Common Stock to which such Securityholder
would be entitled upon the exercise thereby of any Warrants owned by such
Securityholder, and the number of outstanding shares of Common Stock of the
Corporation shall be deemed to be increased by the number of shares of Common
Stock to which all Securityholders would be entitled upon exercise of all
Warrants. For purposes of this Section 11, the term "Excluded Issuance" shall
mean (i) shares issued as stock dividends or pursuant to stock splits,
recapitalization or other similar events that do not adversely affect the
relative rights of the Securityholders, (ii) securities issued pursuant to an
Initial Public Offering, (iii) common stock issuable upon exercise of any of
the Warrants, (iv) shares of common stock issued upon exercise or conversion of
warrants, options or convertible securities issued to full-time key employees
as incentive compensation and (v) securities issued by the Corporation as
consideration in a merger, stock purchase, asset acquisition or similar
transaction with an unaffiliated party.
12. Notices. In the event a notice or other document is required to be
sent hereunder to the Corporation or to any Securityholder or the spouse or
legal representative of a Securityholder, such notice or other document, if
sent by mail, shall be sent by registered mail, return receipt requested (and
by air mail in the event the addressee is not in the continental United
States), to the party entitled to receive such notice or other document at (i)
American Tower Corporation, 12454 Old Galveston Road, Webster, Texas 77598,
Attention: President, in the case of the Corporation, (ii) at the addresses
shown on the stock transfer records of the Corporation in the case of the
Securityholders, their spouses and their respective legal representatives, or
(iii) at such other address as any such party shall request as to such party in
a written notice sent to the Corporation. Any such notice shall be effective
and deemed received three (3) days after proper deposit in the mails, but
actual notice shall be effective however and whenever received. The
Corporation or any Securityholder or spouse or their respective legal
representatives may effect a change of address for purposes of this Agreement
by giving notice of such change to the Corporation, and the Corporation shall,
upon the request of any party hereto, notify such party of such change in the
manner provided herein. Until such notice of change of address is properly
given, the addresses set forth herein shall be effective for all purposes.
13. Rights and Obligations to Participate in Certain Transactions.
The Securityholders shall be entitled to the following "tag along" rights and
be obligated with respect to the following "drag along" rights:
13.1 If any Securityholder (the "Selling Securityholder")
receives an Acquisition Proposal for the purchase of any shares of
Common Stock or Warrants (other than pursuant to (i) a Disposition
permitted under Section 5, (ii) an Initial Public Offering, or
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<PAGE> 16
(iii) an exercise of the registration rights under Section 14), and
desires to accept such Acquisition Proposal (such desire to be evidenced
in writing together with a copy of such Acquisition Proposal), the
Selling Securityholder shall notify the Corporation and all of the other
Securityholders of such Acquisition Proposal (the "Acquisition Proposal
Notice") and furnish a copy of the Acquisition Proposal thereto, and
thereafter each of the Securityholders shall have the right and option
to elect, by giving written notice to the Corporation within 10 Business
Days following receipt of the Acquisition Proposal Notice (and the
Corporation shall promptly notify the other Securityholders of such
Acquisition Proposal Notice and of each Securityholder's election
pursuant to this paragraph) to sell, pursuant to the terms of the
Acquisition Proposal, a portion of such Securityholder's shares of
Common Stock and Warrants (or, if the Securities Acquisition Proposal
only offers to acquire Common Stock or Warrants, up to a percentage of
each such Securityholder's shares of Common Stock or Warrants, as the
case may be) equal to (or, at each such Securityholder's election, less
than) the fraction (not to exceed 1) obtained by dividing the total
number of outstanding shares of Common Stock or Warrants to be sold
pursuant to the Acquisition Proposal by the total number of shares of
Common Stock held by all Securityholders electing to sell pursuant to
the Acquisition Proposal. If less than all of the shares of common
Stock or Warrants to be sold pursuant to such Acquisition Proposal are
accounted for pursuant to the pro ration described in the preceding
sentence, such procedures shall be repeated as many times as necessary
until all securities subject to the Acquisition Proposal have been
accounted for. For purposes of determining each Securityholders'
proportionate rights under this Section 13.1 the number of shares of
Common Stock held by any Securityholder shall be deemed to include the
number of shares of Common Stock to which such Securityholder would be
entitled upon the exercise thereby of any Warrants owned by such
Securityholder. The provisions of this Section 13.1 and Section 3.1
shall apply to each Acquisition Proposal; provided the provisions set
forth in Section 3.1 shall first apply after which those set forth in
this Section 13.1 shall apply.
13.2 In the event (a) the Corporation or any Securityholder
receives a bona fide written proposal for the purchase of at least 51%
of all of the outstanding shares of Common Stock and Warrants (a "Change
of Control Proposal") (other than pursuant to (i) an Initial Public
Offering, (ii) a Disposition permitted by Section 5 or (iii) an exercise
of registration rights under Section 14) and (b) the purchaser, pursuant
to such Change of Control Proposal, proposes to purchase a greater
number of shares of Common Stock or Warrants than held by the Person
receiving such Acquisition Proposal, such Securityholder shall promptly
notify the Corporation of such fact (which notice shall include a copy
of such Change of Control Proposal) and the Corporation shall send a
copy of such notice (which notice shall include a copy of such Change of
Control Proposal) to every other Securityholder. If such Change of
Control Proposal is acceptable to the Required Voting Percentage, taken
as a whole, (the "Approving Group"; and the Securityholders that do not
accept the proposal in the foregoing manner are referred to herein as
the "Non-Approving Group"), and such acceptance is evidenced in writing
to the Board, then each Securityholder shall be obligated to sell to the
purchaser pursuant to the terms of the
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<PAGE> 17
Change of Control Proposal, a number of shares of Common Stock and
Warrants unanimously agreed upon by all of the Securityholders or, in
the absence of any such agreement, up to a percentage of such
Securityholder's shares of Common Stock and Warrants equal to the
percentage of the total outstanding shares of Common Stock and/or
Warrants, as the case may be, to be sold pursuant to the terms of the
Securities Acquisition Proposal. The provisions set forth in this
Section 13.2 shall apply in lieu of the provisions set forth in Section
3.1 with respect to a Change of Control Proposal that is approved by a
Required Voting Percentage. Notwithstanding the foregoing in this
Section 13.2, BOCP shall not be required to participate in any
transaction unless, in connection with such transaction, all amounts
payable on any loan from BOCP to the Corporation or Bowen-Smith Corp.
shall be paid in full.
14. Registration Rights.
14.1 Definitions. As used in this Section 14, the following
terms have the meanings indicated:
"Business Day" shall mean any day other than a Saturday, Sunday or legal
holiday for banks in the States of Texas and Delaware.
"Commission" shall mean the Securities and Exchange Commission.
"Demand Notice" shall have the meaning given it in Section 14.3(a)(i).
"Demand Registration" shall have the meaning given it in Section
14.3(a)(i).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Holder" shall mean any Person holding Registrable Securities.
"Piggy-back Registration" shall have the meaning given it in Section
14.2(a).
"Registrable Securities" shall mean (i) the Common Stock and (ii) any
other securities issued or issuable with respect to any of the Common
Stock or the Warrants by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise; provided, however,
that to the extent such securities to be received are convertible or
exercisable into other shares of the issuer thereof, then any shares as
are issued or issuable upon conversion or exercise of said convertible
or exercisable securities shall constitute Registrable Securities, and
said convertible or exercisable securities shall not constitute
Registrable Securities. Registrable Securities shall include the Common
Stock issuable upon exercise of a Warrant, even if the exercise of the
Warrant is conditioned upon the effectiveness of the registration
statement. As to any particular Registrable Securities, once issued to
a Secur-
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ityholder, such securities shall cease to be Registrable Securities when
(a) a registration statement with respect to the sale of such securities
shall have become effective under the Securities Act and such securities
shall have been disposed of by such Securityholder in accordance with
such registration statement, (b) such securities shall have been
distributed by such Securityholder pursuant to Rule 144 of the
Securities Act or (c) such securities shall have ceased to be
outstanding.
"Registration Expenses" shall have the meaning given it in Section 14.4.
14.2 Piggy-back Registration. (a) If the Corporation proposes
to file a registration statement under the Securities Act with respect
to an offering by the Corporation for the account of any other Person of
any class of equity security, including any security convertible into or
exchangeable for any equity security (other than a registration
statement on Forms S-4 or S-8 (or their successor forms) or filed in
connection with an exchange offer or an offering of securities solely to
the Corporation's existing stockholders, and other than as set forth in
Section 14.2(b) below), then the Corporation shall in each case give
written notice of such proposed filing to the Holders at least twenty
days before the anticipated filing date, and such notice shall offer
such Holders the opportunity to register such number of Registrable
Securities as each such Holder may request (a "Piggy-back
Registration"). The Corporation shall use reasonable efforts to cause
the managing underwriter or underwriters of a proposed underwritten
offering to permit the Holders of Registrable Securities requested to be
included in the registration for such offering to include such
securities in such offering on the same terms and conditions as any
similar securities of the Corporation included therein. Notwithstanding
the foregoing, if the managing underwriter or underwriters of such
offering deliver an opinion to the Holders that the total amount of
securities which they and any other Persons (other than the Corporation)
intend to include in such offering is sufficiently large to materially
and adversely affect the success of such offering, then the amount of
Registrable Securities to be offered for the accounts of Holders shall
be reduced in inverse order of the priority of registration rights
specified in this Agreement held by holders of securities requesting
inclusion therein to the extent necessary, in the opinion of such
managing underwriter, to reduce the total amount of securities to be
included in such offering to the amount recommended by such managing
underwriter; provided, that the reduction imposed upon Holders shall not
be greater, on a percentage basis with respect to the Registrable
Securities requested to be included, than the reduction imposed upon
other Persons whose piggy-back registration rights are pari passu with
those granted hereby with respect to the amount of securities requested
for inclusion in such registration.
(b) Notwithstanding anything to the contrary contained in this
Agreement, the Corporation shall not be required to include Registrable
Securities in any registration statement if the proposed registration is
(i) a registration of a stock option or other employee incentive
compensation or employee benefit plan or of securities issued or
issuable pursuant to any such plan, or a registration statement relating
to warrants, options or shares of capital stock granted or to be granted
or sold primarily as incentive
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<PAGE> 19
compensation to employees and officers of the Corporation, (ii) a
registration of securities issued or issuable pursuant to a stockholder
reinvestment plan or other similar plan, (iii) a registration of
securities issued in exchange for any securities or any assets of, or in
connection with a merger or consolidation with, an unaffiliated company,
(iv) a registration of securities pursuant to a "rights" or other
similar plan designed to protect the Corporation's stockholders from a
coercive or other attempt to cause a change in control of the
Corporation, (v) a registration of securities filed pursuant to Rule 145
under the Securities Act or any successor rule, or (vi) a registration
of preferred stock or securities issued in connection with any debt or
preferred stock financing of the Corporation.
(c) The Corporation may withdraw any registration statement
and abandon any proposed offering initiated by the Corporation without
the consent of any Holder, notwithstanding the request of any such
Holder to participate therein in accordance with this provision, if the
Corporation determines in its sole discretion that such action is in the
best interests of the Corporation and its stockholders (for this
purpose, the interest of the Holders shall not be considered).
14.3 Demand Registration Rights. (a) Right to Demand.
(i) Subject to the conditions stated hereinafter in this
Section 14.3(a)(i), at any time after a registration statement with
respect to a class of equity securities has been filed with the
Commission and become effective and subject to Section 7.1, BOCP may
make a written request to the Corporation for registration with the
Commission of the offer and sale of all or part of the Registrable
Securities held thereby under and in accordance with the provisions of
the Securities Act (a "Demand Registration"); provided, that the
Corporation may if necessary delay the filing of any registration
statement relating to any such Demand Registration for such reasonable
period of time, not to exceed 90 days, as is necessary to prepare the
financial statements of the Corporation for the fiscal period most
recently ended prior to such written request. Within 10 Business Days
after receipt of such request, the Corporation will serve written notice
(the "Demand Notice") of such registration request to all Holders (other
than BOCP) and the Corporation will include in such registration all
Registrable Securities of such other Holders with respect to which the
Corporation has received written requests for inclusion therein within
15 Business Days after the receipt by the applicable Holder of the
Demand Notice; provided, BOCP's right to include Registrable Securities
shall be senior to the other Holders with respect to each Demand
Registration.
(ii) All requests made pursuant to this Section 14.3(a) will
specify the amount and kind of securities to be registered and will also
specify the intended methods of disposition thereof.
(b) Number and Size of Demand Registrations; Payment of
Expenses. Subject to the provisions of Section 14.3(b), BOCP shall be
entitled to three Demand Registrations (which must become effective
under the Securities Act to count as having occurred);
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<PAGE> 20
provided, however, that in no event shall the Corporation be required to
effect (i) more than one Demand Registration in any twelve month period,
or (ii) any Demand Registration wherein the aggregate net proceeds
(after deducting all costs, discounts, commissions and other expenses to
be incurred by the Persons selling securities therein) will be less than
$5 million. Registration Expenses (as hereinafter defined) of each such
Demand Registration, whether or not it becomes effective, shall be paid
as set forth in Section 14.4.
(c) Certain Limitations. If the managing underwriter or
underwriters of a Demand Registration advise the Corporation in writing
that in its or their opinion the number of Registrable Securities
proposed to be sold in such Demand Registration exceeds the number that
can be sold in such offering at the desired price, the Corporation will
include in such registration only the number of Registrable Securities
that, in the opinion of such underwriter or underwriters can be sold;
provided, BOCP shall have the relative rights set forth in Section
14.3(a)(i) in determining those shares to be included.
(d) Selection of Underwriters. The Corporation shall have the
right to select a managing underwriter or underwriters reasonably
acceptable to BOCP to administer the offering.
(e) Corporation Registration. Notwithstanding the provisions
of Sections 14.3(a) through 14.3(d), the Corporation shall not be
obligated to effect a registration requested pursuant to Sections
14.3(a) through 14.3(d) if (i) within 30 days after receiving the notice
provided under Sections 14.3(a) through 14.3(d), the Corporation
notifies BOCP and the other Holders of its intention to file a
registration statement for an underwritten public offering of Common
Stock for the sole account of the Corporation and within ninety days
after providing such notice, the Corporation files a registration
statement for such offering and (ii) the Corporation has never before
exercised its rights under this Section 14.3(e). In such case, BOCP and
the other Holders shall have all the piggy-back registration rights
provided under Section 14.2. If at any time the Corporation fails to
diligently pursue any such registration statement or offering, the
provisions of the first sentence of this Section 14.3(e) shall not
apply, and the Corporation shall be obligated to satisfy its obligations
under Sections 14.3(a) through 14.3(d). With respect to such
Corporation registration, the Corporation shall have the sole authority
to select or terminate the employment of underwriters, and to make all
decisions in connection with the filing, effectiveness and consummation
of the proposed offering, subject to the express provisions hereof.
(f) Assignability. BOCP may assign its rights under this
Section 14.3 with respect to its Registrable Securities to any
transferee acquiring such Registrable Securities in accordance with the
other provisions of this Agreement; provided, the demand registration
rights granted under this Section 14.3 may only be exercised by the
owner of a majority of the Registrable Securities attributable to the
Warrant owned by BOCP on the date of this Agreement.
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<PAGE> 21
14.4 Registration Expenses. (a) All expenses incident to the
Corporation's performance of or compliance with this Agreement,
including without limitation, all Commission and securities exchange or
National Association of Securities Dealers, Inc. registration and filing
fees, fees and expenses (other than the pro rata portion of filing fees
attributable, as required by state law, to the securities to be sold) of
compliance with securities or blue sky laws (including fees and
disbursements of counsel in connection with blue sky qualifications of
the Registrable Securities), rating agency fees, printing expenses,
messenger and delivery expenses, internal expenses of the Corporation
(including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the fees
and expenses incurred in connection with the listing of the securities
to be registered on each securities exchange on which similar securities
issued by the Corporation are then listed and fees and disbursements of
counsel for the Corporation and its independent certified public
accountants (including the expenses of any special audit or "cold
comfort" letters required by or incident to such performance),
securities act liability insurance (if the Corporation elects to obtain
such insurance), and the fees and expenses of any special experts
retained by the Corporation in connection with such registration, and
any reasonable out-of-pocket expenses of the Holders incurred in
connection with the registration of Registrable Securities, excluding
any underwriting fees, discounts or commissions attributable to the sale
of Registrable Securities (all such expenses being herein called
"Registration Expenses"), will be borne by the Corporation; provided,
that, (i) with respect to the fees and expenses of legal counsel for the
Holders, the Corporation shall only be obligated to pay the fees and
expenses of one firm of legal counsel retained by Holders of a majority
of the Registrable Securities to be covered by each registration
statement (unless pursuant to a demand registration under Section 14.3,
in which event BOCP shall be entitled to select counsel if the counsel
selected by the majority of Holders is not reasonably satisfactory to
BOCP) and (ii) the Corporation shall not be required to pay any expenses
of BOCP in connection with its exercise of its demand rights under
Section 14.3 except in connection with its first Demand Registration.
The Holders to be covered by the registration statement agree to
cooperate and use reasonable procedures to select such legal counsel.
All such Registration Expenses will be paid by the Corporation whether
or not the related registration statement is declared effective. All
expenses of Holders incident to this Agreement which are not required to
be paid for by the Corporation pursuant to this Section 14.4 shall be
paid by Holders included or to be included in a registration statement,
with such Holders each paying their own expenses and a pro-rata part
(based on the same proportion that the number of a Holder's Registrable
Securities included or to be included in the registration statement
bears to the total number of all Holders' Registrable Securities
included or to be included in the registration statement) of the common
expenses of such Holders.
(b) Notwithstanding anything herein to the contrary, each
seller of Registrable Securities shall pay such portion of the
Registration Expenses as may be required by applicable law.
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14.5 Participation in Underwritten Registrations. No Holder
may participate in any underwritten registration hereunder unless such
Holder (a) agrees to sell such Holder's securities on the terms of and
on the basis provided in any underwriting arrangements approved by the
Persons entitled hereunder to approve such arrangements (which shall be
the Corporation in the case of an offering of securities by the
Corporation) and (b) completes and executes all questionnaires, powers
of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements.
15. Approval of Incentive Compensation Plan. The Securityholders
hereby approve and authorize the Board to adopt on behalf of the Corporation
without any further action required by the Securityholders an incentive
compensation plan or plans providing for the Corporation's issuance of stock
options, phantom stock, restricted stock, stock appreciation rights and other
items to key, full-time management employees of either the Corporation or its
subsidiaries (other than (i) the members of the Board of Directors of any such
entities, (ii) employees of Summit and (iii) employees of Chase) in such form
as the Board determines to be in the best interests of the Corporation
(including, without limitation, incentive stock options and non-statutory
stock options); provided, the aggregate shares of Common Stock issuable
(whether directly or indirectly through the exercise of options) pursuant to
the authority herein given shall not exceed 10% of all of the shares of Common
Stock (including Common Stock issuable upon exercise of the Warrants)
outstanding from time to time.
16. Certain Information. The Corporation shall furnish to each
Securityholder (i) as soon as available, and in any event within 45 days after
each calendar quarter, a copy of an unaudited financial report of the
Corporation as of the end of such calendar quarter and for the portion of the
fiscal year then ended, containing, on a consolidated and consolidating basis,
a balance sheet, a statement of income, and a statement of cash flows, all in
reasonable detail certified by the chief financial officer to have been
prepared in accordance with generally accepted accounting principles (except
with respect to footnotes) and to fairly and accurately present in all material
respects (subject to the year-end audit adjustments) the financial condition
and results of operations of the Corporation on a consolidated and
consolidating basis, at the date and for the periods indicated therein, (ii) as
soon as available, and in any event within 120 days after the end of each
fiscal year of the Corporation beginning with the fiscal year ending December
31, 1994, a copy of the annual audit report of the Corporation for such fiscal
year containing, on a consolidated and consolidating basis, balance sheets,
statements of income, statements of retained earnings and cash flows (and any
other statements then routinely prepared and provided in connection with the
conduct of an audit) as of the end of such fiscal year and for the 12-month
period then ended (or for such shorter period as such party was in existence
for fiscal year 1994), in each case setting forth in comparative form the
figures for the preceding year, all in reasonable detail and audited and
certified by a "Big 6" accounting firm or other independent certified public
accounting firm of recognized national standing, to the effect that such report
has been prepared in accordance with generally accepted accounting principles
and generally accepted auditing standards and (iii) as soon as practicable, any
written notice received or given by the Corporation to the effect that the
Corporation is in default under any credit agreement to which it or any of its
subsidiaries is a party
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including, without limitation, (a) the Credit Agreement of even date herewith
by and between Bowen-Smith Corp., as borrower, and First Interstate Bank of
Texas, N.A., as agent, (b) the Senior Subordinate Loan Agreement of even date
herewith by and among Banc One Partners II, Limited Partnership and Bowen-Smith
Corp. and (c) the Seller Loan Agreement of even date herewith between the
Corporation and Bowen.
17. SBIC Provisions.
17.1 Definitions. The following terms, as used in this Section
17, shall have the meanings given in this Section 17.1:
"Closing" means issuance of the shares of Common Stock by the
Corporation to the SBIC Holder and the payment by the SBIC Holder for
such shares.
"Financing" means the purchase of 26,225 shares of Common Stock
by the SBIC Holder hereunder.
"SBA" means the United States Small Business Administration, and
any successor agency performing the functions thereof.
"SBIC" means a Small Business Investment Corporation licensed by
an SBA under the SBIC Act.
"SBIC Act" means the Small Business Investment Act of 1958, as
amended.
"SBIC Holder" means Chase.
"SBIC Regulations" means the SBIC Act and the regulations issued
by the SBA thereunder, codified at Title 13 of the Code of Federal
Regulations ("13 CFR"), Parts 107 and 121.
17.2 Representations and Warranties of the Corporation. The
Corporation, together with its "affiliates" (as that term is defined in
13 CFR Section 121.401), is a "small business concern" within the
meaning of the SBIC Regulations, including 13 CFR Section 121.802. The
information regarding the Corporation and its affiliates set forth in
SBA Form 480, Form 652 and Section A of Form 1031 delivered at the
Closing will be accurate and complete. Neither the Corporation nor any
subsidiary presently engages in, or shall hereafter engage in, any
activities, nor shall the Corporation or any subsidiary use the proceeds
of the Financing directly or indirectly for any purpose, for which an
SBIC is prohibited from providing funds by SBIC Regulations (including
13 CFR Section 107.804 and Section 107.901).
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<PAGE> 24
17.3 SBIC Regulatory Provisions.
(i) Number of Stockholders. As long as the SBIC Holder holds
any shares of Common Stock, the Corporation shall notify the SBIC Holder
(a) least 15 days prior to taking any action after which the number of
record holders of the Corporation's voting stock would be increased from
fewer than 50 to 50 or more, and (b) of any other action or occurrence
after which the number of record holders of the Corporation's voting
stock was increased (or would increase) from fewer than 50 to 50 or
more, as soon as practicable after the Corporation becomes aware that
such other action or occurrence has occurred or is proposed to occur.
(ii) Regulatory Violation. Upon the occurrence of a Regulatory
Violation (as defined below) or in the event that the SBIC Holder
determines in its reasonable good faith judgment that a Regulatory
Violation has occurred, in addition to any other rights and remedies to
which it may be entitled (whether under this Agreement or any other
agreement, the Corporation's Certificate of Incorporation or otherwise),
the SBIC holder shall have the right, to the extent required under SBIC
Regulations, to demand the immediate repurchase of all of the shares of
Common Stock owned by the SBIC Holder at a price equal to the purchase
price paid for such shares hereunder plus accrued dividends by
delivering written notice of such demand to the Corporation. The
Corporation shall pay the purchase price for such securities by a
cashier's or certified check or by wire transfer of immediately
available funds to such SBIC Holder within 90 days after the
Corporation's receipt of the demand notice, and, upon such payment, such
SBIC Holder shall deliver the certificates evidencing the shares being
repurchased duly endorsed for transfer or accompanied by duly executed
forms of assignment.
For purposes of this Agreement, "Regulatory Violation" means (a)
a diversion of the proceeds of the Financing from the reported use
thereof described on the use of proceeds statement delivered by the
Corporation at the Closing, if such diversion was effected without
obtaining the prior written consent of the SBIC Holder (which consent
may be withheld in the SBIC Holder's sole discretion) or (b) a change in
the principal business activity of the Corporation and its subsidiaries
to an ineligible business activity (within the meaning of the SBIC
Regulations), if such change occurs within one year after the date of
the initial Financing hereunder.
(iii) Economic Impact Information. Promptly after the end of
each fiscal year (but in any event prior to February 28 of each year)
the Corporation shall deliver to the SBIC Holder a written assessment of
the economic impact of the SBIC Holder's investment in the Corporation,
specifying the full-time equivalent jobs created or retained in
connection with the investment, the impact of the investment on the
businesses of the Corporation in terms of expanded revenue and taxes,
and other economic benefits resulting from the investment, including but
not limited to, technology development or commercialization, minority
business development, urban or rural business development, expansion of
exports.
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17.4 Regulatory Compliance Cooperation.
(i) If and to the extent (x) the SBIC Holder determines that
it has a Regulatory Problem (as defined below) and (y) pursuant to the
provisions of Section 3.1 and Section 4, the shares of Common Stock of
the SBIC Holder have not been fully subscribed for within 45 days after
the date the SBIC Holder notifies the Corporation of the occurrence of a
Regulatory Problem and the related closing of such subscriptions have
not occurred within 90 days following the SBIC Holder's notice to the
Corporation, the SBIC Holder shall have the right to transfer without
regard to any restriction on transfer set forth in this Agreement (other
than the securities laws restrictions set forth in Section 7 and the
requirement that the transferee agrees to become a party to this
Agreement) any of its shares of Common Stock that either (I) remain
unsubscribed for following the 45 day period described above or (II)
remain unpurchased following the expiration of the 90 day period
described above. If the SBIC Holder determines that it has a Regulatory
Problem (as defined below), the SBIC Holder shall have the right to
transfer without regard to any restriction on transfer set forth in this
Agreement (other than the securities laws restrictions set forth in
Section 7 and the requirement that the transferee become a party to this
Agreement) those shares of Common Stock of the SBIC shareholder that,
following the application of Section 3.1 and Section 4, have either been
unsubscribed for before 45 days after the SBIC Holder notifies the
Corporation of the occurrence of the Regulatory Problem or have not been
purchased within 90 days following such notice from the SBIC Holder to
the Corporation. The Corporation shall take all such actions as are
reasonably requested by the SBIC Holder in order to (a) effectuate and
facilitate any transfer by the SBIC Holder to any Person designated by
the SBIC Holder, (b) permit the SBIC Holder (or any of its affiliates)
to exchange all or any portion of any voting security then held by it on
a share-for-share basis of shares of a nonvoting security of the
Corporation, which nonvoting security shall be identical in all respects
to the voting security exchanged for it, except that it shall be
nonvoting and shall be convertible into a voting security on such terms
as are requested by the SBIC Holder in light of regulatory
considerations then prevailing, (c) continue and preserve the respective
allocations of the voting interests with respect to the Corporation
arising out of the SBIC's ownership of voting securities and/or provided
in this Agreement before the transfers and amendments referred to above
(including entering into such additional agreements as are requested by
the SBIC Holder to permit any Person(s) designated by the SBIC Holder
reasonably acceptable to the Corporation to exercise any voting power
which is relinquished by the SBIC Holder and (d) amend this Agreement,
the Certificate of Incorporation, the Bylaws and related agreements and
instruments to effectuate and reflect the foregoing. The parties to
this Agreement agree to vote their shares of Common Stock in favor of
such amendments and actions.
(ii) For purposes of this Agreement, a "Regulatory Problem"
means any set of facts of circumstances wherein it has been asserted by
any governmental regulatory agency under SBIC Regulations (or the SBIC
Holder believes that there is a substantial risk of such assertion) that
the SBIC Holder is not entitled to hold, or exercise any significant
right with respect to, its shares of Common Stock.
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18. Miscellaneous Provisions.
18.1 This Agreement shall be subject to and governed by the
laws of the State of Delaware.
18.2 Whenever the context requires, the gender of all words
used herein shall include the masculine, feminine and neuter, and the
number of all words shall include the singular and plural.
18.3 This Agreement shall be binding upon the Corporation, the
Securityholders, any spouses of the Securityholders, and their
respective heirs, executors, administrators and permitted successors and
assigns.
18.4 This Agreement may be amended or waived from time to time
by an instrument in writing signed by the Corporation and the holders of
at least the Required Voting Percentage at the time of such amendment
and such instrument shall be designated on its face as an "Amendment" to
this Agreement; provided, no amendment that adversely affects the
Warrant held by BOCP on the date hereof or other securities attributable
thereto or rights under this Agreement with respect thereto shall be
effective against BOCP or such securities unless the consent of BOCP to
such amendment is obtained; provided further, any amendment that applies
discriminately to any Securityholder shall, prior to its effectiveness
against such Securityholder, require such Securityholder's consent.
18.5 This Agreement shall terminate automatically upon (a) the
dissolution of the Corporation or (b) the completion of an Initial
Public Offering, provided, however, that Section 7 of this Agreement
shall survive any such termination to the extent and for the periods set
forth in such Section.
18.6 Any Securityholder who disposes of all such
Securityholder's Common Stock or Warrants in conformity with the terms
hereof shall cease to be a party to this Agreement, shall cease to be a
"Securityholder" and shall have no further rights hereunder.
18.7 The spouses of the individual Securityholders are fully
aware of, understand and fully consent and agree to each of the
provisions of this Agreement, including specifically the provisions of
Sections 3.2 through 3.4, 18.8 and 18.9, and the binding effect of the
Agreement and of each of these provisions upon any community property
interests or similar marital property interests in the Common Stock or
Warrants they may now or hereafter own, and agree that the termination
of their marital relationship with any Securityholder for any reason
shall not have the effect of removing any Common Stock or Warrants of
the Corporation otherwise subject to this Agreement from the coverage
hereof and that their careful review, awareness, understanding, consent
and agreement of and to each provision of this Agreement are evidenced
by their signing this Agreement. Furthermore, the spouse (and any
subsequent spouse) of each individual Securityholder shall execute and
deliver, upon the request of the Corporation, a counterpart of this
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Agreement, or an Adoption Agreement in the form attached hereto as
Exhibit "A" or in a form satisfactory to the Corporation. By signing
this Agreement the spouse of each individual Securityholder acknowledges
(i) that he or she has been fully and completely informed as to the
facts related to this Agreement and as to his or her rights in and to
the property that is the subject of this Agreement and (ii) that he or
she enters into this Agreement voluntarily after receiving advice of
independent legal counsel.
18.8 Any Disposition or attempted Disposition in breach of this
Agreement shall be void and of no effect and shall be deemed to be a
Section 3.1 Offer, and the date of such deemed Offer shall be the date
the Corporation, after receipt of evidence satisfactory to it that such
Disposition or attempted Disposition has occurred, gives written notice
of such Disposition or attempted Disposition to the Offerees.
Additionally, Section 7 shall apply to such attempted Disposition. In
connection with any attempted Disposition in breach of this Agreement,
the Corporation may hold and refuse to transfer any Common Stock and
Warrants or any certificate therefor tendered to it for transfer, in
addition to and without prejudice to any and all other rights or
remedies which may be available to it or the Securityholders. Each
party hereto acknowledges that a remedy at law for any breach or
attempted breach hereof will be inadequate, agrees that each other party
hereto shall be entitled to specific performance and injunctive and
other equitable relief in case of any such breach or attempted breach
and further agrees to waive any requirement for the obtaining of any
such injunctive or other equitable relief.
18.9 Each Securityholder and his or her spouse, if any, hereby
appoint the Corporation as their agent and attorney to make the Offers
required and take all actions necessary under Sections 3.2 through 3.4
(other than accepting Offers) and 18.8 on their behalf and to execute
the agreement attached hereto as Exhibit A (the "Adoption Agreement") on
their behalf, and expressly bind themselves to such Offers and to the
Corporation's execution of any such Adoption Agreement without further
action on their part, and such powers of attorney granted herein are
deemed to be coupled with an interest in the Common Stock or Warrants
and shall survive the death, disability, bankruptcy or dissolution of
such Securityholder or his or her spouse, if any.
18.10 If any portion of this Agreement is declared by a court of
competent jurisdiction to be invalid or unenforceable, such declaration
shall not affect the validity of the remaining provisions.
18.11 This Agreement sets forth the entire agreement of the
parties hereto as to the subject matter hereof and supersedes all
previous agreements among all or some of the parties hereto, whether
written, oral or otherwise. This Agreement may be executed in multiple
counterparts, any one of which may contain the signature of one or more
than one party, but all of which counterparts together shall constitute
one and the same instrument.
18.12 No person or entity not a party to this Agreement shall
have rights under this Agreement as a third party beneficiary or
otherwise.
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18.13 If any Common Stock or Warrants are pledged to a bank or
other financial institution as permitted by Section 5.3 and such shares
are to be sold to the Offeree(s), the Securityholders and their spouses,
if the transferor of such shares, hereby authorize any such bank or
financial institution to deliver certificates representing such shares
to the Corporation against receipt of the Purchase Price therefor, and
authorize the Offeree(s) to make payment of the Purchase Price to such
bank or financial institution for application to any indebtedness
secured by any such shares, and such bank or financial institution is
hereby authorized to apply such Purchase Price so received to any such
indebtedness.
18.14 If, and as often as, there are any changes in the Common
Stock or the Warrants by way of stock split, stock dividend, combination
or reclassification, or through merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be
made in the provisions hereof, as may be required, so that the rights,
privileges, duties and obligations hereunder shall continue with respect
to the Common Stock and the Warrants as so changed.
This Agreement is executed by the Corporation and by each Securityholder
and spouse of a Securityholder to be effective as of the date first above
written.
CORPORATION:
AMERICAN TOWER CORPORATION
By: /s/ FRED R. LUMMIS
----------------------------------
Name: Fred R. Lummis
Title: President
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EXHIBIT 10.2
CONTRIBUTION AND TRANSFER AGREEMENT
(Agreement and Plan of Merger)
among
PRIME COMMUNICATION SITES HOLDING, L.L.C.
ATC HOLDINGS CORP.
ATC MERGER CORP.
TCG TOWERS, L.L.C.
CARLYLE-PRIME INVESTORS, L.P.
CARLYLE-PRIME PARTNERS I, L.P.
BILL KUBENA
DALE HARKINS
WARREN D. HARKINS
B.R.A.D. COMMUNICATIONS SERVICES, INC.
October 11, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1.
DEFINITIONS
1.1 Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2.
CONTRIBUTION AND TRANSFER; MERGER; CONSIDERATION; CLOSING
2.1 Formation Transaction Consideration . . . . . . . . . . . . . . . . . 2
2.2 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 Manner and Basis of Converting Shares and LLC Interests . . . . . . . 2
2.6 Certain Conditions at Closing. . . . . . . . . . . . . . . . . . . 3
2.7 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.8 Deliveries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.9 Allocation of Consideration. . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 3.
REVENUE AND COST RECONCILIATION
3.1 Proration; Receipts and Credits . . . . . . . . . . . . . . . . . . . 4
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF THE TRANSFERORS
4.1 Organization and Existence. . . . . . . . . . . . . . . . . . . . . 5
4.2 Qualification. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.3 Authority; Enforceability. . . . . . . . . . . . . . . . . . . . . . 6
4.4 Consents; Absence of Conflicts. . . . . . . . . . . . . . . . . . . 6
4.5 Capitalization of the Prime Companies. . . . . . . . . . . . . . . . 7
4.6 Equity Investments . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.7 Absence of Changes. . . . . . . . . . . . . . . . . . . . . . . . . 8
4.8 Tower Assets and Real Property Interests. . . . . . . . . . . . . . . 9
4.9 Affiliate Transactions. . . . . . . . . . . . . . . . . . . . . . . 11
4.10 Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.11 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.12 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . 13
4.13 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . 14
4.14 Legal Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.15 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.16 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.17 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.18 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
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<TABLE>
<S> <C> <C>
4.19 Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.20 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.21 Employee Benefit Matters. . . . . . . . . . . . . . . . . . . . . . . 16
4.22 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . 17
4.23 Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.24 Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.25 Access Information. . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.26 Operating Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.27 UCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.28 [Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . . . . 19
4.29 Resignations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
5.1 Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2 Qualification. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.3 Authority; Enforceability. . . . . . . . . . . . . . . . . . . . . . 19
5.4 Absence of Conflicts. . . . . . . . . . . . . . . . . . . . . . . . . 19
5.5 Capitalization of the Company . . . . . . . . . . . . . . . . . . . . 20
5.6 Subsidiaries; Equity Investments. . . . . . . . . . . . . . . . . . 20
5.7 Brokers' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.8 Investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.9 Company Common Stock and the Transferor Note . . . . . . . . . . . . 21
ARTICLE 6.
TAX MATTERS
6.1 Preparation and Filing of Tax Returns . . . . . . . . . . . . . . . . 21
ARTICLE 7.
COVENANTS BY THE TRANSFERORS AND THE COMPANY AFTER CLOSING
7.1 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2 Transition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.3 Non-Competition. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.4 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.5 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.6 Title Defect Procedures . . . . . . . . . . . . . . . . . . . . . . . 24
7.7 Pre-Closing Conveyance and Assumption . . . . . . . . . . . . . . . . 26
7.8 Continuation Coverage . . . . . . . . . . . . . . . . . . . . . . . . 26
7.9 Ultra Towers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.10 Release of LLC Indemnities . . . . . . . . . . . . . . . . . . . . . 27
7.11 Provisions Regarding Agent . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE 8.
CLOSING ACTIONS
8.1 Action to be Taken by The Transferors at the Closing . . . . . . . . 27
8.2 Actions To Be Taken by the Company at the Closing . . . . . . . . . . 29
ARTICLE 9.
INDEMNIFICATION
9.1 Indemnities of the Transferors . . . . . . . . . . . . . . . . . . . 29
9.2 Indemnities of the Company . . . . . . . . . . . . . . . . . . . . . 30
9.2A Special Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.3 Exceptions and Limitations to Indemnities . . . . . . . . . . . . . . 31
9.4 Claim Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.5 Calculation, Timing, Manner and Characterization of Indemnification
Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.6 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.7 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.8 Express Negligence . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.9 Exclusive Remedy following the Closing Date . . . . . . . . . . . . . 35
ARTICLE 10.
MISCELLANEOUS
10.1 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.3 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.4 Entire Agreement; Amendments and Waivers . . . . . . . . . . . . . . 37
10.5 Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 37
10.6 Expenses of this Agreement . . . . . . . . . . . . . . . . . . . . . 37
10.7 Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.8 Headings; References; Interpretation . . . . . . . . . . . . . . . . 38
10.9 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.10 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
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<PAGE> 5
SCHEDULES AND EXHIBITS
SCHEDULES
A-1 Scheduled Fee Lands
A-2 Scheduled Leases
A-3 Scheduled Easements
B-1 Scheduled Tangible Personal Property
C Allocation of Value by Tower
2.1 Allocation of Formation Consideration
2.5(b) Allocation of Merger Consideration (A Units)
2.5(c) Allocation of Merger Consideration (B Units)
2.9 Merger Consideration Allocation
3.1A List of Closing Adjustments
4.5(a) Listing of Prime Holdings' Unit and Interest Holders
4.7 Interim Events
4.9 Affiliate Transactions
4.10(a) Scheduled Permits
4.11(a) Scheduled Contracts
4.11(b) Scheduled User Contracts
4.11(c) Existing Indebtedness
4.12 Scheduled Intellectual Property Rights
4.13 Other Liabilities
4.15 Existing Insurance Policies
4.18 Litigation
4.20 List of Employees
5.6 (a) Subsidiaries of ATC Holdings Corp.
7.9 Ultra Tower Assets
EXHIBITS
A. Defined Terms
A-1 Form of Certificate of Merger
A-2 Form of Amended and Restated LLC Agreement for Prime Holdings
B-1 Form of Contingent Transferor Note
B-2 Form of Transferor Note
C. Form of Transfer and Contribution Instrument
D. Form of Release and Waiver Regarding COBRA Coverage
E. Description of the Exxon Towers
2.6A Form of Subordination Agreement
2.6B Form of Intercreditor Agreement
2.6C Form of Waiver and Release
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<PAGE> 6
CONTRIBUTION AND TRANSFER AGREEMENT
(AGREEMENT AND PLAN OF MERGER)
This Contribution and Transfer Agreement (Agreement and Plan of Merger)
(this "AGREEMENT") is entered into as of the 11th day of October, 1996 by and
among the Persons listed as "Transferors" on the signature pages hereto
(collectively, the "TRANSFERORS" and individually a "TRANSFEROR"), ATC Holdings
Corp., a Delaware corporation (the "COMPANY"), ATC Merger Corp., a Delaware
corporation, ("MERGECO") and Prime Communication Sites Holding, L.L.C., a
Delaware limited liability company ("PRIME HOLDINGS").
R E C I T A L S:
WHEREAS, contemporaneous with the contributions and transfers
contemplated by this Agreement, American Tower Corporation, a Delaware
corporation ("ATC"), has contributed and transferred all of the outstanding
capital stock of ATC Tower Corp., a Delaware corporation, and American Tower
Rental Holdings Corp., a Delaware corporation, to the Company in exchange for
common and preferred stock issued by the Company;
WHEREAS, certain Transferors desire to transfer and contribute to the
Company, and the Company desires to accept, certain of such Transferors
membership interests in Prime Holdings according to Section 2.1 and the terms
and conditions of this Agreement, and the parties intend that the transfer and
contribution of such membership interests to the Company and the transfer and
contribution to the Company of the capital stock described in the immediately
preceding paragraph qualify as a transaction described in Section 351 of the
Code (as defined below) (the "FORMATION TRANSACTION");
WHEREAS, the Company, immediately upon completion of the Formation
Transaction, will form MergeCo and contribute to it the Merger Consideration,
and cause MergeCo to merge with and into Prime Holdings in a transaction in
which the Transferors receive the Merger Consideration and MergeCo immediately
upon completion of the merger will cease to exist;
WHEREAS, the Board of Directors of MergeCo and the Management Committee
of Prime Holdings have approved and deemed advisable and in the best interest
of each of such entities and their respective shareholders and members, as
applicable, that MergeCo be merged with and into Prime Holdings (the "MERGER")
in the manner in the contemplated herein and accordingly has adopted and
approved this Agreement as its agreement and plan of merger and authorize the
execution hereof;
WHEREAS, the Merger has been approved by the shareholders of MergeCo in
accordance with the Delaware general corporation law and by the requisite
members of Prime Holdings in accordance with the Prime Holdings L.L.C.
Agreement; and
WHEREAS, as beneficiaries of the consummation of the Merger, the
Transferors have entered into this Agreement to evidence certain obligations.
NOW, THEREFORE, in consideration of the premises, agreements and
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and in reliance upon
the mutual representations and warranties contained herein, the parties hereto
agree as follows:
<PAGE> 7
ARTICLE 1.
DEFINITIONS
1.1 CERTAIN DEFINITIONS. Capitalized terms used in this Agreement
but not defined in the body hereof shall have the meanings ascribed to them in
Exhibit A. Capitalized terms defined in the body of this Agreement are listed
in Exhibit A by location herein.
ARTICLE 2.
CONTRIBUTION AND TRANSFER; MERGER; CONSIDERATION; CLOSING
2.1 FORMATION TRANSACTION CONSIDERATION. Subject to the terms and
conditions of this Agreement, at the Closing, but immediately prior to the
Effective Time (as defined below), each Carlyle Partnership shall contribute
and transfer to the Company the number of Class A Units specified opposite its
name on Schedule 2.1 and TCG shall contribute and transfer to the Company all
of its equity interest in Prime Sub, and for all of the Class A Units so
contributed and transferred by a particular Person and for all of the interest
so contributed and transferred by TCG, the Company shall issue to each
contributing Person the number of shares of Company Common Stock specified
opposite its name on Schedule 2.1, which in the aggregate shall equal 6481
shares of Company Common Stock.
2.2 THE MERGER. Subject to the terms and conditions of this
Agreement, at the Closing and effective as of 11:59 p.m., Houston, Texas time
on the Closing Date (the "EFFECTIVE TIME"), MergeCo will merge with and into
Prime Holdings in accordance with the provisions of the General Corporation Law
of the State of Delaware (the "DGCL"), the separate existence of MergeCo shall
cease and Prime Holdings shall continue as the surviving company in the Merger
(the "SURVIVING COMPANY"). Prime Holdings and MergeCo are sometimes referred
to as the "CONSTITUENT COMPANIES."
2.3 CERTIFICATE OF MERGER. Subject to the terms and conditions
hereof, on the Closing Date, the parties hereto shall cause the Merger to be
consummated by the filing of a duly executed copy of the Certificate of Merger
in the form attached hereto as Exhibit A-1 (the "CERTIFICATE OF MERGER") with
the Secretary of State of the State of Delaware in accordance with the
provisions of the DGCL.
2.4 EFFECT OF MERGER. At the Effective Time, the separate existence
of MergeCo shall cease, and the Surviving Company shall thereupon and
thereafter possess all of the rights, privileges, immunities and franchises of
each of the Constituent Companies. At the Effective Time, the limited
liability company agreement of Prime Holdings shall be amended and restated in
its entirety in the form attached hereto as Exhibit A-2. The managers,
officers, employees and agents of Prime Holdings immediately prior to the
Effective Time shall be deemed to have resigned immediately at such time, and
from and after the Effective Time, the managers of Prime Holdings shall be Fred
R. Lummis and Marty L. Jimmerson and the officers of Prime Holdings shall be
Fred R. Lummis, President and Marty L. Jimmerson, Vice President and Secretary,
in each case, until their successors are duly elected and qualified or until
their removal or resignation.
2.5 MANNER AND BASIS OF CONVERTING SHARES AND LLC INTERESTS. At the
Effective Time, by virtue of the Merger and without any further action on the
part of the Constituent Companies or their respective shareholders or members,
but subject to the provisions of Section 2.6, the limited liability
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<PAGE> 8
company interests of Prime Holdings shall be converted or canceled and the
outstanding shares of MergeCo shall be canceled in accordance with the
following provisions of this Section 2.5. Each of the Transferors, as members
of Prime Holdings, hereby consents to the composition of the consideration that
it shall receive pursuant to this Section 2.5, which (prior to adjustments
contemplated by Section 3.1) in the aggregate shall equal $5,241,000 in cash
(the "CASH PORTION OF THE MERGER CONSIDERATION") and $2,861,339 in subordinated
notes, of which $500,000 shall be evidenced by a single note payable to Agent
and otherwise in the form of Exhibit B-1 (the "CONTINGENT TRANSFEROR NOTE") and
$2,361,339 of which shall be evidenced by multiple notes (including that issued
to Mr. Barnett) each in the form of Exhibit B-2 (together with the Contingent
Transferor Note, the "TRANSFEROR NOTES") even though such consideration differs
in composition as between holders of Class A Units (as defined in the Prime
Holdings LLC Agreement), on the one hand, and holders of Class B Units (as
defined in the Prime Holdings LLC Agreement), on the other hand. The manner of
conversion or cancellation of the shares of MergeCo and membership interests of
Prime Holdings is as follows:
(a) At the Effective Time, the number of Class A Units held by
ATC Holdings by reason of the contribution and transfer
described in the first sentence of Section 2.1 shall cease
to exist or be outstanding and shall be canceled and
retired.
(b) At the Effective Time, the number of Class A Units
specified opposite each Person's name on Schedule 2.5(b)
shall be converted into the right to receive the
consideration (in cash and subordinated promissory notes)
specified opposite such person's name on Schedule 2.5(b).
(c) At the Effective Time, the number of Class B Units (or
assignee interests therein) specified opposite each
Person's name on Schedule 2.5(c) shall be converted into
the right to receive the consideration (in cash and
subordinated promissory notes) specified opposite such
person's name on Schedule 2.5(c).
(d) At the Effective Time, each of the 100 outstanding shares
of common stock of MergeCo shall be automatically
converted into a 1% membership interest in the Surviving
Company.
2.6 CERTAIN CONDITIONS AT CLOSING. The right of each Person to
receive its portion of the Merger Consideration set forth in Section 2.5 shall
be conditioned on (a) if such Person is to receive any subordinated promissory
note, such Person entering into the Intercreditor Agreement, in the form of
Exhibit 2.6A, and the Subordination Agreement, in the form of Exhibit 2.6B and
(b) each Person, regardless of the form of consideration to be received, must
execute and deliver a release and waiver in the form of Exhibit 2.6C.
2.7 CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at the offices of Vinson & Elkins
L.L.P., 2300 First City Tower, Houston, Texas 77002 commencing at 11:00 a.m.,
local time, on October 16, 1996 or at such other time and place as the
Transferors and the Company shall agree (the "CLOSING DATE").
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2.8 DELIVERIES.
(a) Except as provided in Section 2.8(b), at the Closing, (i) the
Transferors will deliver to the Company, and the Company will deliver to Agent
the various certificates, instruments and documents required to be delivered
pursuant to Article 8 and 2.6(b), and (ii) the Company will deliver (A) the
Cash Portion of the Merger Consideration, as adjusted by agreement of the
parties according to the provisions of Article 3, (B) the Company Common Stock
and (C) the Transferor Notes.
(b) Notwithstanding the deliveries required in Section 2.8(a), with
respect to any Person entitled to any portion of the Merger Consideration that
has not satisfied the conditions set forth in Section 2.6, the portion of the
Merger Consideration otherwise payable thereto shall be retained by the Company
and, if cash, deposited in a segregated, interest-bearing account maintained by
the Company. Thereafter, upon satisfaction of the conditions set forth in
Section 2.6 by the Person otherwise entitled to such retained consideration,
the Company shall promptly deliver such consideration thereto. Any portion of
the retained consideration that has not been distributed in accordance with
this Section 2.8(b) on December 31, 1997, may, at the election of the Company,
be distributed to Agent, and Agent shall accept such consideration. Upon the
Company's distributing such retained consideration to Agent, any Person
entitled to any portion of such consideration shall look only to Agent for
payment of their claim.
2.9 ALLOCATION OF CONSIDERATION. The Merger Consideration shall be
allocated among the assets of the Prime Companies in the manner set forth on
Schedule 2.9. The Company and the Transferors shall use such allocation as the
basis for reporting asset values and other items for purposes of all required
Tax Returns. The Company and the Transferors agree to treat and report (and, if
necessary, to cause each of their respective Affiliates to treat and report)
the transactions contemplated hereby in a manner consistent with Schedule 2.9.
ARTICLE 3.
REVENUE AND COST RECONCILIATION
3.1 PRORATION; RECEIPTS AND CREDITS.
(a) All monies, proceeds, receipts, credits and income
(collectively, "GROSS REVENUES") attributable to the Prime Companies (i) for
all periods of time after October 15, 1996, shall be the sole property and
entitlement of the Company and, to the extent received by any Transferor or any
Affiliates thereof, Transferors shall fully disclose, account for and transmit
same to the Company promptly and (ii) for all periods of time on or prior to
October 15, 1996, shall be the sole property and entitlement of Transferors
and, to the extent received by the Company or any of its Affiliates, the
Company shall fully disclose, account for and transmit same to Agent promptly.
All ad valorem taxes and other operating expenses relating to the Prime
Companies including, without limitation, utility charges, maintenance,
management costs and other normal operating charges (collectively, "OPERATING
COSTS") shall be prorated as of October 15, 1996 between Transferors, on the
one hand, and the Company, on the other hand. Transferors shall timely pay all
Operating Costs attributable to the period through and including October 15,
1996 and shall immediately prepay all indebtedness for borrowed money in excess
of $3,295,000 and prepayment penalties or similar amounts, accrued, unpaid
interest and attorneys' fees of the Prime Companies' lenders in connection with
such prepayment, and the Company shall timely pay all Operating Costs
attributable to the period after October 15, 1996 and shall prepay at Closing
agreed upon indebtedness for borrowed money in the amount of $3,266,000 (and
Transferors shall pay all
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<PAGE> 10
prepayment penalties and similar amounts, accrued, unpaid interest and
attorneys' fees of the Prime Companies' lenders in connection with such
prepayment).
(b) In furtherance of the proration provisions set forth in
Section 3.1(a), the Transferors have delivered to the Company Schedule 3.1A
setting forth (i) Transferors' best estimate of "Net Revenues" (i.e. Gross
Revenues minus Operating Costs) for the month of October 1996 and, without
duplication of the items taken into account in estimating such Net Revenues,
(ii) unpaid ad valorem taxes for 1996 based on 1995 actual tax liabilities,
(iii) land rents paid by the Prime Companies pertaining to the Tower Assets
that cover periods from and after November 1, 1996 and revenues previously
collected from tower users that cover periods from and after November 1,1996
and (iv) certain prepaid items. Based on the dollar amounts of the items set
forth on Schedule 3.1A, an adjustment has been made to the cash payable by the
Company at the Closing. By reason of such adjustment to the cash payable at
the Closing, notwithstanding anything to the contrary in Section 3.1(a), the
parties agree as follows: (A) the Transferors shall be responsible for and
shall timely pay all Operating Costs (including all amounts owing for
maintenance and repairs conducted on or before the Closing Date but excluding
ad valorem taxes described under (B) below) and shall be entitled to retain all
Gross Revenues, in each case, from the operations of the Prime Companies before
and in the month of October 1996 and (B) the Company shall assume and cause to
be paid all ad valorem taxes with respect to the Tower Assets for tax year
1996 that are not yet due and payable. In the event actual ad valorem taxes
for 1996 and other charges cannot be determined as of the Closing Date, the
parties shall adjust the estimated proration based on actual taxes and charges
and settle up accordingly within a reasonable time after the actual amounts
become first available. If the parties are unable to determine the actual
prorated taxes and other charges as of the Closing Date, such taxes and other
charges shall be prorated based upon the parties' reasonable estimate thereof.
The parties shall adjust the proration based on actual taxes and charges and
settle up accordingly within a reasonable time after such actual numbers become
first available. The Transferors recognize that, although the management
agreements have been terminated with Labda Communication, High Sierra
Communication and Madbeck Tower Management Company and that the Prime Companies
have received a release from David Bergh and his spouse, certain amounts remain
payable in connection with such termination and release, and the Transferors
shall pay all amounts owed within 90 days from the date hereof.
(c) Mr. Bill Kubena will assist the Company, at the
Transferors' expense, in the collection and payment of the Gross Revenues and
Operating Costs during the 90-day period following the Closing Date.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF THE TRANSFERORS
The Transferors hereby jointly and severally represent and warrant to
the Company as follows:
4.1 ORGANIZATION AND EXISTENCE. Each of the Prime Companies is a
limited liability company duly organized, validly existing and in good standing
under the laws of Delaware. The Transferors have delivered to the Company
true and complete copies of the certificates of formation and the limited
liability company agreements (the "CONSTITUENT DOCUMENTS") of each of the
Prime Companies, each as amended to date and presently in effect.
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<PAGE> 11
4.2 QUALIFICATION. Each of the Prime Companies is duly qualified to
do business as a foreign limited liability company and is good standing in each
of the Subject States. Neither Prime Company is qualified as a foreign
corporation under a name other than the name set forth in its certificate of
formation or a name reflected on the certificates of good standing or existence
furnished by the Transferors to the Company at the Closing. Neither of the
Prime Companies is required to qualify as a foreign limited liability company
in any jurisdiction other than the Subject States. Each of the Prime Companies
has all requisite power and authority to own its properties and assets and to
carry on the business it currently conducts.
4.3 AUTHORITY; ENFORCEABILITY. Prime Holdings and each Transferor
has all requisite power and authority to execute and deliver this Agreement and
the other Transaction Documents to which it is a party and to perform its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and the other Transaction Documents to which it is a party by Prime
Holdings and each Transferor and the performance of the transactions
contemplated hereby and thereby have been duly and validly approved by the
requisite vote of the partners of any Transferor that is a partnership and by
the requisite vote of the members of Prime Holdings and TCG. The Transferors
are the only persons entitled to notice with respect to any meeting regarding
the approval of the Merger by the members of Prime Holdings. With respect to
each Transferor and Prime Holdings, this Agreement and each of the Transaction
Documents to which it is a party constitute the legal, valid and binding
obligations of such Person, enforceable against it in accordance with their
terms, subject to applicable bankruptcy, insolvency or other similar laws
relating to or affecting the enforcement of creditors' rights generally and to
general principles of equity (such laws being referred to herein as "CREDITORS'
RIGHTS").
4.4 CONSENTS; ABSENCE OF CONFLICTS. Neither the execution and
delivery of this Agreement or the other Transaction Documents by Prime Holdings
or any Transferor, nor the consummation of the transactions contemplated hereby
and thereby will (a) require consent or advance notice under (other than
notices that have been given and consents that have been obtained, copies of
which have been furnished to the Company), violate or breach the terms of,
cause a default under, conflict with, result in acceleration of, create in any
party the right to accelerate, terminate, modify in a manner adverse to either
Prime Company under (i) any applicable Legal Requirement, (ii) the Constituent
Documents of either Prime Company or the partnership agreements of the Carlyle
Partnerships or the limited liability company agreement of TCG, (iii) any
Contract to which either Prime Company is a party or by which it, or any of its
properties, is bound or (b) entitle any Person to exercise any preferential
purchase or similar right (whether arising by law, contract or otherwise) that
affects any of the Prime Interests or the Tower Assets, (c) result in the
creation or imposition of any Lien (other than a Permitted Lien) on any of the
Tower Assets or the Prime Interests; (d) result in the cancellation,
forfeiture, revocation, suspension or adverse modification of any existing
consent, approval, authorization, license, permit, certificate or order of any
Governmental Authority that adversely affects the Prime Businesses; or (e) with
the passage of time or the giving of notice or the taking of any action of any
third party have any of the effects set forth in clause (a), (b), (c) or (d) of
this Section 4.4.
4.5 CAPITALIZATION OF THE PRIME COMPANIES.
(a) All of the issued and outstanding equity interests of
Prime Holdings consists of 43,500 Class A Units and 27,277 Class B Units. All
of the record and beneficial equity interests of
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<PAGE> 12
Prime Holdings (including, without limitation, any interest entitling the
holder to the economic benefits of Prime Holdings) are owned by the Persons
identified on Schedule 4.5(a).
There are no other members or holders of assignee or similar interests
in Prime Holdings other than those set forth on Schedule 4.5(a). Each Person
listed on Schedule 4.5(a) has good and valid title to the ownership interest or
Units set forth opposite its name and owns same free and clear of all Liens.
The interests described on Schedule 4.5(a) in Prime Holdings have been duly
authorized and are validly issued. The interests in Prime Holdings are not
certificated.
(b) All of the record and beneficial equity interests of Prime
Sub (including, without limitation, any interest entitling the holder to the
economic benefits of Prime Sub) are owned by the following Persons in the
percentages set forth opposite their name:
<TABLE>
<CAPTION>
MEMBER NAME PERCENTAGE MEMBERSHIP INTEREST
----------- ------------------------------
<S> <C>
Prime Holdings 99%
TCG 1%
</TABLE>
There are no other members or holders of assignee interests or similar
interests in Prime Sub other than those set forth above. Each Person listed
above has good and valid title to the ownership interest set forth opposite its
name and owns same free and clear of all Liens. The above interests in Prime
Sub have been duly authorized and are validly issued. The interests in Prime
Sub are not certificated.
(c) Except for this Agreement, there are no Contracts
obligating either of the Prime Companies (i) to issue, sell, pledge, dispose of
or encumber any equity interest therein or any security convertible,
exercisable or exchangeable into any class of equity interest therein, (ii) to
redeem, purchase or acquire in any manner any class of its equity interests or
any securities that are convertible, exercisable or exchangeable into any of
its equity interests or (iii) to make any dividend or distribution of any kind
with respect to its equity interests.
(d) There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights affecting the capital
stock or equity of either of the Prime Companies. There are no voting trusts,
proxies, or other agreements or understandings with respect to the voting of
the equity interests of any of the Prime Companies other than the voting terms
set forth in the LLC Agreements.
(e) Prime Holdings is its own "ultimate parent entity" within
the meaning of the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as
amended.
(f) No Class C Units of Prime Holdings have ever been issued
or are outstanding.
4.6 EQUITY INVESTMENTS. Except for Prime Holding's equity interest
in Prime Sub described above, neither of the Prime Companies owns any equity
interest, or any security convertible, exercisable or exchangeable into any
equity interest in any Person.
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<PAGE> 13
4.7 ABSENCE OF CHANGES. Except as set forth on Schedule 4.7 and
except for the acquisition of the Exxon Towers and sales of property from the
Exxon Towers, since the Interim Balance Sheet Date:
(a) no Material Adverse Effect has occurred to either of the
Prime Companies;
(b) the Prime Companies have been operated and maintained in
the ordinary course of the business consistent with their past practices;
(c) there has not been any damage, destruction or loss to any
of the Towers or equipment shelters located thereon or any other material
assets of either of the Prime Companies except damage, destruction or loss that
has been previously restored to its pre-damaged, pre-destroyed or pre-loss
condition (by repair or replacement);
(d) there has been no issuance by either of the Prime
Companies of any equity interests therein, or any repurchase or redemption by
any of them of any equity interests therein;
(e) there has been no merger or consolidation of either of the
Prime Companies with any other Person or any acquisition by any of the Prime
Companies of the stock, equity or all or substantially all of the assets of any
other Person;
(f) there has been no declaration or payment of any dividend
on, or any other distribution with respect to, the equity interests of either
of the Prime Companies;
(g) there has been no borrowing of funds, agreement to borrow
funds, guaranty or agreement to maintain the financial position of any Person
by any of the Prime Companies;
(h) none of the Prime Companies has entered into any
employment, consulting, severance or indemnification agreement with any Person
including with any of its employees, nor has any such the Company incurred or
entered into any collective bargaining agreement or other obligation to any
labor organization or employee;
(i) there has been no actual or, to the knowledge of the
Transferors, threatened adverse change in the relationship of either Prime or
the Company with any material customer, supplier, distributor or sales
representative thereof; and
(j) there has been no Contract entered into by the Prime
Companies to do any of the foregoing.
4.8 TOWER ASSETS AND REAL PROPERTY INTERESTS.
(a) Schedule A-1 lists separately for each of the Prime
Companies all real property owned and held in fee thereby (collectively, for
both of the Prime Companies, the "SCHEDULED FEE LANDS") and a general
description of the improvements located thereon. Each Prime Company has good
and marketable title to its Scheduled Fee Lands (as identified on such
Schedule) and all improvements
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<PAGE> 14
(except for certain equipment shelters located on Tower Sites that are owned by
customers of the Prime Company on such Tower Sites) thereon, free and clear of
all Title Defects except Permitted Liens.
(b) Schedule A-2 lists separately for each of the Prime
Companies all surface leases (and the lands covered thereby) pursuant to which
it leases real property for use in connection with the Prime Business
(collectively, for both of the Prime Companies, the "SCHEDULED LEASES"),
together with a general description of any improvements located thereon, in
each case specifying the name of the lessor, or sublessor, the date and term of
the lease. A true and complete copy of each of the Scheduled Leases, as
amended to date, has been furnished by the Transferors to the Company. One of
the Prime Companies is the lessee or sublessee under each Scheduled Lease or
has succeeded to the rights of the lessee under such Scheduled Lease, owns the
leasehold interest created pursuant to such lease and, to the knowledge of the
Transferors, holds title thereto free and clear of all Title Defects except
Permitted Liens. Each Scheduled Lease is in full force and effect and
constitutes a binding obligation of each landlord, lessor or sublessor
thereunder, enforceable against such landlord, lessor or sublessor in
accordance with its terms subject to Creditor's Rights. No event has occurred
that constitutes, or that with the giving of notice or the passage of time or
both would constitute, a default under any Scheduled Lease by either of the
Prime Companies or, to the knowledge of the Transferors, any other Person. The
Prime Company that is the lessee or sublessee under any particular Scheduled
Lease either owns the improvements located on the lands covered by such lease
or validly occupies such improvements in accordance with the terms of such
lease and, to the knowledge of the Transferors, holds title thereto free and
clear of all Title Defects except Permitted Liens.
(c) Schedule A-3 lists separately for each of the Prime
Companies all surface easements (and the lands covered thereby) on which any
Tower is located and all other material easements used in connection with the
Prime Businesses (collectively, for both of the Prime Companies, the "SCHEDULED
EASEMENTS"), together with a general description of any improvements located
thereon, in each case specifying the name of the grantor and grantee thereof,
the grant date and, if other than perpetual, the term of the easement. A true
and complete copy of each instrument by which the Scheduled Easements have been
granted, as amended to date, has been furnished by the Transferors to the
Company. The Person identified on Schedule A-3 as the grantee under any
particular Scheduled Easement is the original grantee or has validly succeeded
to the rights of the original grantee thereof and has good and valid title to
such easement and, to the knowledge of the Transferors, holds title thereto
free and clear of all Title Defects except Permitted Liens. Each Scheduled
Easement is in full force and effect and has been paid for in full. No event
has occurred that constitutes, or that with the giving of notice or the passage
of time or both would constitute, a default by any party to any Scheduled
Easement. Each Prime Company identified on Schedule A-3 as the owner of any
particular Scheduled Easement owns the improvements (except for certain
equipment shelters located on Tower Sites that are owned by customers of the
Prime Companies on such Tower Sites) located on the lands covered by such
easement and, to the knowledge of the Transferors, holds title thereto free
and clear of all Title Defects except Permitted Liens.
(d) The Real Property Interests constitute (i) all of the real
property and (except for certain equipment shelters located on Tower Sites that
are owned by customers of the Prime Companies on such Tower Sites) improvements
which have been used in connection with the ownership and operations of the
Prime Companies and the conduct of the Prime Businesses since January 1, 1996
and (ii) all of the real property and improvements which are reasonably
anticipated to be required to provide
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<PAGE> 15
services under Contracts with existing users and users under the Prime Pending
Contracts. Other than the Prime Companies and any party to any Scheduled User
Contract, there are no parties in possession of any portion of any of the Real
Property Interests as lessees, subtenants, tenants at sufferance or
trespassers. Each Prime Company identified on Schedules A-1, A-2 or A-3 as
being the owner of the particular Real Property Interest has full right and
authority to own, use and operate all of the improvements located on the Real
Property Interest (except for certain equipment shelters located on Tower Sites
that are owned by customers of the Prime Companies on such Tower Sites),
subject to applicable law and Permitted Liens. Such improvements are being
used, occupied, and maintained in all material respects by each Prime Company
in accordance with all applicable easements, contracts, permits, insurance
requirements, restrictions, ordinances, zoning laws, building setback lines,
covenants and reservations. Certificates of occupancy and all other material
licenses, permits, authorizations, and approvals required by any Governmental
Authority having jurisdiction over the Real Property Interests, have been
issued for the applicable Prime Company's occupancy of each of such
improvements and all such certificates, licenses, permits, authorizations and
approvals have been paid for and are in full force and effect. There is no
pending or, to the knowledge of any of the Transferors, threatened
condemnation, eminent domain or similar proceeding or special assessment
affecting any of the Real Property Interests. The improvements located on the
Real Property Interests are free from material structural and mechanical
defects and have been used by the applicable Prime Company in the ordinary
course of business and remain as of the date hereof in suitable and adequate
condition for such continued use in the Tower Business.
(e) Schedules A-1, A-2 and A-3 accurately list for each Tower
Site the type and height (within a reasonable degree of accuracy) of each Tower
located thereon and other information requested on such Schedules. To the
knowledge of the Transferors, each Tower Site has direct pedestrian and
vehicular access to public roads without the use of any easement, license or
right of way other than the Real Property Interests, and such access is the
only access to the Tower Sites that has been needed by the Prime Companies to
conduct its business during the 12-month period preceding the date of this
Agreement.
(f) Each of the Towers and related support facilities
(including guy anchors and wires), the equipment shelters located thereon and
any fence surrounding same are located wholly within the related Tower Site and
do not encroach on any property other than the Real Property Interests. Each
legal description set forth in the deed, lease or easement creating each Real
Property Interest is adequate under applicable local laws to describe the real
property interest covered thereby. No portion of the Tower Site has been
leased or subleased (except under Scheduled User Contracts) including for
grazing purposes. To the knowledge of the Transferors, no Tower Site is
located within an area that has been designated by the Federal Insurance
Administration, the Army Corps of Engineers, or the Federal Emergency
Management Administration, or any other governmental authority as being subject
to any special or increased flooding hazards.
(g) The Transferors have furnished the Company with true and
complete copies of all deeds, leases, title opinions, title insurance policies
and surveys in their possession that relate to the Real Property Interests,
together with copies of all reports of any engineers, environmental consultants
or other consultants in their possession or the possession of the Prime
Companies and relating to any of the Real Property Interests.
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<PAGE> 16
(h) All utilities are available to each Real Property Interest
in sufficient quantities and quality to adequately serve the related Real
Property Interest in connection with the operation of Prime Businesses
consistent with its past practices.
(i) Schedule B-1 separately lists for each Prime Company each
item of equipment, machine, part, material, supply, furniture, car, truck,
trailer and other rolling stock and each other item of tangible personal
property owned thereby in connection with its Business (a) having a book value
of $1,000 or more or (b) such other items of the foregoing that have a book
value of less than $1,000 but that, when aggregated with other individual items
of the foregoing with a book value of less than $1,000 have an aggregate fair
market value or book value of more than $10,000 (collectively, for all of the
Prime Companies, the "SCHEDULED TANGIBLE PERSONAL PROPERTY"). The Scheduled
Tangible Personal Property constitutes all of the tangible personal property
(other than de minimis items of personal property) necessary for the continued
ownership, use and operation of the Prime Businesses consistent in all material
respects with the past practices of the Prime Companies since January 1, 1996.
The Prime Company identified on Schedule B-1 as using or holding any particular
items of Scheduled Tangible Personal Property has good title to such items free
and clear of all Title Defects except Permitted Lines. Each item of Scheduled
Tangible Personal Property is in reasonable working order and repair (taking
its age and ordinary wear and tear into account), has been operated and
maintained in the ordinary course of business and in any event remains in
suitable and adequate condition for use consistent with its primary use since
January 1, 1996.
4.9 AFFILIATE TRANSACTIONS. Schedule 4.9 describes all services and
assets (including Intellectual Property Rights) owned, licensed to or otherwise
held by any of the Transferor or its Affiliates (other than the Prime
Companies) that has been made available or provided to or used by either of the
Prime Companies within the one year period prior to the date of this Agreement
and that are required to conduct following the Closing Date the Prime
Businesses consistent with past practices. Except as set forth in Schedule
4.9, (a) there are no outstanding notes payable to, accounts receivable from or
advances by either of the Prime Companies to, and neither of the Prime
Companies is otherwise a creditor of, the Transferor or Affiliate, director,
officer, shareholder, member or partner thereof and (b) since January 1, 1996,
neither of the Prime Companies has purchased, transferred or leased any real or
personal property from or for the benefit of, paid any commission, salary or
bonus to or for the benefit of the Transferor (other than in their capacity as
employees of the Prime Companies) or Affiliate, director, officer, shareholder,
member or partner of any Transferor.
4.10 PERMITS. Schedule 4.10(a) separately lists for each Prime
Company all permits (including those issued by the Federal Aviation
Administration and the Federal Communications Commission), licenses,
certificates, authorizations and approvals granted by any Governmental
Authority (each, a "PERMIT") and used or held by or issued to such Prime
Company or any of its Affiliates in connection with the ownership and operation
of the Prime Businesses including the Towers and the Tower Sites (collectively,
the "SCHEDULED PERMITS") that are necessary for the continued ownership, use
and operation of the Prime Businesses including the Towers and Tower Sites
consistent in all material respects with the past practices of the Prime
Companies since January 1, 1996. All fees and other payments due and owing in
connection with the Scheduled Permits have been paid in a timely manner so as
to prevent any lapse or revocation thereof, and no amounts remain unpaid
(whether or not due) with respect to the Scheduled Permits for the period of
time ending on or before the Closing Date except amounts included in the
adjustments under Section 3.1. Each of the Prime Companies is the initial
permittee of, or has validly
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<PAGE> 17
succeeded to the rights of the permittee under, each of the Scheduled Permits
identified as being held or being used thereby. Each of the Scheduled Permits
is in full force and effect and no event has occurred that constitutes, or that
with the giving of notice for the passage of time or both would constitute, a
default by either Prime Company or, to the knowledge of the Transferors, any
other Person under any of the Scheduled Permits. The Transferors have
furnished to the Company true and complete copies of the Scheduled Permits as
amended to date. The Scheduled Permits are free and clear of all collateral
assignments, security interests and similar encumbrances.
4.11 CONTRACTS.
(a) Schedule 4.11(a) lists each Contract (other than the
Scheduled User Contracts and the Scheduled Leases) to which either of the Prime
Companies is a party or by which either of their properties are bound
including, without limitation, the following: (i) any Contract that provides
for the payment by either Prime Company of more than $5,000 in any consecutive
12-month period or more than $25,000 over the remaining life of such Contract,
(ii) any Contract entered into outside of the ordinary course of business
including the purchase or sale of all or substantially all of the assets of any
company or operating division (by asset sale, stock sale, merger or otherwise),
(iii) any Contract relating to indebtedness for borrowed money and any Contract
creating a capital lease obligation, (iv) any Contract providing for the
deferred or installment payment of any purchase price including any so called
"earn out" arrangement, (v) any Contract between such Prime Company and any
Governmental Authority and (vi) any Contract that grants either Prime Company
the option or preferential purchase right to acquire any tower site, towers or
related equipment.
(b) Schedule 4.11(b) lists each User Contracts to which either
of the Prime Companies is a party or by which either of their properties are
bound, and correctly lists the information requested on such Schedule for each
User Contract. Schedule 4.11(b) also separately lists and clearly identifies
them as such all of the Prime Pending Contracts and the information requested
therefor on such Schedule. The Contracts listed on Schedules 4.11(a) and (b)
are collectively referred to as the "SCHEDULED CONTRACTS." Each Contract
specified on Schedule 4.11(b) as "Pending" has been executed as of the date
hereof, has a term of at least one year and the revenues of which have not
begun to be received but will begin to be received some time on or before
December 31, 1996.
(c) Neither of the Prime Companies is a party to or has
continuing obligations or contingent liabilities under, and Schedules 4.11(a)
and (b) do not make reference to, (i) any Contract that grants any Person the
right to market or manage any aspect of the Prime Businesses including, without
limitation, tower management, tower space marketing, and tower customer or user
administration other than those terminated and released at Closing, (ii) any
Contract that limits the freedom of such Prime Company to compete in any line
of business or to conduct business in any geographic location, (iii) any
Contract that (A) was entered into on terms known at the time the Contract was
entered into not to be commercially reasonable, (B) was entered into with the
expectation that such Prime Company would incur a loss or (C) involves an
obligation on the part of such Prime Company to construct or manage towers for
another Person at a fixed or turn-key price, (iv) any Contract for the sale of
accounts receivable, (v) any Contract constituting a guarantee of debt of any
third Person or any Contract requiring such Prime Company to maintain the
financial position of any other Person, (vi) any Contract (other than the LLC
Agreements) constituting a partnership, joint venture or other similar
Contract; (vii) any Contract in respect of Intellectual Property Rights granted
to or by such Prime Company, (viii) any Contract
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creating a Lien on any of the Tower Assets, (ix) any Contract between either
Prime Company and any Transferor or any Affiliate of any Transferor or (x) any
Contract for employment or consulting services or any Contract for severance,
termination pay or similar obligations.
(d) True and complete copies of each Scheduled Contract have
been furnished by the Transferors to the Company. With respect to each
Scheduled Contract: (i) the Scheduled Contract is the legal, valid obligation
of the applicable Prime Company, and to the knowledge of the Transferors, any
other Person party thereto, binding and enforceable against such applicable
Prime Company, and to the knowledge of the Transferors, any other Person party
thereto, in accordance with its terms subject to Creditors' Rights; (ii) the
Scheduled Contract has not been terminated, and none of the Prime Companies,
nor, to the knowledge of any of the Transferors, any other Person is in breach
or default thereunder, and to the knowledge of the Transferors no event has
occurred that with notice or lapse of time, or both, would constitute a breach
or default, or permit termination or modification thereunder; and (iii) no
party has asserted nor has any right to offset, discount or otherwise abate any
amount owing under the Scheduled Contract except as expressly set forth in such
Contract. Each of the Prime Companies is the initial party to each Scheduled
Contract, or has validly succeeded to the rights of a party to each Scheduled
Contract. None of the rights of the Prime Companies in the Scheduled Contracts
has been assigned (including by an absolute assignment of rents or contracts)
or collaterally assigned or are affected by any security interest or similar
encumbrance.
(e) The principal balance of all of the Prime Companies'
indebtedness to third-parties is described on Schedule 4.11(c) and can be
prepaid at any time without payment of any premium, penalty or similar amount
other than amounts that have been paid by the Transferors on or prior to the
Closing. All accrued interest, whether or not then payable, on the Prime
Companies's indebtedness to third-parties has been paid in full through and
including the Closing Date. All intercompany amounts including those between
any Prime Company, on the one hand, and any Transferor or their respective
Affiliates have been capitalized, paid in full, forgiven or otherwise satisfied
in full prior to the Closing Date.
4.12 INTELLECTUAL PROPERTY. Schedule 4.12 lists all of the material
Intellectual Property Rights owned or used by either of the Prime Companies
including any corporate, trade or assumed names (other than those under which
either Prime Company may have qualified as a foreign corporation and that are
reflected on the certificates of good standing and existence delivered at
Closing) and the applicable state, county or other jurisdiction in which either
Prime Company has made any filing with respect to any such property
(collectively, the "SCHEDULED INTELLECTUAL PROPERTY RIGHTS") that are necessary
for the continued ownership, use and operation of the Prime businesses
consistent in all material respects with the past practices of the Prime
Companies since January 1, 1996. One of the Prime Companies has good title to
each item of Scheduled Intellectual Property Rights and holds title thereto
free and clear of all Liens, and has not granted any person the right to use,
or consented to the use by any person of, any of the Scheduled Intellectual
Property Rights or, with respect to any corporate, trade or assumed name, any
confusingly similar name in any of the Subject States.
4.13 FINANCIAL STATEMENTS. The Transferors have delivered to the
Company true and complete copies of the following financial statements
(collectively, the "FINANCIAL STATEMENTS"): (a) the audited balance sheets of
the Prime Companies (on a combined basis) as of December 31, 1995 and December
31, 1994 and the related audited statements of the Prime Companies (on a
combined basis) of
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<PAGE> 19
income, members' capital and cash flows (including the notes thereto) (the
"AUDITED FINANCIAL STATEMENTS"), which financial statements are accompanied by
the signed audit opinions of the Prime Companies' independent public
accountants for each of such calendar years, and (b) an unaudited balance sheet
(on a combined basis) of the Prime Companies as of the Interim Balance Sheet
Date and the related unaudited statements of the Prime Companies (on a combined
basis) of income for the eight-month period then ended (the "INTERIM FINANCIAL
STATEMENTS"). The Financial Statements present fairly in all material respects
the financial position of the Prime Companies on a combined basis and the
results of their operations and changes in financial position as of the dates
and for the periods indicated therein and have been prepared in accordance with
GAAP, applied on a consistent basis throughout the periods covered thereby.
Other than as reflected in the Financial Statements delivered to the Company
or as disclosed on Schedule 4.13, to the knowledge of the Transferors, neither
Prime Company has any liability or obligation (whether accrued, absolute,
contingent or otherwise) that, when aggregated with other liabilities or
obligations described in this sentence, is reasonably likely to give rise to
Damages of more than $5000, nor do Transferors know of any basis for the
assertion against either Prime Company of any liability or obligation not fully
reflected or accrued for in the Financial Statements delivered to the Company
or reflected on Schedule 3.1A.
4.14 LEGAL COMPLIANCE. Each of the Prime Companies is in compliance
in all material respects with all applicable Legal Requirements.
4.15 INSURANCE. Schedule 4.15 sets forth a true and complete list of
all policies, binders, and insurance contracts under which any of the Prime
Companies or any of the properties or assets of the Prime Companies is insured
(the "EXISTING INSURANCE POLICIES"). With respect to each Existing Insurance
Policy, Schedule 4.15 sets forth a true and correct description of (a) the
scope of coverage, (b) the limits of liability, (c) deductibles and other
similar amounts, and (d) the aggregate limits and available coverage (if less
than the aggregate limits) as of the date hereof. Each of the Existing
Insurance Policies is in full force and effect, neither the Prime Companies nor
the Transferors have received written notice of any cancellation or any
threatened cancellation of any Existing Insurance Policy, and each of the Prime
Companies is a named insured or loss payee, as applicable, under each Existing
Insurance Policy.
4.16 BOOKS AND RECORDS. The Transferors have furnished the Company
with true and complete copies of the books and records relating to the
ownership and operation of the Prime Companies (the "BOOKS AND RECORDS"). The
Books and Records accurately reflect all member interest transfers and all
minutes and written consents adopted by the members or managers of the Prime
Companies. The Books and Records have been maintained in accordance with
applicable Legal Requirements, comprise all of the books and records relating
to the ownership and operation Businesses, reflect all proceedings and
transactions customarily contained in corporate books and records and will be
delivered to the Company at the Closing.
4.17 TAXES.
(a) All returns (including, without limitation, income,
franchise, corporation, capital gains, sales and use, unemployment
compensation, excise, severance, property, gross receipts, profits, payroll and
withholding tax returns and information returns) and reports (all such returns
and reports herein referred to collectively as the "TAX RETURNS" or singularly
as a "TAX RETURN") of or relating to any foreign, federal, state or local tax,
assessment, impost, duty, levy or charge of any nature whatsoever (all,
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<PAGE> 20
together with any penalties, additions to tax, fines and interest thereon, or
related thereto, herein referred to collectively as "TAXES" or singularly as a
"TAX") which are required to be filed on or before the Closing Date by or with
respect to the Prime Companies have been duly and timely filed. All items of
income, gain, loss, deduction and credit or other items required to be included
in each such Tax Return have been so included and all information provided in
each such Tax Return is true, correct and complete in all material respects.
All Taxes which have become due and payable by either of the Prime Companies
with respect to the period covered by each such Tax Return have been timely
paid in full. All withholding Tax and Tax deposit requirements imposed on the
Prime Companies to the extent required by Legal Requirements for any and all
periods ending on or prior to the Closing Date have been timely satisfied in
full by the Prime Companies. No penalty, interest or other charge is or will
become due with respect to the late filing of any such Tax Return or late
payment of any such Tax.
(b) All Tax sharing agreements or similar arrangements with
respect to or involving any of the Prime Companies have been terminated prior
to the Closing Date, and after the Closing Date none of the Prime Companies
shall have any obligation under any such agreement for any past, current or
future period.
(c) There is no claim pending against either of the Prime
Companies or any of their members for any Taxes, and to the knowledge of the
Transferors, no assessment, deficiency or adjustment has been asserted or
proposed with respect to any Tax Return of or with respect to the Prime
Companies. None of the property of the Prime Companies is subject to any Lien
for any Tax except Liens for current Taxes not yet due.
(d) None of the Prime Companies or any of their members will
be required to include any amount in income for any taxable period as a result
of a change in accounting method for any taxable period ending on or before the
Closing Date.
(e) Each of the Prime Companies is classified as a partnership
for U.S. federal income tax purposes.
(f) None of the property of any Prime Company is subject to a
safe-harbor lease (pursuant to section 168(f)(8) of the Internal Revenue Code
of 1954 as in effect after the Economic Recovery Tax Act of 1981 and before the
Tax Reform Act of 1986) or is "tax-exempt use property" (within the meaning of
section 168(h) of the Code) or "tax-exempt bond financed property" (within the
meaning of section 168(g)(5) of the Code).
4.18 LITIGATION. Except as set forth in Schedule 4.18, there are no
actions, suits or proceedings pending or, to the knowledge of the Transferors,
threatened at law or in equity, or before or by any Governmental Authority or
before any arbitrator of any kind, against either of the Prime Companies or
their respective Affiliates that affect or would affect the Prime Companies,
the Prime Businesses or the Tower Assets or the consummation of the
transactions contemplated hereby.
4.19 BROKERS' FEES. Neither the Transferors nor their respective
Affiliates (including the Prime Companies) have any liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Company or its
Affiliates (including any of the Prime Companies) could become liable or
obligated.
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<PAGE> 21
4.20 EMPLOYEES. Schedule 4.20 lists all persons employed by either
Prime Company during any part of the 120-day period preceding the Closing Date.
The employment of all persons employed by either of the Prime Companies on or
prior to the Closing has been terminated, and all liabilities and obligations
relating to the employment of such persons (including, without limitation,
liabilities and obligations relating to the payment of salary and other wages,
travel and entertainment reimbursement, severance benefits, bonuses, profit
sharing, pension benefits, vacation pay or any other liability or obligation
arising under or relating to any employee benefit plan, program or policy) have
been satisfied in full (either by payment or assumption in full by a Person
other than the Prime Companies). There are no outstanding loans or advances to
or from either of the Prime Companies to any of its former members, managers,
officers, employees or any of their respective Affiliates. Neither of the
Prime Companies is a party to, nor is either of the Prime Companies bound by,
the terms of any collective bargaining agreement or any other Contract with any
labor union or representative of employees, and no such agreements are being
negotiated.
4.21 EMPLOYEE BENEFIT MATTERS.
(a) As of the Closing, neither of the Prime Companies
sponsors, maintains or contributes to, nor does either of the Prime Companies
have an obligation to sponsor, maintain or contribute to, any of the following
(collectively referred to as "PLANS," and individually referred to as a
"PLAN"):
(i) an "employee benefit plan," as such term is defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), (including, but not limited to, employee benefit
plans, such as foreign plans, which are not subject to the provisions of
ERISA); or
(ii) a personnel policy, stock option plan, collective
bargaining agreement, bonus plan or arrangement, incentive award plan or
arrangement, vacation policy, severance pay plan, policy or agreement,
deferred compensation agreement or arrangement, executive compensation
or supplemental income arrangement, consulting agreement, employment
agreement and each other employee benefit plan, agreement, arrangement,
program, practice or understanding which is not described in Section
4.21(a)(i).
(b) Neither of the Prime Companies, nor any corporation,
trade, business or entity under common control with either of the Prime
Companies within the meaning of Section 414(b), (c), (m) or (o) of the Internal
Revenue Code of 1986, as amended (the "CODE"), or Section 4001 of ERISA (a
"COMMONLY CONTROLLED ENTITY"), has at any time within six years prior to the
Closing Date contributed to, or had an obligation to contribute to, a
multiemployer plan within the meaning of Section 3(37) of ERISA.
(c) Neither of the Prime Companies has any outstanding
obligations or liabilities (including, without limitation, any obligation or
liability relating to the continuation of coverage provisions contained in
Section 4980B of the Code, Sections 601 through 608 of ERISA, and applicable
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state laws) with respect to any Plan (i) formerly sponsored, maintained or
contributed to by either of the Prime Companies or (ii) currently or formerly
sponsored, maintained or contributed to by any Commonly Controlled Entity.
(d) No payments have or will be made to former employees of
the Prime Companies which, in the aggregate, would result in imposition of the
sanctions imposed under Sections 280G and 4999 of the Code.
4.22 ENVIRONMENTAL MATTERS.
(a) To the knowledge of the Transferors, the properties of
each Prime Company (collectively, the "PROPERTIES") do not violate any
Environmental Laws or any order or requirement of any court or Governmental
Authority to the extent pertaining to health or the environment, nor are there
any conditions existing on or resulting from operation of the Properties that
may give rise to any on-site or off-site remedial obligations under any
Environmental Law;
(b) The Properties are not subject to any pending or, to the
knowledge of the Transferors, threatened action, suit, investigation, inquiry
or proceeding by or before any court or Governmental Authority under any
Environmental Law;
(c) All notices, permits, licenses or similar authorizations,
if any, required to be obtained or filed by each Prime Company under any
Environmental Law in connection with the Properties, including without
limitation those relating to the treatment, storage, disposal or release of a
hazardous substance or solid waste into the environment, have been duly
obtained or filed, and each Prime Company is in compliance with the terms and
conditions of all such notices, permits, licenses and similar authorizations;
(d) To the knowledge of the Transferors, all hazardous
substances or solid wastes generated at or as a result of operations at the
Properties and requiring disposal have been transported from such Properties
only by carriers maintaining valid authorizations under applicable
Environmental Laws.
(e) To the knowledge of the Transferors, there is no material
liability (accrued or contingent) to any non-governmental third party in tort
in connection with any release or threatened release of any hazardous
substances, solid wastes, petroleum, petroleum products, and oil and gas
exploration and production wastes into the environment as a result of or with
respect to operations at the Properties; and
(f) There have been no Claims against or affecting the Prime
Companies that relate to the release, discharge or emission of any hazardous
substance, or to the generation, treatment, storage or disposal of any wastes,
or otherwise relating to the protection of the environment or to the non-
compliance with any notices, permits, licenses, consent decrees or other
authorization.
4.23 CUSTOMERS. Except as may be disclosed on Schedule 4.7, to the
knowledge of the Transferors, there is no present intent of any significant
tower space user, customer, vendor or supplier of the Prime Businesses to
discontinue or substantially alter its relationship as such with the Prime
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<PAGE> 23
Companies or the Company upon consummation of the transactions contemplated
hereby, nor does any Transferor have any reasonable belief that any significant
tower space user, customer, vendor, or supplier of the Prime Businesses will
discontinue or substantially alter its relationship as such with the Prime
Companies or the Company upon the consummation of the transactions contemplated
hereby.
4.24 INVESTMENT. Each Transferor (a) understands that the shares of
Company Common Stock and the Transferor Notes (collectively, the "ATC
SECURITIES") have not been, and will not be, registered under the Federal
securities law or any state securities laws, and are being offered and sold in
reliance upon Federal and state exemptions for transactions not involving any
public offering and as such will be "restricted securities", (b) is acquiring
the ATC Securities solely for its own account for investment purposes, and not
with a view to the distribution thereof, (c) is a sophisticated investor with
knowledge and experience in business and financial matters, (d) has received
certain information concerning the Company and has had the opportunity to
obtain additional information it desired in order to evaluate the merits and
risks inherent in holding the ATC Securities, (e) is able to bear the economic
risk and lack of liquidity inherent in holding the ATC Securities, and (f) is
an accredited investor within the meaning of Regulation D under the Securities
Act of 1933, as amended.
4.25 ACCESS INFORMATION. No Prime Company has given any revocable or
irrevocable powers of attorney or similar grant of authority to any Person
relating to its business for any purpose whatsoever. The Transferors have
provided the Company with all keys, combinations, alarm and access codes and
other information necessary to enter into or upon the Tower Assets.
4.26 OPERATING EXPENSES. Except for those items included in the
adjustments under Section 3.1, all operating expenses relating to the ownership
and operation of the Prime Companies and the Tower Assets on or prior to the
Closing Date have been paid in full.
4.27 UCC. None of the Tower Assets is covered by any UCC financing
statement other than those for which a fully executed termination statement has
been delivered to the Company at the Closing.
4.28 [INTENTIONALLY OMITTED].
4.29 RESIGNATIONS. All officers and managers of the Prime Companies
have tendered their written resignations effective as of the Closing Date.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Transferors as follows:
5.1 ORGANIZATION. The Company is a corporation duly organized,
validly existing and in good standing under the laws of Delaware. The Company
has delivered to the Transferors true and complete copies of its certificate of
incorporation and bylaws, as amended to date.
5.2 QUALIFICATION. The Company is duly qualified to do business as a
foreign corporation and is good standing in Texas. The Company is not required
to qualify as a foreign corporation in any
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<PAGE> 24
other jurisdiction. The Company has all requisite power and authority to own
its properties and assets and to carry on the business as it is currently
conducted.
5.3 AUTHORITY; ENFORCEABILITY. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and the
other Transaction Documents to which it is a party and to perform its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and the other Transaction Documents to which the Company is a party
and the performance of its obligations contemplated hereby and thereby have
been duly and validly approved by the Board of Directors of the Company and by
all other corporate action, if any, necessary on behalf of the Company. This
Agreement and each of the Transaction Documents to which the Company is a party
constitute the legal, valid and binding obligations of the Company, enforceable
against it in accordance with their terms, subject to Creditors' Rights. All
other documents required hereunder to be executed and delivered by the Company
at the Closing have been duly authorized, executed and delivered by the Company
and constitute the legal, valid and binding obligations of the Company,
enforceable against it in accordance with their terms, subject to the
Creditors' Rights.
5.4 ABSENCE OF CONFLICTS. Neither the execution and delivery by the
Company of this Agreement or the other Transaction Documents to which the
Company is a party, nor the consummation of the transactions contemplated
hereby and thereby will violate or breach the terms of, cause a default under,
conflict with, result in acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, require any notice or consent or give
rise to any preferential purchase or similar right under (a) any applicable
Legal Requirement, (b) the Company's certificate of incorporation or bylaws, or
(c) any Contract to which the Company is a party or by which it, or any of its
properties, is bound.
5.5 CAPITALIZATION OF THE COMPANY .
(a) The entire authorized share capital of the Company consists
of (i) 250,000 shares of common stock, $.01 par value per share, and (ii)
22,500 shares of preferred stock all of which are designated as Series A
Convertible Preferred Stock. The Company's issued and outstanding share
capital (before giving effect to the issuance of the shares of Company Common
Stock) consists of 106,677 shares of Common Stock and 22,500 shares of Series A
Convertible Preferred Stock. The Company has delivered to Agent true and
complete copies of its certificate of incorporation, certificate of
designations and bylaws, each as amended to date.
(b) Except for this Agreement, there are no Contracts
obligating the Company (i) to issue, sell, pledge, dispose of or encumber any
equity interest therein or any security convertible, exercisable or
exchangeable into any class of equity interest therein, (ii) to redeem,
purchase or acquire in any manner any class of its equity interests or any
securities that are convertible, exercisable or exchangeable into any of its
equity interests or (iii) to make any dividend or distribution of any kind with
respect to its equity interests.
(c) There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights affecting the capital
stock of the Company. There are no voting trusts, proxies, or other agreements
or understandings with respect to the voting of the equity interests of the
Company.
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<PAGE> 25
5.6 SUBSIDIARIES; EQUITY INVESTMENTS. Except as set forth on
Schedule 5.6(a), the Company does not own, directly or indirectly, any equity
interest, or any security convertible, exercisable or exchangeable into any
equity interest, in any Person (the "COMPANY SUBSIDIARIES"). Immediately
before giving effect to the transactions contemplated hereby, the sole
properties (other than de minimis assets) of ATC consisted of its equity
interests in the Company Subsidiaries. The Company owns beneficially and of
record all of the issued and outstanding capital stock of each Person specified
on Schedule 5.6(a). There are no outstanding or authorized Contracts that
could require the Company or any of the Company Subsidiaries to sell, transfer
or otherwise dispose of any of its interests in any such subsidiary (other than
customary stock pledges to the Company's lenders) or that would require any of
such entities to issue, sell, or otherwise cause to become outstanding any of
its capital stock or other capital interests or any securities exercisable,
exchangeable or convertible into any such shares or interests. Except as
described on Schedule 5.6(a), there are no outstanding stock appreciation,
phantom stock, profit participation, or similar rights affecting the capital
stock or other capital interests of any of the Company Subsidiaries. There are
no voting trusts, proxies or other agreements or understandings with respect to
the voting of any capital stock or other capital interests of any of the
Company Subsidiaries.
5.7 BROKERS' FEES. Neither the Company nor its Affiliates has any
liability or obligation to pay any fees or commissions to any broker, finder,
or agent with respect to the transactions contemplated by this Agreement for
which the Transferors or their respective Affiliates (other than the Prime
Companies) could become liable or obligated.
5.8 INVESTMENT. The Company (a) understands that the Prime Interests
have not been, and will not be, registered under the Federal securities law or
any state securities laws, and are being offered and sold in reliance upon
Federal and state exemptions for transactions not involving any public offering
and as such will be "restricted securities", (b) is acquiring the Prime
Interests solely for its own account for investment purposes, and not with a
view to the distributions thereof, (c) is a sophisticated investor with
knowledge and experience in business and financial matters, (d) has received
certain information concerning the Prime Companies and has had the opportunity
to obtain additional information it desired in order to evaluate the merits and
risks inherent in holding the Prime Interests, (e) is able to bear the economic
risk and lack of liquidity inherent in holding the Prime Interests, and (f) is
an accredited investor within the meaning of Regulation D under the Securities
Act of 1933, as amended. Notwithstanding the foregoing, the Company is
relying, and is permitted by the Transferors to rely, on the representations
and warranties of the Transferors made in this Agreement.
5.9 COMPANY COMMON STOCK AND THE TRANSFEROR NOTE. The issuance of
the shares of Company Common Stock and the Transferor Notes have been approved
by all corporate action necessary to be taken by the Company in connection
therewith. The shares of Company Common Stock, when issued in accordance with
this Agreement, will be validly issued, fully paid and non-assessable.
5.10 CAPITALIZATION OF ATC . The entire authorized share capital of
ATC consists of (A) 250,000 shares of common stock, $.01 par value per share
and (b) 22,500 shares of preferred stock all of which are designated as Series
A Redeemable Preferred Stock. ATC's issued and outstanding share capital
(including warrants on an "as if exercised" basis) consists of 106,677 shares
of Common Stock and 22,500 shares of Series A Redeemable Preferred Stock.
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ARTICLE 6.
TAX MATTERS
6.1 PREPARATION AND FILING OF TAX RETURNS.
(a) With respect to each Tax Return covering a taxable period
ending on or before the Closing Date that is required to be filed after the
Closing Date for, by or with respect to any of the Prime Entities, the
Transferors shall cause such Tax Return to be prepared, shall cause to be
included in such Tax Return all items of income, gain, loss, deduction and
credit or other items (collectively "TAX ITEMS") required to be included
therein, and shall timely file such Tax Return along with full and complete
payment of all Taxes required to be paid with respect to the period covered by
such return. If any such tax Return is required to be filed by any of the
Prime Companies, the Transferors shall deliver the original of such Tax Return
to the Company at least 30 days prior to the due date (including extensions) of
such Tax Return and shall pay to the Company not less than 5 days prior to the
due date of such Tax Return the full and complete amount of Taxes due and
payable by the Prime Companies or any direct or indirect member thereof with
respect to the period covered by such Tax Return. Thereafter, the Company
shall cause such Tax Return (along with the payment received from the
Transferors) to be timely filed with the appropriate taxing authority.
(b) With respect to each Tax Return covering a taxable period
beginning on or before the Closing Date and ending after the Closing Date that
is required to be filed after the Closing Date for, by or with respect to any
of the Prime Companies, the Company shall cause such Tax Return to be prepared,
shall cause to be included in such Tax Return all Tax Items required to be
included therein. The Company shall determine (by an interim closing of the
books as of the Closing Date except for ad valorem Taxes and franchise Taxes
based on capital which shall be prorated on a daily basis) the portion, if any,
of the Tax due with respect to the period covered by such Tax Return which is
attributable to operations of the Prime Companies during a Pre-Closing Taxable
Period. At least 40 days prior to the due date (including extensions) of such
Tax Return, the Company shall deliver to the Transferors a copy of such Tax
Return and of its determinations for review and approval by the Transferors,
which approval shall not be unreasonably withheld. If the Transferors approve
the Tax Return, the Transferors shall pay to the Company the amount of any
Taxes attributable to operations during a Pre-Closing Period not less than 5
days prior to the due date of such Tax Return, taking into account any Taxes
for which proration payments were made by the Transferors, or which were
assumed by the Company, in each case under Section 3.1. If the Transferors do
not approve any Tax Return, they shall so advise the Company within 20 days
from the date the Transferors received the Tax Return in a written notice
setting forth the basis for their disapproval, and the parties shall endeavor
in good faith to resolve their differences prior to the due date (including
extensions) for the Tax Return. If the parties are unable to resolve any such
differences, the filing of a Tax Return shall not in any way limit the rights
of the Company Parties under Section 9.1.
(c) Any Tax Return to be prepared pursuant to the provisions
of this Article 6 shall be prepared in a manner consistent with practices
followed in prior years with respect to similar Tax Returns, except for changes
required by changes in law.
(d) At the request of the Company, the Transferors shall
either include or refrain from including an election under Section 754 of the
Code in the final Tax Returns of the Prime Companies.
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(e) ATC, the Transferors contributing property to the Company
in the Formation Transaction and the Company agree (i) to report the transfer
of property to the Company hereunder and the transfer by ATC of the stock of
ATC Tower Corp. and American Tower Rental Holdings Corp. as an integrated
transaction which qualifies under Section 351 of the Code in the filing of all
Tax Returns and (ii) to report to the other any communication from the Internal
Revenue Service which challenges in any way such characterization of this
transaction. Without limiting the generality of the foregoing, (A) ATC and the
Transferors shall comply with the requirements of Treas. Reg. Section
1.351-3(a), and shall deliver to the Company a copy of the statement required
to be filed with its Tax Return under that section within ten (10) days
thereafter, and (B) the Company shall comply with the requirements of Treas.
Reg. Section 1.351-3(b), and shall deliver to ATC and the Transferors a copy
of the statement required to be filed under that section within ten (10) days
thereafter. ATC, the Transferor and the Company also shall maintain such
permanent records as are required by Treas. Reg. Section 1.351-3(c).
ARTICLE 7.
COVENANTS BY THE TRANSFERORS AND THE COMPANY AFTER CLOSING
7.1 BOOKS AND RECORDS. The Transferors acknowledge and agree that
from and after the Closing the Company will be entitled to the originals of all
documents, books, records (including Tax records), agreements and financial
data of any sort relating to the Prime Businesses (the "BOOKS AND RECORDS").
The Company shall cooperate in all reasonable respects with any Transferor and
will make available to such Transferor, during normal business hours, the Books
and Records (but only to the extent relating to the period preceding the
Closing Date) and which are necessary or useful in connection with any third-
party tax inquiry, audit or similar investigation or any dispute or litigation;
provided, prior to making available any of the Books and Records, the
Transferor shall enter into a customary confidentiality agreement binding on it
and any other person to whom the information may be disclosed.
7.2 TRANSITION. The Transferors will not take any affirmative action
that is intended to have the effect of discouraging any lessor, licensor,
licensee, customer, supplier, or other business associate of the Prime
Companies from maintaining the same business relationships as it maintained
with the Prime Companies prior to the Closing.
7.3 NON-COMPETITION.
(a) As a material inducement to the Company's willingness to
enter into this Agreement, Bill Kubena, Dale Harkins and Warren Harkins
expressly covenant and agree that for a period of three years from and after
the Closing Date they and their respective Affiliates (collectively, the
"SUBJECT PARTIES") will not (i) buy, lease or in any manner acquire, or
participate in the acquisition or acquisition process of (as a broker,
consultant, principal or otherwise) (A) any communication tower or tower site
within a 10-mile radius of any tower or tower site owned by the Company or its
Affiliates (including the Prime Companies) immediately after the Closing (other
than the Exxon Towers, the Uhra Tower Assets and any assets reconveyed under
Section 7.6) or (B) any communication tower located in the continental United
States that is over 100 feet in height (other than the Exxon Towers, the Uhra
Tower Assets and any assets reconveyed) or (ii) construct any new tower within
a ten-mile radius of any tower or tower site that, at the time any significant
construction activities are proposed to be commenced (and all conditions
precedent to construction (e.g. available financing and good title) have been
satisfied), is owned by the Company or its Affiliates. During such three-year
period, the Subject Parties shall not take
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any action intended to circumvent the restrictions set forth herein including,
without limitation, owning a financial interest in, or being otherwise employed
by or connected with, any business, individual, partnership, firm or
corporation that is engaged in the type of activities that the Subject Parties
are prohibited from directly participating in pursuant to this Section 7.3.
Notwithstanding the foregoing in this Section 7.3(a), the restrictions on the
Subject Parties shall terminate in the event the Company fails to make interest
or scheduled principal payments on the Transferor Notes and such failure
continues uncured for 15 days after notice from Agent; provided, no payment
default shall be deemed to exist by reason of the exercise of offset rights
granted in the Transferor Notes or due to restrictions contained in any credit
facility or refinancings thereof having priority over the Transferor Notes or
related subordination agreement.
(b) To the extent that any part of this Section 7.3(a) may be
invalid, illegal or unenforceable for any reason, it is intended that such part
shall be enforceable to the extent that a court of competent jurisdiction shall
determine that such part, if more limited in scope, would have been
enforceable, and such part shall be deemed to have been so written and the
remaining parts shall as written be effective and enforceable in all events.
(c) The Subject Parties and the Company agree and acknowledge
that the limitations as to time, geographical area and scope of activity to be
restrained as set forth in Section 7.3(a) do not impose any greater restraint
than is necessary to protect the legitimate business interests of the Company.
The Subject Parties and the Company further agree and acknowledge that, in the
event of a breach or threatened breach of any of the provisions of this Section
7.3, the Company shall be entitled to immediate and temporary injunctive
relief, as any such breach would cause the Company irreparable injury for which
it would have no adequate remedy at law. Nothing herein shall be construed so
as to prohibit the Company from pursuing any other remedies available to it
hereunder, at law or in equity for any such breach or threatened breach.
7.4 FURTHER ASSURANCES. Each party hereto will, at the request of
any other party hereto, take such further actions as are requested and execute
any additional documents, instruments or conveyances of any kind which may be
reasonably necessary to further effect the contribution and transfer of the
Prime Interests and the other transactions contemplated hereby.
7.5 CONFIDENTIALITY. The Transferors agree that after the Closing
Date any facts, information, know-how, processes, trade secrets, customer lists
or confidential matters that relate in any way to the Prime Businesses or the
Prime Companies shall be maintained in confidence and shall not be divulged by
the Transferors or their Affiliates to any party unless and until they shall
become public knowledge (other than by disclosure in breach of this Section
7.5) or as required by law, including applicable securities laws and
regulations; provided, before the Transferors or any Affiliate thereof
discloses any of the foregoing as may be required by law, such Person shall
give the Company reasonable advance notice and take such reasonable actions as
the Company may propose to minimize the required disclosure.
7.6 TITLE DEFECT PROCEDURES.
(a) In the event either Prime Company fails to be vested with
title as of the Closing Date to any Tower, Tower Site or the improvements
located thereon or in the event the Company discovers any Title Defect (other
than a Permitted Lien) existing on the Closing Date and affecting any
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Tower, Tower Site or the improvements located thereon, the Company may from
time to time following the Closing Date submit to Agent written notice thereof
(a "TITLE DEFECT NOTICE") and promptly thereupon Transferors may elect to
undertake to cure such matter. Agent shall keep the Company informed on a
regular basis of the Transferors' curative efforts and shall furnish for the
Company's prior comment and approval the form of all deeds, assignments, bills
of sale, consents, waivers and other instruments proposed to cure any Title
Defect (each a "CURATIVE INSTRUMENT"). In no event shall the Transferors or
Agent file or record, or cause to be filed or recorded, any of the Curative
Instruments without the Company's prior written consent, which consent will not
be unreasonably withheld. In no event shall any Curative Instrument impose any
monetary obligation or assumption of any liability on the Company or its
Affiliates.
(b) If the Transferors do not elect (within 5 days after
receipt of notice from the Company) to cure any Title Defect and diligently
proceed to cure same, the Company may attempt to cure such Title Defect and be
entitled to prompt reimbursement in accordance with Section 7.6(c) for all
amounts incurred in curing such Title Defect. If the Company is unable to cure
such Title Defect after undertaking the cure efforts described in the preceding
sentence or if the Company elects not to undertake further curative efforts,
and such Title Defect remains uncured, the Company may either (i) convey the
Tower Site and Tower affected by such Title Defect to Agent or its designee or
(ii) retain the property affected by the Title Defect and waive further
recourse therefor under this Section 7.6. The conveyance contemplated by
clause (i) preceding shall be effected by a deed without warranty and shall be
subject to all matters appearing in the real property records of the
jurisdiction in which the Tower Site is located (other than liens created by,
through or under the Company or its Affiliates (other than under User
Contracts)) after the Closing Date, and the grantee shall be required to assume
all obligations under all Contracts (including any lease of the real property
constituting the Tower Site and all contracts, leases or licenses to users of
space on the Tower and Tower Site so reconveyed) affecting the property so
reconveyed. Upon any such reconveyance, the Company shall account for and pay
to Agent the net revenues collected since the Closing Date from operations on
the reconveyed Tower Site, and the Transferors shall account for and pay to the
Company any net loss attributable to the operation of the reconveyed Tower and
Tower Site since the Closing Date in accordance with the provisions of Section
7.6(c) and the Company shall issue a note having comparable terms to the
Transferor Notes if monies are payable by the Company.
(c) With respect to any Tower Site reconveyed pursuant to this
Section 7.6, the Transferors shall, subject to the remaining provisions of this
Section 7.6(c) and Section 7.6(d), make a payment to the Company equal to the
amount set forth for such Tower and Tower Site in the "Value" column of
Schedule C, as applicable. If the Tower Defect or failure of title giving rise
to a reconveyance of a Tower and Tower Site was not Known as of the Closing
Date, the amount payable by the Transferors upon reconveyance shall be
satisfied solely by offsetting such amount against amounts owing under the
Contingent Transferor Note; provided, the Transferors shall have no liability
with respect to any unknown Title Defect for which the Company fails to submit
a claim to Agent on or before the first anniversary of the Closing Date. If
the Tower Defect or failure of title giving rise to a reconveyance of a Tower
and Tower Site was Known as of the Closing Date, the amount payable by the
Transferors upon reconveyance shall be made as follows: (i) with respect to any
claim submitted to Agent on or before July 11, 1997, each Transferor shall be
required to pay to the Company in cash its Pro Rata Share of the "Value" of the
Tower or Tower Site affected thereby (as determined from Schedule C), (ii) to
the extent any Transferor fails to make any cash payment required by it under
clause (i) preceding, the Company
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may offset any such unpaid amount against amounts (whether principal or
interest and whether or not then due) on the Contingent Transferor Note and pro
rata against the other Transferor Notes and (iii) with respect to any claim
first submitted by the Company to Agent after July 11, 1997 but on or before
April 11, 1998, the amount payable by the Transferors shall be satisfied solely
by offsetting such amount against amounts (whether principal or interest and
whether or not then due) on the Contingent Note or pro rata against the other
Transferor Notes.
(d) The Transferors shall be deemed to have discharged their
obligations under this Section 7.6 with respect to the Euless I Tower located
in Tarrant County, Texas to the extent of any amount that the Company, after
undertaking customary claims procedures with respect to the Euless Title Policy
(and without the requirement that the Company institute legal proceedings,
employ any legal counsel or take any other extraordinary means of collecting on
the policy), actually recovers under such title policy.
7.7 PRE-CLOSING CONVEYANCE AND ASSUMPTION. Immediately prior to the
Closing, the Transferors will take such action as is required to convey and
assign, without recourse, from the Prime Companies the Excluded Assets and to
cause an Affiliate of the Transferors (other than the Prime Companies) to
assume the Excluded Liabilities.
7.8 CONTINUATION COVERAGE. The Transferors shall (a) provide to all
former employees of the Prime Companies (and the eligible dependents of such
former employees) sufficient medical, mental health, vision, dental, and other
group health plan benefits to satisfy the obligations, if any, of the Prime
Companies or any of its Affiliates under the continuation of coverage
provisions contained in Section 4980B of the Code, Sections 601 through 608 of
ERISA, and applicable state laws and (b) take any and all other actions
necessary to ensure that the Company, the Prime Companies and their respective
Affiliates shall not be required to provide such continuation coverage with
respect to any such benefit to any such individual. The Transferors shall
deliver to the Company at the Closing a release and waiver, in the form of
Exhibit D, from each person employed by either Prime Company during any part of
the 120 day period prior to the Closing Date.
7.9 ULTRA TOWERS. Subject to the remaining provisions of this
Section 7.9, the Company agrees to purchase, or cause an Affiliate thereof to
purchase, and the Transferors shall cause Ultra Towers, L.L.C. ("ULTRA") to
sell, 100% interest in the two communication towers described on Schedule 7.9,
the fee interest on which such towers are located and all improvements located
thereon, as such fee interests are described on Schedule 7.9 (collectively, the
"ULTRA TOWER ASSETS"). The purchase price for the Euless Tower in Tarrant
County, Texas shall be $1,650,000 and for the Plano Tower shall be $1,250,000.
The closing of the Euless Tower shall take place on October 31, 1996 unless
the parties mutually agree on another date and the closing of the Plano Tower
shall take place as soon as practicable after January 15, 1997. The purchase
price for each Tower shall be payable in cash and common stock of American
Tower Corporation in such proportions as the parties mutually agree or, in the
absence of agreement, in cash. The obligations of the Company to purchase the
Ultra Tower Assets are conditioned on the following matters having been
satisfied at the closing of the Euless Tower (with respect to the Euless Tower
closing) and at the closing of the Plano Tower (with respect to the Plano Tower
closing): (i) the Ultra Tower Assets shall have been operated in the ordinary
course of business and in accordance with prudent industry practices from the
date hereof to the date of the purchase and sale and Ultra shall continue to
market space on the towers and manage the towers consistent with its present
conduct as if
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it were conducting same for its own account, (ii) there shall have been no
damage, destruction or loss to any of the Ultra Tower Assets that has not been
restored as of the closing to its pre-damaged, pre-destroyed or pre-loss
condition (by repair or replacement), (iii) no condemnation, eminent domain or
other litigation shall be pending or threatened with respect to any portion of
the Ultra Tower Assets, (iv) Ultra, at its expense, shall deliver title
policies dated as of the closing in the amount of the respective purchase price
of each tower and such policy shall reflect no liens or encumbrances other than
Permitted Liens, (v) Ultra will remain responsible for all pre-closing
liabilities relating to the ownership and operation of the Ultra Tower Assets
including those under environmental laws and under contracts including
management contracts, (vi) Ultra shall deliver the Ultra Tower Assets free and
clear of all liens and encumbrances (other than ordinary course obligations to
users on the towers and Permitted Liens) and shall deliver evidence that all
management agreements have been terminated and obligations thereunder released,
and (vii) Ultra and the Company, or a wholly owned subsidiary of the Company,
shall enter into a purchase agreement or letter of intent that will reflect the
foregoing terms and will survive the closing. The Transferors represent to the
Company that the ordinary, recurring, actual, annualized monthly revenue
(determined in accordance with GAAP) arising from the operation of the Ultra
Tower Assets in the month of October 1996 is $216,480 and the associated Cost
of Sales giving rise to such revenues is $20,160.
7.10 RELEASE OF LLC INDEMNITIES. Each Transferor hereby releases and
discharges, and shall cause each present or former member or manager of either
of the Prime Companies to release and discharge, the Company and its Affiliates
(including the Prime Companies) from any obligations (including indemnification
obligations) arising under the LLC Agreements or the Delaware Limited Liability
Company Act, in each case, to the extent relating to actions or omissions of
the Prime Companies, or any acts or omissions of the managers, members or
officers (former or present) including those committed while serving in their
capacity as members, managers, employees or similar capacities of the Prime
Companies.
7.11 PROVISIONS REGARDING AGENT. The Transferors hereby engage TCG
Towers, LLC ("TCG") to serve as "AGENT" hereunder, and TCG hereby accepts such
engagement. TCG may resign as Agent, and the Transferors may remove or replace
TCG as Agent, at any time after the appointment of a successor agent has become
effective in accordance with the remaining provisions of this Section 7.11.
The appointment of a successor agent shall become effective on the second
Business Day following the Company's receipt of a written instrument satisfying
the following requirements: (a) such instrument shall identify the successor
agent, an individual contact if such successor agent is not a natural person
and a street address and telecopy number for purposes of giving notice, (b)
Transferors collectively accounting for more than a 50% Pro Rata Share
(according to clause (b) of the definition thereof) must sign the instrument
and agree to the appointment, and (c) the successor agent must sign the
instrument and agree to act as "Agent" in accordance with the terms of this
Agreement. Upon the effectiveness of the successor agent's appointment, the
person acting as the Agent hereunder immediately prior to such effectiveness
shall be deemed to have resigned. Agent will have no liability (in its
capacity as such) to the Company under this Agreement except for Agent's breach
of its express obligations hereunder.
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ARTICLE 8.
CLOSING ACTIONS
8.1 ACTION TO BE TAKEN BY THE TRANSFERORS AT THE CLOSING. Subject to
the terms and conditions of this Agreement, the Transferors shall cause the
following events to occur at the Closing:
(a) The Transferors listed in Section 2.1(a) shall execute and
deliver to the Company a transfer and contribution instrument of the Prime
Interests to be transferred and contributed pursuant to such Section,
substantially in the form of Exhibit C.
(b) Those of the Transferors that are to receive all or a
portion of the Company Common Shares will execute and deliver (and, if
individuals, cause their spouses to execute and deliver) a stockholders
agreement between the Company and its stockholders, in form agreed to by the
parties.
(c) The Transferors will cause, at its expense, Texas State
Title Company to issue, or commit to issue, an owner's title insurance policy
or policies with respect to the Tower and Tower Site located in Tarrant County,
Texas in form satisfactory to the Company (the "EULESS TITLE POLICY"). The
insured amount under such policy shall be the amount given for the Tower and
Tower Site covered thereby in the "Value" column of Schedule C.
(d) The Transferors shall deliver to the Company all
documentation regarding the termination and settlement of the Prime Companies'
tower management, marketing and administration agreements.
(e) The Transferors will deliver to the Company the originals
of all of the Books and Records, and all keys and other security access
devices.
(f) The Transferors shall cause to be delivered to the Company
an opinion of Latham & Watkins, counsel to the Transferors, as to such matters
as the Company reasonably requests, in form reasonably satisfactory to the
Company. Such opinion shall allow ATC's lenders to rely on same.
(g) The Transferors shall deliver to the Company the fully
executed assignment and assumption effecting the transactions required under
Section 7.7.
(h) The Transferors shall deliver to the Company a certificate
of existence and good standing for each of the Prime Companies issued by the
Secretary of State of the State of Delaware and a certificate of good standing
from the appropriate public officials of the Subject States, each dated not
more than 30 days before the Closing Date.
(i) The Transferors shall deliver to the Company the written
resignations of the officers and managers of the Prime Companies.
(j) The Transferors shall deliver to the Company releases and
waivers required under Section 7.8.
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(k) The Transferors shall execute and deliver to the Company
and/or its lenders a subordination or similar agreement with respect to the
Transferor Notes.
(l) The Transferors shall cause to be executed and delivered
to the Company, its lenders and Texas State Title Company an instrument signed
by the Prime Companies' existing lenders described on Schedule 4.11(a)
indicating (i) that all indebtedness of the Prime Companies and interest
thereon has been repaid in full and (ii) that all further obligations between
the Prime Companies and such lenders have been terminated and released. The
Transferors shall also cause such lenders to deliver, at the Transferors'
expense, to the Company UCC termination statements, mortgage lien releases and
such other instruments as the Company reasonably requests to fully effect the
release of such lenders' liens and security interests in the properties of the
Prime Companies.
8.2 ACTIONS TO BE TAKEN BY THE COMPANY AT THE CLOSING. Subject to
the terms and conditions of this Agreement, the Company shall cause the
following events to occur at the Closing:
(a) The Company shall disburse the Merger Consideration and
the consideration described in Section 2.1 as directed by the Transferors.
(b) The Company shall issue to the Transferors designated by
Agent (all of whom must satisfy the representations set forth in Section 4.24)
a stock certificate or stock certificates, with such legends thereon as are
required by law and by the Securityholders Agreement between the Company and
its securityholders, evidencing ownership of the Company Common Shares.
(c) The Company shall execute and deliver the Transferor
Notes.
(d) The Company shall cause to be delivered to the Transferors
an opinion of Vinson & Elkins L.L.P., counsel to the Company, as to such
matters as the Transferors reasonably request, in form reasonably satisfactory
to the Transferors.
(e) The Company shall deliver to Agent a certificate of
incorporation and good standing for each of the Company and American Tower
Corporation issued by the Secretary of State of the State of Delaware and dated
not more than 30 days before the Closing Date.
ARTICLE 9.
INDEMNIFICATION
9.1 INDEMNITIES OF THE TRANSFERORS. Subject to the remaining
provisions of this Article 9, from and after the Closing, the Transferors shall
indemnify, defend and hold harmless the Company, the Company's Affiliates, and
their respective directors, stockholders, officers, partners, employees,
agents, consultants, attorneys, representatives, successors, transferees and
assignees (collectively, the "COMPANY PARTIES") from, against and in respect of
any Damages or Claims that arise out of, relate to or result from any of the
following described matters (herein collectively referred to as the "COMPANY
INDEMNIFIED LIABILITIES", and individually as a "COMPANY INDEMNIFIED
LIABILITY"): (a) any representation or warranty made by the Transferors in this
Agreement or the other Transaction Documents not having been true and correct
as of the Closing Date; (b) any debt, liability or obligation of the Prime
Companies or the Transferors other than the Assumed Obligations including,
without limitation, debts, liabilities and
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obligations arising from (i) the ownership, use, possession, enjoyment,
transfer, or operation of the Tower Assets or the Prime Companies on or before
the Closing Date, (ii) tortious conduct relating to the Tower Assets or Prime
Companies committed on or before the Closing Date, (iii) violation of laws
committed on or before the Closing Date that relate to the Tower Assets or
Prime Companies (including violations of Environmental Laws), (iv) the presence
of any hazardous or toxic substance on any of Tower Assets or other assets
owned by the Prime Companies on or prior to the Closing Date, (v) the exposure
of any Person or property to hazardous or toxic substances associated with the
Tower Assets or other assets owned by the Prime Companies on or before the
Closing Date, (vi) litigation arising from events or conditions occurring or
existing on or before the Closing Date that relate to the Prime Companies or
the Tower Assets and (vi) employees or former employees of the Prime Companies
relating to their employment by either of the Prime Companies including,
without limitation, Claims relating to their termination of employment or their
failure to obtain employment with the Company for any reason whatsoever or
respecting compensation and benefits under any benefit or compensation plans or
any other employee benefit program maintained by or on behalf of the Prime
Companies for its employees or former employees including any Claim relating
to a group health plan (as defined in Section 607(1) of ERISA or 5000(b)(1) of
the Code), (c) the Excluded Assets or the Excluded Liabilities, (d) any notice
of deficiency, or assessment by, or any obligation owing to, any taxing
authority for any Taxes of the Prime Companies attributable to any Pre-Closing
Taxable Period, (e) appraisal rights, dissenter's rights and all other Claims
asserted by any former or present manager, committee member, member or assignee
of, or holder of any equity right in, either Prime Company and (f) any deferred
purchase price or indemnity obligation under any Contract by which either Prime
Company acquired any of its properties except to the extent the indemnity
obligations are for the ownership and operation of the Tower Assets and the
Prime Companies after the Closing Date.
9.2 INDEMNITIES OF THE COMPANY. Subject to the remaining provisions
of this Article 9, from and after the Closing, the Company shall indemnify,
defend and hold harmless the Transferors, the Transferors' Affiliates, and
their respective directors, stockholders, officers, partners, employees,
agents, consultants, attorneys, representatives, successors, transferees and
assignees (collectively, the "TRANSFEROR PARTIES") from, against and in respect
of any Damages or Claims that arise out of, relate to or result from any of the
following described matters (herein collectively referred to as the "TRANSFEROR
INDEMNIFIED LIABILITIES", and individually as a "TRANSFEROR INDEMNIFIED
LIABILITY"): (a) any representation or warranty made by the Company in this
Agreement or the other Transaction Documents not having been true and correct
as of the Closing Date, (b) obligations, debts and liabilities of the Prime
Companies to the extent arising from the ownership, use, possession, enjoyment,
transfer or operation of the Tower Assets and the Prime Companies after the
Closing Date including, without limitation, Damages for Taxes owing by reason
of the operation and ownership of the Tower Assets and the Prime Companies
after the Closing Date, tortious conduct relating to the Tower Assets or Prime
Companies committed after the Closing Date, violation of laws committed after
the Closing Date that relate to the Tower Assets or Prime Companies (including
violations of Environmental Laws), the presence of any hazardous or toxic
substance on any of Tower Assets or other assets owned by the Prime Companies
after the Closing Date (but only to the extent the presence of such substances
first arises after the Closing Date), and litigation arising from events or
conditions first arising or existing after the Closing Date that relate to the
Prime Companies or the Tower Assets and (c) any of the Assumed Obligations.
9.2A SPECIAL INDEMNITY. From and after the Closing, Dale Harkins and
Warren D. Harkins shall jointly and severally indemnify, defend and hold
harmless the Company Parties from and against
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any Damages or Claims that arise out of or relate to any transfer or purported
transfer of any of their units or other interests (including economic
interests) in either of the Prime Companies to any Person not a party to this
Agreement as of the date hereof. Nothing in this Section 9.2A or elsewhere in
this Agreement shall constitute any admission of wrongdoing with respect to the
matters covered by this Section 9.2A. In particular, while Prime Holdings has
recognized the interests of Randall Barnett as set forth in this Agreement,
nothing in this Agreement shall constitute a waiver or release by Dale Harkins
or Warren Harkins with respect to the matters covered by this indemnity
including any rights or claims either or them has against Randall Barnett.
9.3 EXCEPTIONS AND LIMITATIONS TO INDEMNITIES.
(a) Notwithstanding anything to the contrary in Section 9.1:
(i) remedies regarding title to the Tower Assets are
covered in Section 7.6 and shall not be covered by
Article 9;
(ii) the Transferors shall not be liable under clause
(a) of Section 9.1 until the aggregate amount of
all Damages for which the Company is entitled to
indemnification pursuant to such clause exceeds
$100,000 at which time the Company shall be
entitled to recover only such Damages that exceed
such $100,000 basket; provided, that the
Transferors' liability under the other clauses of
this Section 9.1 shall not be so limited;
(iii) all indemnity amounts payable under Section 9.1
shall be satisfied solely by offsetting such
amounts against amounts owing under the Contingent
Transferor Note; and
(iv) in no event shall the Transferors' indemnity
obligations under Section 9.1 apply to any claim
first asserted after the first anniversary of the
Closing Date.
(b) The provisions of Sections 9.3(a)(ii) through (iv) shall
not apply to any indemnity payment owing by reason of:
(i) any misrepresentation arising under Sections 4.3,
4.5, 4.17, or 4.19;
(ii) any liability or obligation arising from any matter
described in Sections 9.1(b) (other than
liabilities or obligations under Section 9.1(b)(vi)
which is covered by Section 4.3(b)(iii)) that was
Known as of the Closing Date; or
(iii) any liability or obligation arising from any matter
described in Sections 9.1(b)(vi), 9.1(d), 9.1(e) or
9.1(f); or
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(iv) any misrepresentation by TCG in the transfer and
contribution instrument delivered by it to transfer
and convey its interest in Prime Sub to the Company
as contemplated in Section 2.1;
as to which, in the cases described in clauses (i), (ii)
and (iii), any indemnity amount will be paid as follows:
(A) with respect to any Claim submitted to Agent
on or before July 11, 1997, each Transferor
shall be required to pay to the Indemnified
Party in cash such Transferor's Pro Rate
Share of the Damages arising therefrom;
(B) to the extent any Transferor fails to make
any payment required by it under clause (A)
preceding, the unpaid amount may be offset
against any amount (whether principal or
interest and whether or not then due) on the
Contingent Transferor Note or pro rata
against the other Transferor Notes;
(C) with respect to any Claim first submitted to
Agent after July 11, 1997 but on or before
April 11, 1998, the amount payable shall be
satisfied solely by offsetting such amount
against any amount (whether principal or
interest and whether or not then owing) on
the Contingent Transferor Note or pro rata
against the other Transferor Notes; and
(D) the Transferors shall have no liability with
respect to any Claim first asserted after
April 11, 1998.
(c) Notwithstanding anything to the contrary in Section 9.2:
(i) the Company shall not be liable under clause (a) of
this Section 9.2 until the aggregate amount of all
Damages for which the Transferors are entitled to
indemnification pursuant to such clause exceeds
$100,000 at which time the Transferors shall be
entitled to recover only such Damages that exceed
such $100,000 basket; provided, that the Company's
liability under the other clauses of this Section
9.2 shall not be so limited;
(ii) in no event shall the Company's indemnity
obligations under Section 9.2 apply to any claim
first asserted after the first anniversary of the
Closing Date and in no event shall the Company be
liable under Section 9.2(b) or Section 9.2(c)
except to the extent Damages arise from Third Party
claims asserted against a Transferor Party.
(d) Notwithstanding anything to the contrary set forth in
Section 9.1, the Company Indemnified Liabilities shall not include any Damages
to the extent same directly or indirectly arise from
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<PAGE> 37
a breach of any representation or warranty of the Company under this Agreement.
Notwithstanding anything to the contrary set forth in Sections 9.2, the
Transferor Indemnified Liabilities shall not include any Damages to the extent
same directly or indirectly arise from a breach of any representation or
warranty of any the Transferors under this Agreement.
(e) In the event Damages suffered by any Indemnified Party are
recoverable under more than one provision of this Agreement and even though an
Indemnified Party is permitted to rely on each provision of Article 9
independently (as contemplated in Section 9.7), such Indemnified Party shall
only be permitted to recover with respect to any particular Damages suffered by
it one time as it is the parties' intent that once any particular Damages have
been recovered by a particular Indemnified Party under one provision, such
Damages no longer exist with respect to such Indemnified Party and, therefore,
recovery by such particular Indemnified Party for such same Damages under
another provision would constitute an unintended and prohibited "double"
recovery. Furthermore, no recovery may be had under this Article 9 with
respect to amounts already taken into account in making any adjustments under
Section 3.1 or payments under Article 6. The parties acknowledge that the
Company Parties may not recover more than 100% of any Damages even if, for
example, the definition of "Pro Rata Share" results in percentages aggregating
more than 100%.
9.4 CLAIM PROCEDURES.
(a) Each party agrees that, promptly after it becomes aware of
facts giving rise to a Claim by it for indemnification pursuant to this Article
9, such party (an "INDEMNIFIED PARTY") will provide notice (a "CLAIM NOTICE")
thereof in writing to the Company (if the Indemnified Party is a Transferor
Party) or to Agent (if the Indemnified Party is a Company Party), specifying
the nature and basis for such claim and a copy of all papers served with
respect to such claim (if any). For purposes of this Section 9.4(a), receipt
by a party of written notice of any Claim from a third-party which gives rise
to a Claim on behalf of such party shall constitute the discovery of facts
giving rise to a Claim by it and shall require notice of the receipt of such
matter as provided in the first sentence of this Section 9.4(a). An
Indemnified Party's failure to send or delay in sending a Claim Notice shall
not relieve an Indemnifying Party from liability hereunder with respect to such
Claim except to the extent and only to the extent the Indemnifying Party is
prejudiced by such failure or delay.
(b) All Claims for indemnification under this Article 9 shall
be asserted and resolved as follows:
(i) In the event any Indemnified Party has a claim
against any Indemnifying Party hereunder that does
not involve a Third-Party Claim, the Indemnified
Party shall transmit to the Indemnifying Party a
Claim Notice with respect to such claim. If the
Indemnifying Party does not notify the Indemnified
Party within the Election Period that the
Indemnifying Party disputes such Claim, the Claim
specified in the Claim Notice shall be deemed a
liability of the Indemnifying Party. If the
Indemnifying Party has timely disputed such Claim
such dispute shall be resolved between the parties
hereto or by resort to legal process.
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<PAGE> 38
(ii) If an Indemnified Party shall have any Third-Party
Claim asserted against such Indemnified Party, the
Indemnified Party promptly shall transmit to the
Indemnifying Party a Claim Notice relating to such
Third-Party Claim. If the Indemnifying Party
notifies an Indemnified Party within the Election
Period that the Indemnifying Party elects to defend
the Indemnified Party with respect to a Third-Party
Claim, then the Indemnifying Party shall have the
right to defend or settle such Third-Party Claim in
such manner as deemed reasonably appropriate by the
Indemnifying Party or its counsel; provided
however, that the Indemnifying Party shall not
enter into any compromise or settlement that will
impose any unindemnified liability or obligation on
an Indemnified Party or that would require an
Indemnified Party to admit liability. In such
case, the Indemnifying Party shall have full
control of such defense and proceedings, including
any compromise or settlement thereof subject to the
preceding sentence. The Indemnified Party shall
have the right to participate in, but not control,
any defense or settlement of any Third-Party Claim
controlled by the Indemnifying Party, but the
Indemnified Party shall bear its own costs and
expenses with respect to any such participation.
If an Indemnifying Party fails to notify an
Indemnified Party within the Election Period that
the Indemnifying Party elects to defend the
Indemnified Party pursuant to this Section
9.4(b)(ii) with respect to a Third-Party Claim, or
if, having so notified, the Indemnifying Party
either notifies the Indemnified Party that the
Indemnifying Party will discontinue such defense as
a result of the Indemnifying Party's belief that
the Indemnifying Party is not required by this
Agreement to defend such Third-Party Claim or fails
to pursue the defense of such Third-Party Claim in
a reasonably diligent manner, then the Indemnified
Party shall have the right to defend such
Third-Party Claim by such proceedings deemed
reasonably appropriate by the Indemnified Party and
its counsel. In such case, the Indemnified Party
shall have full control of such defense and
proceedings, including any compromise or settlement
of such Third-Party Claim. The Indemnifying Party
shall have the right to participate in, but not
control, any defense or settlement controlled by
the Indemnified Party pursuant to this Section
9.4(b)(ii) but the Indemnifying Party shall bear
its own costs and expenses with respect to any such
participation. If the Indemnified Party is found to
be entitled to indemnification with respect to a
matter that the Indemnifying Party disputed its
responsibility, the Indemnified Party shall be
entitled to recover from the Indemnifying Party its
reasonable attorneys fees, court costs and related
disbursements in addition to any amount owing to a
third-party by reason of the Third-Party Claim.
9.5 CALCULATION, TIMING, MANNER AND CHARACTERIZATION OF
INDEMNIFICATION PAYMENTS.
(a) Payments of all amounts owing by an Indemnifying Party as
a result of a Third-Party Claim shall be made as and when damages with respect
thereto are incurred by the Indemnified
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<PAGE> 39
Party and within five Business Days after the Indemnified Party makes demand
therefor to the Indemnifying Party. Payments of all amounts owing by an
Indemnifying Party other than as a result of a Third-Party Claim shall be made
within five Business Days after the later of (i) the date the Indemnifying
Party is deemed liable therefor pursuant to this Article 9 or (ii) if disputed,
the date of the adjudication of the Indemnifying Party's liability to the
Indemnified Party under this Agreement. All amounts due and payable hereunder
(x) with respect to a Third-Party Claim, shall bear interest at the Past Due
Rate from the date due and payable hereunder until the date paid and (y) with
respect to a claim other than a Third-Party Claim, shall bear interest at the
Past Due Rate from the date the Indemnified Party suffers the damages until the
date paid.
(b) Any offset against the Transferor Notes in satisfaction of
indemnity obligations shall be deemed to have been made at the time such
indemnification payment is payable according to Section 9.5(a) and interest on
such note shall accrue thereafter on the principal amount as reduced by such
offset amount.
(c) Any indemnity payments made hereunder shall be treated for
all Tax purposes as an adjustment to the consideration described in Article 2,
unless otherwise required by applicable law.
9.6 SURVIVAL. The representations, warranties, and indemnities set
forth in this Article 9 shall survive the Closing and delivery of the Transfer
Documents for the applicable survival period set forth in this Article 9.
9.7 RELIANCE. The parties acknowledge and agree that any of the
subsections of Sections 9.1 and 9.2 may be relied upon independently of and
without regard to any other of such subsections more specifically or generally
covering the same subject matter and without regard to the knowledge of any
party entitled to the benefits of the provisions of Article 9 (whether such
knowledge was gained through such party's due diligence or otherwise). The
parties acknowledge that, at the Transferors' request, the Company assisted the
Transferors in formatting certain of the disclosure schedules and that the
Company's participation in this regard shall have no effect on its
indemnification rights hereunder.
9.8 EXPRESS NEGLIGENCE. THE FOREGOING INDEMNITIES SET FORTH IN THIS
ARTICLE 9 ARE INTENDED TO BE ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH
THE EXPRESS TERMS AND SCOPE THEREOF NOTWITHSTANDING TEXAS' EXPRESS NEGLIGENCE
RULE OR ANY SIMILAR DIRECTIVE THAT WOULD PROHIBIT OR OTHERWISE LIMIT
INDEMNITIES BECAUSE OF THE SIMPLE OR GROSS NEGLIGENCE (WHETHER SOLE,
CONCURRENT, ACTIVE OR PASSIVE) OR OTHER FAULT OR STRICT LIABILITY OF ANY
INDEMNIFIED PARTIES.
9.9 EXCLUSIVE REMEDY FOLLOWING THE CLOSING DATE. The rights of the
Indemnified Parties to indemnification pursuant to this Article 9 shall be the
sole and exclusive remedy of such Indemnified Parties for any breach of this
Agreement except that (i) the provisions set forth in Articles 1, 2, 3, 6, 7
and 10 shall survive the Closing and be enforceable in accordance with the
terms thereof and (ii) nothing in this Agreement is intended to or shall limit
any remedies (whether arising by statute, common law, contract or otherwise)
for fraud.
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<PAGE> 40
ARTICLE 10.
MISCELLANEOUS
10.1 ASSIGNMENT. This Agreement and the rights hereunder may not be
assigned by the Company without the prior written consent of the Agent, which
consent will not be unreasonably withheld; provided, the Company shall be
permitted to collaterally assign without the Agent's consent this Agreement and
its rights herein and in the other Transaction Documents to the Company's or
the Company's Affiliate's lenders. This Agreement and the rights hereunder may
not be assigned by any Transferor without the prior written consent of the
Company, which consent will not be unreasonably withheld. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
10.2 NOTICES. Unless otherwise provided herein, any notice, request,
consent, instruction or other document to be given hereunder by any party
hereto to another party hereto shall be in writing and delivered personally or
mailed by certified mail, postage prepaid, return receipt requested (such
mailed notice to be effective on the date such receipt is acknowledged), or by
facsimile transmission or by overnight courier, as follows:
If to the Transferors, c/o Agent, addressed to:
TCG Towers, L.L.C.
c/o The Carlyle Group
1001 Pennsylvania Avenue, NW
Washington, DC 20004-2505
Attention: Mr. Mark Ein
Telecopy No. (202) 347-1818
With a copy to:
Latham & Watkins
1001 Pennsylvania Avenue, NW
Washington, DC 20004-2505
Attention: Mr. Bruce E. Rosenblum
Telecopy No. (202) 637-2201
If to the Company, addressed to:
American Tower Corporation
P. O. Box 57747
Webster, Texas 77598-57747
Attention: Mr. Fred R. Lummis, CEO
Telecopy No. (713) 486-5524
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<PAGE> 41
With a copy to:
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002
Attention: Mr. Bruce C. Herzog
Telecopy No. (713) 758-2346
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others in accordance with this Section
10.2.
10.3 CHOICE OF LAW. This Agreement shall be construed and interpreted
and the rights of the parties governed by the internal laws of the State of
Texas.
10.4 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement,
together with all Exhibits and Schedules hereto, and the other Transaction
Documents constitute the entire agreement between the parties pertaining to the
subject matter hereof and supersedes all prior and contemporaneous agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties including the binding letter of intent dated on or about July 24, 1996,
and there are no other warranties, representations or other agreements between
the parties in connection with the subject matter. No amendment, supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by all parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar), nor shall such waiver constitute a continuing
waiver unless expressly agreed to in writing by the affected party.
10.5 MULTIPLE COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.6 EXPENSES OF THIS AGREEMENT. No part of the expenses of the
Transferors applicable to or incurred in connection with the negotiation,
preparation, execution or performance of this Agreement (including the fees and
disbursements of counsel) shall be charged to the Prime Companies except to the
extent such expenses have been reported on Schedule 3.1A. To the extent any
real estate transfer, documentary, stamp or other similar tax or any sales,
use, transfer, retailer occupation or other similar taxes arise by reason of
the consummation of the transactions contemplated by this Agreement, such costs
and expenses will be borne equally by the Transferors and the Company.
10.7 INVALIDITY. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement or any other such instrument.
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<PAGE> 42
10.8 HEADINGS; REFERENCES; INTERPRETATION. The headings of the
several Articles and Sections herein are inserted for convenience of reference
only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement. Any reference herein to an Article or
Section shall be deemed to refer to the applicable Article or Section of this
Agreement unless otherwise expressly stated herein. Any reference to a
Schedule or Exhibit shall be deemed to refer to the applicable Schedule or
Exhibit attached hereto, all such Schedules and Exhibits being incorporated
herein and made a part hereof by this reference. Words used herein in the
singular, where the context so permits, shall be deemed to include the plural
and vise versa. The definitions of words in the singular herein shall apply to
such words when used in the plural where the context so permits and vice versa.
10.9 PUBLICITY. None of the parties hereto nor any of their
respective Affiliates shall, without the prior written approval of the other
parties, except as required by a court of competent jurisdiction or applicable
laws, including applicable securities laws and regulations, make any statement
or any public announcement or press release with respect to the transactions
contemplated by this Agreement.
10.10 NO THIRD PARTY BENEFICIARIES. This Agreement is solely for the
benefit of the parties hereto, the Company Parties, the Transferor Parties and
their successors and assigns permitted under this Agreement, and no provisions
of this Agreement shall be deemed to confer upon any other Persons any remedy,
claim, liability, reimbursement, cause of action or other right.
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<PAGE> 43
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
THE TRANSFERORS:
CARLYLE-PRIME INVESTORS, L.P.
By: /s/ MARK EIN , its
-----------------------------
general partner
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
CARLYLE-PRIME PARTNERS I, L.P.
By: /s/ MARK EIN , its
-----------------------------
general partner
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
/s/ BILL KUBENA
-------------------------------------
BILL KUBENA
/s/ WARREN D. HAWKINS
-------------------------------------
WARREN D. HARKINS
<PAGE> 44
/s/ DALE HARKINS
-------------------------------------
DALE HARKINS
B.R.A.D. COMMUNICATIONS SERVICES,
INC.
By: /s/ BILL KUBENA
----------------------------------
Name: Bill Kubena
--------------------------------
Title:
-------------------------------
TCG TOWERS, L.L.C., individually and
as Agent
By: /s/ MARK EIN
----------------------------------
Name: Mark Ein
--------------------------------
Title:
-------------------------------
THE COMPANY:
ATC HOLDINGS CORP.
By: /s/ FRED R. LUMMIS
----------------------------------
Fred R. Lummis
President and CEO
MERGECO:
ATC HOLDINGS CORP.
By: /s/ FRED R. LUMMIS
----------------------------------
Fred R. Lummis
President
PRIME HOLDINGS:
PRIME COMMUNICATION SITES
HOLDING, L.L.C.
By: /s/ BILL KUBENA
----------------------------------
Name: Bill Kubena
--------------------------------
Title:
-------------------------------
<PAGE> 45
EXHIBIT A
DEFINED TERMS
AFFILIATE shall mean with respect to any Person, any Person which,
directly or indirectly, controls, is controlled by, or is under a common
control with, such Person. The term "CONTROL" (including the terms "CONTROLLED
BY" and "UNDER COMMON CONTROL WITH") as used in this definition means the
possession, directly or indirectly, of the power to direct or cause the
direction of management and policies of a Person, whether through the ownership
of voting securities, by contract, or otherwise. With respect to any natural
person, the term "AFFILIATE" shall also mean (1) the spouse and children
(including those by adoption) of such Person; and any trust whose primary
beneficiary is such Person, such Person's spouse and/or one or more members of
such Person's lineal descendants, (2) the legal representative or guardian of
such Person or of any such immediate family member in the event such Person or
any such immediate family member becomes mentally incompetent and (3) any
Person controlled by or under the common control with any one or more of such
Person and the Persons described in clauses (1) or (2) preceding.
ASSUMED OBLIGATION shall mean (a) obligations first arising and first
attributable to the period on and after the Closing Date under any Scheduled
Contract, any Scheduled Lease or any Scheduled Easement for which consent is
not needed (unless obtained and furnished to the Company before Closing) in
connection with the transactions contemplated by this Agreement and (b)
obligations assumed by the Company under the express terms of Section 3.1.
ATC SECURITYHOLDERS AGREEMENT shall mean the Securityholders Agreement
among American Tower Corporation and its securityholders dated October 12,
1994, as amended to date.
BUSINESS DAY shall mean any day other than a Saturday, Sunday or legal
holiday under the laws of the United States or the State of Texas.
CARLYLE PARTNERSHIPS shall mean Carlyle-Prime Investors, L.P., a
Delaware limited partnership, and Carlyle-Prime Partners I, L.P., a Delaware
limited partnership. A "Carlyle Partnership" shall refer to either of the
foregoing.
CLAIM shall mean any and all claims, causes of action, demands,
lawsuits, suits, proceedings, governmental investigations or audits and
administrative orders.
CONTRACT shall mean any contract, agreement, option, right to acquire,
preferential purchase right, preemptive right, warrant, indenture, debenture,
note, bond, loan, loan agreement, collective bargaining agreement, lease,
mortgage, franchise, license, purchase order, bid, commitment, letter of
credit, guaranty, surety or any other legally binding arrangement, whether oral
or written.
COST OF SALES shall mean, with respect to any revenues, the direct
operating expenses associated with the operation of assets attributable to such
revenues. The term "DIRECT OPERATING EXPENSES" as used in this definition
shall mean, with respect to any particular assets, the direct operating
expenses of such
Exhibit A - 1
<PAGE> 46
assets, determined in accordance with GAAP, including, without limitation,
actual or accrued expenditures relating to regular site inspections,
maintenance, utilities, property taxes, tower watches, monitors/alarms, land
operating leases, equipment operating leases, third party management fees
relating to marketing of such Tower Assets (other than fees arising under
Contracts the financial obligations of which have been released in full
effective as of the Closing Date) and insurance coverage related to physical
tower damage, general liability and excess/umbrella coverages but only to the
extent that such expenditures are actually incurred or accrued by the Prime
Companies or the Company, as applicable, in accordance with their current
business practices.
DAMAGES shall mean all debts, liabilities, obligations, losses, damages,
cost and expenses, whether actual, consequential or punitive, interest
(including, without limitation, prejudgment interest), penalties, reasonable
legal fees, disbursements and costs of investigations, deficiencies, levies,
duties and imposts.
ELECTION PERIOD shall mean the 30-day period following receipt by an
Indemnifying Party of a Claim Notice.
ENVIRONMENTAL LAWS shall mean any and all laws, statutes, ordinances,
rules, regulations, orders or determinations of any Governmental Authority
pertaining to health or the environment in effect in any and all jurisdictions
in which either Prime Company conducts business or at any time has conducted
business, or where any of the Tower Assets are located, including without
limitation, the Clean Air Act, as amended, the Comprehensive Environmental,
Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the
Federal Water Pollution Control Act, as amended, the Occupational Safety and
Health Act of 1970, as amended, the Resource Conservation and Recovery Act of
1976 ("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Hazardous and Solid Waste
Amendments Act of 1984, as amended, the Hazardous Materials Transportation Act,
as amended, the Outer Continental Shelf Lands Act, as amended, the Coastal Zone
Management Act, as amended, and other environmental conservation or protection
laws. The terms "HAZARDOUS SUBSTANCE" and "RELEASE" (or "THREATENED RELEASE")
have the meanings specified in CERCLA, and the terms "SOLID WASTE" and
"DISPOSAL" (or "DISPOSED") have the meanings specified in RCRA; provided,
however, that (a) in the event either CERCLA or RCRA is amended so as to
broaden the meaning of any term defined thereby, such broader meaning shall
apply to activities undertaken subsequent to the effective date of such
amendment and (b) to the extent the laws of the state in which any of the Tower
Assets is located establish a meaning for "hazardous substance," "release,"
"solid waste" or "disposal" which is broader than that specified in either
CERCLA or RCRA, such broader meaning shall apply.
EXCLUDED ASSETS shall mean the Exxon Towers and equipment thereon, cash,
bank accounts, and the property identified on the exhibit to the Assignment and
Assumption instrument referenced in Section 8.1(g).
EXCLUDED LIABILITIES shall mean all other liabilities and obligations of
the Prime Companies other than the Assumed Obligations.
EXXON TOWERS shall mean the towers and tower sites described on Exhibit
E.
Exhibit A - 2
<PAGE> 47
GAAP shall mean generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principals Board
of the American Institute of Certified Public Accounts and/or in statements of
the Financial Accounting Standards Board and/or their respective successors and
which are applicable in circumstances as of the date in question. Accounting
principles are applied on a "consistent basis" when the accounting principles
observed in a current period are comparable in all material respects to those
accounting principles applied in a preceding period.
GOVERNMENTAL AUTHORITY shall mean any governmental, quasi-governmental,
state, county, city or other political subdivision of the United States or any
other country, or any agency, court or instrumentality, foreign or domestic, or
statutory or regulatory body thereof.
INDEMNIFYING PARTY shall mean, with respect to any particular
Indemnified Party, any Person that, pursuant to Article 9, may owe an indemnity
obligation to such Indemnified Party.
INTELLECTUAL PROPERTY RIGHTS shall mean any trademark, service mark,
trade name, invention, patent, trade secret, know-how, copyright (including to
the extent applicable, any registrations thereof or applications for
registration of any of the foregoing), or any other similar type of proprietary
intellectual property right.
INTERIM BALANCE SHEET DATE shall mean August 31, 1996.
KNOWN shall mean the actual knowledge of Mark Ein, Dale Harkins, Warren
Harkins or Bill Kubena.
LEGAL REQUIREMENT shall mean any law, statute, code, ordinance, order,
rule, regulation, judgment, decree, injunction, franchise, permit, certificate,
license, authorization, or other directional requirement (including, without
limitation, any of the foregoing that relates to environmental standards or
controls, energy regulations and occupational, safety and health standards or
controls including those arising under Environmental Laws) of any Governmental
Authority.
LIEN shall mean any lien, pledge, condemnation award, claim,
restriction, charge, preferential purchase right, security interest, mortgage
or encumbrance of any nature whatsoever including a statutory landlord lien.
LLC AGREEMENTS shall mean the limited liability company agreements of
Prime Holdings and Prime Sub, as amended to date.
MATERIAL ADVERSE EFFECT shall mean, in relation to any Person, any
material and adverse effect on the assets, liabilities, financial condition,
business, operations or affairs, taken as a whole, of the Person referred to.
MERGER CONSIDERATION shall mean the consideration payable with respect
to the conversion of membership interest of Prime Holdings as set forth in
Section 2.5.
Exhibit A - 3
<PAGE> 48
PAST DUE RATE shall mean the lesser of (a) the maximum nonusurious rate
permitted by law and (b) the "prime rate" as announced by The First National
Bank of Boston from time to time, plus 4% per annum.
PERMITTED LIENS shall mean:
(i) Liens for taxes which are not yet due and payable;
(ii) inchoate Liens arising by operation of law, including
materialman's, mechanic's, repairman's, laborer's,
warehousemen, carrier's, employee's, contractor's and
operator's Liens arising in the ordinary course of
business but only to the extent such liens secure
obligations that, as of the Closing, are not due and
payable and are not being contested;
(iii) minor defects, irregularities in title, easements, rights
of way, servitudes, similar rights (whether affecting fee
interests, a landlord's interest in leased properties or a
tenant's interest in leased properties) and Liens
affecting a landlord's interest in property leased to
either Prime Company that individually or in the aggregate
(1) have not had, and are not reasonably likely to have an
adverse effect on the ability of the Company or its
Affiliates to use such property in the manner previously
owned or used by the Prime Companies or (2) materially
impair the value of such property; and
(iv) Liens securing the Company's financing.
PERSON shall mean any natural person, firm, partnership, association,
corporation, limited liability the Company, the Company, trust, entity, public
body or government.
PRE-CLOSING TAXABLE PERIOD means all or a portion of (i) any taxable
period up to and including the Closing Date.
PRIME BUSINESSES shall mean the Tower Businesses conducted by the Prime
Companies prior to the Closing Date.
PRIME COMPANIES shall mean collectively Prime Holdings and Prime Sub.
PRIME HOLDINGS shall mean Prime Communication Sites Holding, L.L.C.
PRIME HOLDINGS LLC AGREEMENT shall mean the Limited Liability Company
Agreement of Prime Communication Sites Holding, L.L.C. dated as of January 20,
1995, as amended to date.
PRIME INTERESTS shall mean all of the issued and outstanding
record and beneficial equity interests in Prime Holdings and Prime Sub.
Exhibit A - 4
<PAGE> 49
PRIME SUB shall mean Prime Communication Sites, L.L.C.
PRO RATA SHARE shall mean, as it relates to any Transferor, (a) with
respect to Damages arising from acts or omissions of such Transferor committed
in its individual capacity thus giving rise to personal obligations (as opposed
to in its capacity as a member, manager, officer, employee or agent of the
Prime Companies), 100% or (b) with respect to Damages arising from acts or
omissions of any other Transferor or debts, liabilities or obligations of the
Prime Companies, the percentage set forth opposite such Transferor's name as
follows:
<TABLE>
<S> <C>
Carlyle-Prime Investors, L.P. 25.8%
Carlyle-Prime Partners I, L.P. 35.7%
Bill Kubena 12.8%
Dale Harkins 12.8%
Warren D. Harkins 12.8%
BRAD Communication Services, Inc. 0.1%
</TABLE>
REAL PROPERTY INTERESTS shall mean the Scheduled Fee Lands, the
Scheduled Leases (and the leasehold estates created thereby), the Scheduled
Easements, and all improvements located on any of the foregoing.
SCHEDULED USER CONTRACTS shall mean the Contracts listed on Schedule
4.11(b).
SUBJECT STATES shall mean (a) with respect to Prime Holdings, Arizona,
Illinois, New Mexico, Oklahoma, Pennsylvania, Texas and West Virginia and (b)
with respect to Prime Sub, Arkansas, Colorado, Florida, Georgia, Kansas,
Kentucky, Louisiana, Missouri, Mississippi, Nebraska, Nevada, Pennsylvania,
Tennessee, Texas, Utah and Wyoming.
TANGIBLE PROPERTY shall mean all machinery, equipment, tools, supplies,
improvements, shelters, sheds, construction in progress, fixtures and other
fixed assets located as of the date of this Agreement in or on the Tower Sites
or Towers, including microwave equipment, tower supplies, shelters and utility
hook-ups, support facilities and such additional of the foregoing items as may
be located thereon on the Closing Date.
THIRD-PARTY CLAIM shall mean a third-party claim asserted against an
Indemnified Party by a Person other than (a) an Affiliate of such Indemnified
Party or (b) any director, stockholder, officer, member, partner or employee of
any such Indemnified Party or its Affiliates.
TITLE DEFECT shall mean, with respect to any of the Tower Assets any one
or more of the following:
(a) any restriction contained in any Contract that would
prohibit, limit or interfere with the ability of the
Company or its Affiliates (including the Prime Companies)
to use such Tower Site or Tower in the Tower Business;
Exhibit A - 5
<PAGE> 50
(b) any Contract granting any Person the right to use any
portion of such property other than parties under the User
Contracts listed on Schedule 4.11(b);
(c) any consent to assignment relating to the Tower Assets
that may have been required to have been obtained, and
that was not obtained, in connection with the transactions
contemplated by this Agreement or any conveyance or
assignment thereof prior to the Closing Date;
(d) any Lien;
(e) the failure of such Property to have direct vehicular and
pedestrian access to public roads;
(f) any encroachment or protrusion of any of the Tower Assets
and related support facilities (including guy anchors and
wires) the equipment shelters located thereon or any fence
surrounding same on any property other than the Tower
Sites.
TOWER ASSETS shall mean the Real Property Interests, the Towers, the
Scheduled Intellectual Property Rights, the Books and Records, the Permits, the
Scheduled Tangible Personal Property and the Scheduled Contracts.
TOWER BUSINESS shall mean the business of owning and operating or
otherwise managing radio or other communication towers and roof top
communication facilities including renting or leasing space on such towers or
facilities to third-parties.
TOWERS shall mean the microwave communication towers, poles, signboard
or building attachments located on any of the Tower Sites.
TOWER SITES shall mean the Fee Properties, the Scheduled Leases and the
Scheduled Easements.
TRANSACTION DOCUMENTS shall mean this Agreement and all agreements,
conveyances, documents, instruments and certificates delivered at the Closing
pursuant to this Agreement.
USER CONTRACT shall mean any Contract by which any Person is granted
rights to use space or install equipment (including antennae) on any of the
Towers or in any improvement located on the Tower Sites.
Exhibit A - 6
<PAGE> 1
EXHIBIT 10.3
Conformed Copy
================================================================================
ATC TOWER CORP.
CREDIT AGREEMENT
Dated as of October 11, 1996
THE FIRST NATIONAL BANK OF BOSTON, Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1. Definitions; Certain Rules of Construction . . . . . . . . . . . . . 1
2. The Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.1. Revolving Credit . . . . . . . . . . . . . . . . . . . . . . 28
2.1.1. Revolving Loan . . . . . . . . . . . . . . . . . . 28
2.1.2. Maximum Amount of Revolving Credit . . . . . . . . 28
2.1.3. Borrowing Requests . . . . . . . . . . . . . . . . 30
2.1.4. Revolving Notes . . . . . . . . . . . . . . . . . . 30
2.2. Term Credit . . . . . . . . . . . . . . . . . . . . . . . . 30
2.2.1. Term Loan . . . . . . . . . . . . . . . . . . . . . 30
2.2.2. Term Notes . . . . . . . . . . . . . . . . . . . . 31
2.3. Letters of Credit . . . . . . . . . . . . . . . . . . . . . 31
2.3.1. Issuance of Letters of Credit . . . . . . . . . . . 31
2.3.2. Requests for Letters of Credit . . . . . . . . . . 31
2.3.3. Form and Expiration of Letters of Credit . . . . . 31
2.3.4. Lenders' Participation in Letters of Credit . . . . 32
2.3.5. Presentation . . . . . . . . . . . . . . . . . . . 32
2.3.6. Payment of Drafts . . . . . . . . . . . . . . . . . 32
2.3.7. Uniform Customs and Practice . . . . . . . . . . . 32
2.3.8. Subrogation . . . . . . . . . . . . . . . . . . . . 34
2.3.9. Modification, Consent, etc. . . . . . . . . . . . . 34
2.4. Application of Proceeds . . . . . . . . . . . . . . . . . . 34
2.4.1. Revolving Loan . . . . . . . . . . . . . . . . . . 34
2.4.2. Term Loan . . . . . . . . . . . . . . . . . . . . . 34
2.4.3. Letters of Credit . . . . . . . . . . . . . . . . . 35
2.4.4. Specifically Prohibited Applications . . . . . . . 35
2.5. Nature of Obligations of Lenders to Make Extensions of
Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3. Interest; Eurodollar Pricing Options; Fees . . . . . . . . . . . . . 35
3.1. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.2. Eurodollar Pricing Options . . . . . . . . . . . . . . . . . 36
3.2.1. Election of Eurodollar Pricing Options . . . . . . 36
3.2.2. Notice to Lenders and Company . . . . . . . . . . . 36
3.2.3. Selection of Eurodollar Interest Periods . . . . . 37
3.2.4. Additional Interest . . . . . . . . . . . . . . . . 37
3.2.5. Violation of Legal Requirements . . . . . . . . . . 38
3.2.6. Funding Procedure . . . . . . . . . . . . . . . . . 38
3.3. Commitment Fees . . . . . . . . . . . . . . . . . . . . . . 38
3.4. Letter of Credit Fees . . . . . . . . . . . . . . . . . . . 39
3.5. Changes in Circumstances; Yield Protection . . . . . . . . . 39
3.5.1. Reserve Requirements, etc . . . . . . . . . . . . . 39
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C> <C>
3.5.2. Taxes . . . . . . . . . . . . . . . . . . . . . . . 39
3.5.3. Capital Adequacy . . . . . . . . . . . . . . . . . 40
3.5.4. Regulatory Changes . . . . . . . . . . . . . . . . 40
3.5.5. Compensation Claims . . . . . . . . . . . . . . . . 40
3.5.6. Mitigation . . . . . . . . . . . . . . . . . . . . 41
3.6. Computations of Interest and Fees . . . . . . . . . . . . . 41
4. Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.1. Payment at Maturity . . . . . . . . . . . . . . . . . . . . 41
4.2. Scheduled Required Prepayments . . . . . . . . . . . . . . . 41
4.3. Contingent Required Prepayments . . . . . . . . . . . . . . 42
4.3.1. Excess Credit Exposure . . . . . . . . . . . . . . 42
4.3.2. Excess Cash Flow . . . . . . . . . . . . . . . . . 42
4.3.3. Net Asset Sale Proceeds . . . . . . . . . . . . . . 42
4.3.4. Net Debt Proceeds . . . . . . . . . . . . . . . . . 43
4.3.5. Net Equity Proceeds . . . . . . . . . . . . . . . . 43
4.4. Voluntary Prepayments . . . . . . . . . . . . . . . . . . . 43
4.5. Letters of Credit . . . . . . . . . . . . . . . . . . . . . 43
4.6. Reborrowing; Application of Payments, etc. . . . . . . . . . 44
4.6.1. Reborrowing . . . . . . . . . . . . . . . . . . . . 44
4.6.2. Order of Application . . . . . . . . . . . . . . . 44
4.6.3. Payment with Accrued Interest, etc . . . . . . . . 44
4.6.4. Payments for Lenders . . . . . . . . . . . . . . . 44
5. Conditions to Extending Credit . . . . . . . . . . . . . . . . . . . 44
5.1. Conditions on Initial Closing Date . . . . . . . . . . . . . 45
5.1.1. Notes . . . . . . . . . . . . . . . . . . . . . . . 45
5.1.2. Payment of Fees . . . . . . . . . . . . . . . . . . 45
5.1.3. Legal Opinions . . . . . . . . . . . . . . . . . . 45
5.1.4. Security Agreement . . . . . . . . . . . . . . . . 45
5.1.5. Perfection of Security . . . . . . . . . . . . . . 45
5.1.6. Master Subordination Agreement . . . . . . . . . . 46
5.1.7. Guarantee Agreement. . . . . . . . . . . . . . . . 46
5.1.8. Parent Pledge Agreement . . . . . . . . . . . . . . 46
5.1.9. Prime Acquisition . . . . . . . . . . . . . . . . . 46
5.1.10. Solvency, etc. . . . . . . . . . . . . . . . . . . 47
5.1.13. Proper Proceedings . . . . . . . . . . . . . . . . 47
5.1.14. General . . . . . . . . . . . . . . . . . . . . . 48
5.2. Conditions to Each Extension of Credit . . . . . . . . . . . 48
5.2.1. Officer's Certificate . . . . . . . . . . . . . . . 48
5.2.2. Legality, etc . . . . . . . . . . . . . . . . . . . 48
6. General Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 48
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C>
6.1. Taxes and Other Charges; Accounts Payable. . . . . . . . . . 48
6.1.1. Taxes and Other Charges . . . . . . . . . . . . . . 49
6.1.2. Accounts Payable . . . . . . . . . . . . . . . . . 49
6.2. Conduct of Business, etc. . . . . . . . . . . . . . . . . . 49
6.2.1. Types of Business . . . . . . . . . . . . . . . . . 49
6.2.2. Maintenance of Properties. . . . . . . . . . . . . 49
6.2.3. Statutory Compliance . . . . . . . . . . . . . . . 50
6.2.4. Compliance with Material Agreements . . . . . . . . 50
6.3. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.3.1. Property Insurance . . . . . . . . . . . . . . . . 50
6.3.2. Liability Insurance . . . . . . . . . . . . . . . . 50
6.4. Financial Statements and Reports . . . . . . . . . . . . . . 51
6.4.1. Annual Reports . . . . . . . . . . . . . . . . . . 51
6.4.2. Quarterly Reports . . . . . . . . . . . . . . . . . 52
6.4.3. Monthly Reports. . . . . . . . . . . . . . . . . . 53
6.4.4. Future Towers . . . . . . . . . . . . . . . . . . . 53
6.4.5. Other Reports . . . . . . . . . . . . . . . . . . . 53
6.4.6. Notice of Litigation, Defaults, etc . . . . . . . . 54
6.4.7. ERISA Reports . . . . . . . . . . . . . . . . . . . 54
6.4.8. Other Information . . . . . . . . . . . . . . . . . 55
6.5. Certain Financial Tests . . . . . . . . . . . . . . . . . . 55
6.5.1. Consolidated EBITDA to Consolidated Interest
Expense . . . . . . . . . . . . . . . . . . . . . . 55
6.5.2. Consolidated Annualized EBITDA to Consolidated Pro
Forma Debt Service . . . . . . . . . . . . . . . . 55
6.5.3. Consolidated EBITDA to Consolidated Fixed
Charges . . . . . . . . . . . . . . . . . . . . . . 56
6.5.4. Consolidated Senior Debt to Consolidated
Annualized EBITDA . . . . . . . . . . . . . . . . . 56
6.5.5. Consolidated Total Debt to Consolidated
Annualized EBITDA . . . . . . . . . . . . . . . . . 56
6.5.6. Tower Construction Debt . . . . . . . . . . . . . . 57
6.6. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 57
6.7. Guarantees; Letters of Credit . . . . . . . . . . . . . . . 59
6.8. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
6.9. Investments and Acquisitions . . . . . . . . . . . . . . . . 60
6.10. Distributions . . . . . . . . . . . . . . . . . . . . . . . 61
6.11. Asset Dispositions and Mergers . . . . . . . . . . . . . . . 62
6.12. Issuance of Stock by Subsidiaries; Subsidiary
Distributions . . . . . . . . . . . . . . . . . . . . . . . 63
6.12.1. Issuance of Stock by Subsidiaries . . . . . . . . 63
6.12.2. No Restrictions on Subsidiary Distributions . . . 63
6.13. Voluntary Prepayments of Other Indebtedness . . . . . . . . 63
6.14. Derivative Contracts . . . . . . . . . . . . . . . . . . . . 64
6.15. Negative Pledge Clauses . . . . . . . . . . . . . . . . . . 64
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<CAPTION>
Page
<S> <C>
6.16. ERISA, etc. . . . . . . . . . . . . . . . . . . . . . . . . 64
6.17. Transactions with Affiliates . . . . . . . . . . . . . . . . 64
6.18. Interest Rate Protection . . . . . . . . . . . . . . . . . . 64
6.19. Environmental Laws . . . . . . . . . . . . . . . . . . . . . 65
6.19.1. Compliance with Law and Permits . . . . . . . . . 65
6.19.2. Notice of Claims, etc . . . . . . . . . . . . . . 65
7. Representations and Warranties . . . . . . . . . . . . . . . . . . . 65
7.1. Organization and Business . . . . . . . . . . . . . . . . . 65
7.1.1. The Company . . . . . . . . . . . . . . . . . . . . 65
7.1.2. Subsidiaries . . . . . . . . . . . . . . . . . . . 66
7.1.3. Qualification . . . . . . . . . . . . . . . . . . . 66
7.1.4. Capitalization . . . . . . . . . . . . . . . . . . 66
7.2. Financial Statements and Other Information; Material
Agreements . . . . . . . . . . . . . . . . . . . . . . . . 66
7.2.1. Financial Statements and Other Information . . . . 66
7.2.2. Material Agreements . . . . . . . . . . . . . . . . 68
7.3. Agreements Relating to Financing Debt, Investments, etc. . . 68
7.4. Changes in Condition . . . . . . . . . . . . . . . . . . . . 68
7.5. Title to Assets . . . . . . . . . . . . . . . . . . . . . . 68
7.6. Operations in Conformity With Law, etc . . . . . . . . . . . 68
7.7. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.8. Authorization and Enforceability . . . . . . . . . . . . . . 69
7.9. No Legal Obstacle to Agreements . . . . . . . . . . . . . . 69
7.10. Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.11. Licenses, etc. . . . . . . . . . . . . . . . . . . . . . . . 70
7.12. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . 71
7.13. Certain Business Representations . . . . . . . . . . . . . . 71
7.13.1. Labor Relations . . . . . . . . . . . . . . . . . 71
7.13.2. Antitrust . . . . . . . . . . . . . . . . . . . . 71
7.13.3. Tower Sites . . . . . . . . . . . . . . . . . . . 71
7.13.4. Real Property Leases . . . . . . . . . . . . . . . 71
7.13.5. Operation and Maintenance of Equipment . . . . . . 72
7.13.6. FCC and FAA Matters . . . . . . . . . . . . . . . 72
7.14. Environmental Regulations . . . . . . . . . . . . . . . . . 73
7.14.1. Environmental Compliance . . . . . . . . . . . . . 73
7.14.2. Environmental Litigation . . . . . . . . . . . . . 73
7.14.3. Hazardous Material . . . . . . . . . . . . . . . . 73
7.14.4. Environmental Condition of Properties . . . . . . 74
7.15. Pension Plans . . . . . . . . . . . . . . . . . . . . . . . 74
7.16. Prime Acquisition Agreement, etc . . . . . . . . . . . . . . 74
7.17. Foreign Trade Regulations; Government Regulation;
Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . 74
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<CAPTION>
Page
<S> <C> <C>
7.17.1. Foreign Trade Regulations . . . . . . . . . . . . 74
7.17.2. Government Regulation . . . . . . . . . . . . . . 75
7.17.3. Margin Stock . . . . . . . . . . . . . . . . . . . 75
7.18. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 75
8. Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
8.1. Events of Default . . . . . . . . . . . . . . . . . . . . . 75
8.1.1. Payment . . . . . . . . . . . . . . . . . . . . . . 75
8.1.2. Specified Covenants . . . . . . . . . . . . . . . . 75
8.1.3. Other Covenants . . . . . . . . . . . . . . . . . . 75
8.1.4. Representations and Warranties . . . . . . . . . . 76
8.1.5. Cross Default, etc. . . . . . . . . . . . . . . . . 76
8.1.6. Ownership; Liquidation; etc. . . . . . . . . . . . 76
8.1.7. Enforceability, etc. . . . . . . . . . . . . . . . 77
8.1.8. Judgments . . . . . . . . . . . . . . . . . . . . . 77
8.1.9. ERISA . . . . . . . . . . . . . . . . . . . . . . . 77
8.1.10. Bankruptcy, etc. . . . . . . . . . . . . . . . . . 78
8.2. Certain Actions Following an Event of Default . . . . . . . 78
8.2.1. Terminate Obligation to Extend Credit . . . . . . . 78
8.2.2. Specific Performance; Exercise of Rights . . . . . 79
8.2.3. Acceleration . . . . . . . . . . . . . . . . . . . 79
8.2.4. Enforcement of Payment; Credit Security; Setoff . . 79
8.2.5. Cumulative Remedies . . . . . . . . . . . . . . . . 79
8.3. Annulment of Defaults . . . . . . . . . . . . . . . . . . . 79
8.4. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . 80
9. Expenses; Indemnity . . . . . . . . . . . . . . . . . . . . . . . . 80
9.1. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 80
9.2. General Indemnity . . . . . . . . . . . . . . . . . . . . . 81
9.3. Indemnity With Respect to Letters of Credit . . . . . . . . 81
10. Operations; Managing Agent . . . . . . . . . . . . . . . . . . . . . 82
10.1. Interests in Credits . . . . . . . . . . . . . . . . . . . . 82
10.2. Agents' Authority to Act, etc . . . . . . . . . . . . . . . 82
10.3. Company to Pay Managing Agent, etc . . . . . . . . . . . . . 82
10.4. Lender Operations for Advances, Letters of Credit, etc . . . 82
10.4.1. Advances . . . . . . . . . . . . . . . . . . . . . 82
10.4.2. Letters of Credit . . . . . . . . . . . . . . . . 83
10.4.3. Managing Agent to Allocate Payments, etc. . . . . 83
10.4.4. Delinquent Lenders; Nonperforming Lenders . . . . 83
10.5. Sharing of Payments, etc. . . . . . . . . . . . . . . . . . 84
10.6. Amendments, Consents, Waivers, etc . . . . . . . . . . . . . 85
10.7. Agent's Resignation . . . . . . . . . . . . . . . . . . . . 86
</TABLE>
-v-
<PAGE> 7
<TABLE>
<CAPTION>
Page
<S> <C> <C>
10.8. Concerning the Agents . . . . . . . . . . . . . . . 86
10.8.1. Action in Good Faith, etc . . . . . . . . . . . . 86
10.8.2. No Implied Duties, etc. . . . . . . . . . . . . . 87
10.8.3. Validity, etc. . . . . . . . . . . . . . . . . . . 87
10.8.4. Compliance . . . . . . . . . . . . . . . . . . . . 87
10.8.5. Employment of Agents and Counsel . . . . . . . . . 87
10.8.6. Reliance on Documents and Counsel . . . . . . . . 88
10.8.7. Agent's Reimbursement . . . . . . . . . . . . . . . 88
10.9. Rights as a Lender . . . . . . . . . . . . . . . . . . . . . 88
10.10. Independent Credit Decision . . . . . . . . . . . . . . . . 88
10.11. Indemnification . . . . . . . . . . . . . . . . . . . . . . 89
11. Successors and Assigns; Lender Assignments and Participations . . . 89
11.1. Assignments by Lenders . . . . . . . . . . . . . . . . . . . 89
11.1.1. Assignees and Assignment Procedures . . . . . . . 90
11.1.2. Terms of Assignment and Acceptance . . . . . . . . 91
11.1.3. Register . . . . . . . . . . . . . . . . . . . . . 91
11.1.4. Acceptance of Assignment and Assumption . . . . . 92
11.1.5. Federal Reserve Bank . . . . . . . . . . . . . . . 92
11.1.6. Further Assurances . . . . . . . . . . . . . . . . 92
11.2. Credit Participants . . . . . . . . . . . . . . . . . . . . 92
11.3. Replacement of Lender . . . . . . . . . . . . . . . . . . . 93
12. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . 94
13. Foreign Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . 95
14. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
15. Course of Dealing; Amendments and Waivers . . . . . . . . . . . . . 96
16. Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
17. Venue; Service of Process . . . . . . . . . . . . . . . . . . . . . 97
18. Maximum Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 97
18.1. No Interest in Excess of Maximum Interest . . . . . . . . . 97
18.2. Incorporation by Reference . . . . . . . . . . . . . . . . . 98
18.3. Changes in Usury Laws . . . . . . . . . . . . . . . . . . . 98
19. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . 99
20. DTPA WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
21. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
</TABLE>
-vi-
<PAGE> 8
ATC TOWER CORP.
CREDIT AGREEMENT
This Agreement, dated as of October 11, 1996, is among ATC Tower
Corp., a Delaware corporation, the Subsidiaries of ATC Tower Corp. from time to
time party hereto, the Lenders from time to time party hereto, The First
National Bank of Boston, both in its capacity as a Lender and in its capacity
as Managing Agent for itself and the other Lenders, and Wells Fargo Bank
(Texas) National Association, both in its capacity as a Lender and in its
capacity as Collateral Agent for itself and the other Lenders. The parties
agree as follows:
Recitals: This Agreement amends and restates the Credit Agreement
dated as of October 12, 1994, as amended and restated as of December 28, 1995,
as in effect on the date hereof immediately prior to giving effect to this
Agreement, among the Company (as successor to Bowen-Smith Corp.), Wells Fargo
Bank (Texas) National Association (as successor to First Interstate Bank of
Texas, N.A.), as agent, and certain other lenders (the "Prior Credit
Agreement"). Pursuant to this Agreement, the Lenders are extending to the
Company a $23,000,000 revolving credit facility, including a $1,000,000
sub-allotment for Letters of Credit, and a $37,000,000 term loan facility. All
the credit facilities mature on October 10, 2003. These credit facilities are
guaranteed by the Parent, ATC Holdings and the Company's Subsidiaries and are
secured by liens on substantially all the assets of the Company and its
Subsidiaries, including Towers that contribute at least 80% of Consolidated
Revenues. The proceeds of these credit facilities may be used to acquire Towers
from Prime on the Initial Closing Date, to acquire and construct additional
Towers and for general corporate purposes as provided herein.
1. Definitions; Certain Rules of Construction. Certain capitalized
terms are used in this Agreement and in the other Credit Documents with the
specific meanings defined below in this Section 1. Except as otherwise
explicitly specified to the contrary or unless the context clearly requires
otherwise, (a) the capitalized term "Section" refers to sections of this
Agreement, (b) the capitalized term "Exhibit" refers to exhibits to this
Agreement, (c) references to a particular Section include all subsections
thereof, (d) the word "including" shall be construed as "including without
limitation", (e) accounting terms not otherwise defined herein have the meaning
provided under GAAP, (f) references to a particular statute or regulation
include all rules and regulations thereunder and any successor statute,
regulation or rules, in each case as from time to time in effect and (g)
references to a particular Person include such Person's successors and assigns
to the extent not prohibited by this Agreement and the other Credit Documents.
References to "the date hereof" mean the date first set forth above.
1.1. "Accumulated Benefit Obligations" means the actuarial
present value of the accumulated benefit obligations under any Plan, calculated
in accordance with Statement No. 87 of the Financial Accounting Standards
Board.
1.2. "Affected Lender" is defined in Section 11.3.
<PAGE> 9
1.3. "Affiliate" means, with respect to the Company (or any other
specified Person), any other Person directly or indirectly controlling,
controlled by or under direct or indirect common control with the Company (or
such specified Person), and shall include (a) any officer or director or
general partner of the Company (or such specified Person) and (b) any Person of
which the Company (or such specified Person) or any Affiliate (as defined in
clause (a) above) of the Company (or such specified Person) shall, directly or
indirectly, beneficially own either (i) at least 10% of the outstanding equity
securities having the general power to vote or (ii) at least 10% of all equity
interests.
1.4. "Agent" means each of the Managing Agent and the Collateral
Agent.
1.5. "Agreement" means this Credit Agreement as from time to time
amended, modified and in effect.
1.6. "Applicable Margin" means (a) through December 31, 1996, the
highest applicable percentage rate set forth below and (b) during any month
thereafter, the percentage in the table below set opposite the ratio which (i)
Consolidated Total Debt on the last day of the most recent fiscal quarter for
which financial statements have been (or are required to have been) furnished
to the Lenders in accordance with Sections 6.4.1 or 6.4.2 prior to the
beginning of such month bore to (ii) Consolidated Annualized EBITDA for the
most recent fiscal quarter ended on the day referred to in clause (i) above:
<TABLE>
<CAPTION>
Ratio of Consolidated Total Debt Base Rate Eurodollar
to Consolidated Annualized EBITDA Applicable Margin Applicable Margin
- --------------------------------- ----------------- -----------------
<S> <C> <C>
Greater than or equal to 500% 1 .75% 2.75%
Less than 500% but greater than or
equal to 450% 1 .50% 2.50%
Less than 450% but greater than or
equal to 400% 1 .00% 2.00%
Less than 400% but greater than or
equal to 350% 0 .50% 1.50%
Less than 350% 0 .25% 1.25%
</TABLE>
1.7. "Applicable Rate" means, at any date, the sum of:
(a) (i) with respect to each portion of the Loan
subject to a Eurodollar Pricing Option, the sum of the
Applicable Margin plus the Eurodollar Rate
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<PAGE> 10
with respect to such Eurodollar Pricing Option;
(ii) with respect to each other portion of the
Loan, the sum of the Applicable Margin plus the Base Rate;
plus (b) an additional 2% effective on the day the Managing
Agent notifies the Company that the interest rates hereunder
are increasing as a result of the occurrence and continuance
of an Event of Default until the earlier of such time as (i)
such Event of Default is no longer continuing or (ii) such
Event of Default is deemed no longer to exist, in each case
pursuant to Section 8.3;
provided, however, that (A) in no event shall the Applicable Rate exceed the
Maximum Rate, and (B) if at any time the Applicable Rate as described above
without giving effect to the foregoing clause (A) shall exceed the Maximum Rate
and thereafter shall become less than the Maximum Rate, the Applicable Rate
shall be the Maximum Rate until the Lenders shall have received the amount of
interest that the Lenders would have received on the Credit Obligations if the
Applicable Rate had not been limited to the Maximum Rate during the period of
time the Applicable Rate as described above without giving effect to the
foregoing clause (A) exceeded the Maximum Rate.
1.8. "Assignee" is defined in Section 11.1.1.
1.9. "Assignment and Acceptance" is defined in Section 11.1.1.
1.10. "Assignment of Leases" means a collateral assignment of
Leases, leasehold mortgage or leasehold deeds of trust executed by the Company
on October 12, 1994 and subsequently executed or to be executed in respect of
Towers in favor of the Collateral Agent or the Managing Agent for the benefit
of the Lenders, in form and substance satisfactory to the Required Lenders, in
each case as the same may be renewed, modified, extended, supplemented or
rearranged, at any time and from time to time.
1.11. "Assignment of License Agreements" means a collateral
assignment of each License Agreement executed by the Company on October 12,
1994 in favor of the Collateral Agent or the Managing Agent for the benefit of
the Lenders, in form and substance satisfactory to the Required Lenders, as the
same may be renewed, modified, extended, supplemented or rearranged, at any
time and from time to time.
1.12. "ATC Holdings" means ATC Holdings Corp., a Delaware
corporation.
1.13. "Banc One" means Banc One Capital Partners II, Limited
Liability Company, an Ohio limited liability company (the successor to Banc One
Capital Partners II, Limited Partnership).
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<PAGE> 11
1.14. "Bank of Boston" means The First National Bank of Boston.
1.15. "Banking Day" means any day other than Saturday, Sunday or a
day on which banks in Boston, Massachusetts are authorized or required by law
or other governmental action to close and, if such term is used with reference
to a Eurodollar Pricing Option, any day on which dealings are effected in the
Eurodollars in question by first-class banks in the inter-bank Eurodollar
markets in New York, New York.
1.16. "Bankruptcy Code" means Title 11 of the United States Code.
1.17. "Bankruptcy Default" means an Event of Default referred to
in Section 8.1.10.
1.18. "Base Rate" means, on any date, the greater of (a) the rate
of interest announced by Bank of Boston at the Boston Office as its Base Rate
or (b) the sum of 1/2% plus the Federal Funds Rate.
1.19. "Boston Office" means the principal banking office of Bank
of Boston in Boston, Massachusetts.
1.20. "Bowen Subordinated Debt" means the Company's 10 1/2%
Subordinated Indebtedness in the aggregate original principal amount of
$3,000,000 due October 15, 2002, payable to Max Bowen Enterprises and
subordinated to the Credit Obligations pursuant to the Bowen Subordination
Agreement.
1.21. "By-laws" means all written by-laws, rules, regulations and
all other documents relating to the management, governance or internal
regulation of any Person other than an individual, or interpretive of the
Charter of such Person, all as from time to time in effect.
1.22. "Capital Expenditures" means, for any period, amounts added
or required to be added to the property, plant and equipment or other fixed
assets account on the Consolidated balance sheet of the Company and its
Subsidiaries, prepared in accordance with GAAP, in respect of (a) the
acquisition, construction, improvement or replacement of land, buildings,
machinery, equipment, leaseholds and any other real or personal property, (b)
to the extent not included in clause (a) above, materials, contract labor and
direct labor relating thereto (excluding amounts properly expensed as repairs
and maintenance in accordance with GAAP) and (c) software development costs to
the extent not expensed; provided, however, that in no event will Capital
Expenditures include Tower construction and acquisition costs to the extent not
prohibited by Section 6.9.
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<PAGE> 12
1.23. "Capitalized Lease" means any lease which is required to be
capitalized on the balance sheet of the lessee in accordance with GAAP,
including Statement Nos. 13 and 98 of the Financial Accounting Standards Board.
1.24. "Capitalized Lease Obligations" means the amount of the
liability reflecting the aggregate discounted amount of future payments under
all Capitalized Leases calculated in accordance with GAAP, including Statement
Nos. 13 and 98 of the Financial Accounting Standards Board.
1.25. "Cash Equivalents" means:
(a) negotiable certificates of deposit, time deposits
(including sweep accounts), demand deposits and bankers' acceptances
having a maturity of 180 days or less and issued by any United States
financial institution having capital and surplus and undivided profits
aggregating at least $300,000,000 or issued by any Lender;
(b) corporate obligations having a maturity of 180 days
or less and rated at least Prime-1 by Moody's or A-1 by S&P or issued
by any Lender;
(c) any direct obligation of the United States of
America or any agency or instrumentality thereof, or of any state or
municipality thereof, (i) which has a remaining maturity at the time
of purchase of not more than 180 days or which is subject to a
repurchase agreement with any Lender (or any other financial
institution referred to in clause (a) above) exercisable within 180
days from the time of purchase and (ii) which, in the case of
obligations of any state or municipality, is rated at least AAA by
Moody's or AAA by S&P; and
(d) any mutual fund or other pooled investment vehicle
rated at least Aa by Moody's or AA by S&P which invests principally in
obligations described above.
1.26. "CERCLA" means the federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980.
1.27. "CERCLIS" means the federal Comprehensive Environmental
Response Compensation Liability Information System List (or any successor
document) issued under CERCLA.
1.28. "Charter" means the articles of organization, certificate of
incorporation, statute, constitution, joint venture agreement, partnership
agreement, trust indenture, limited liability company agreement or other
charter document of any Person other than an individual, each as from time to
time in effect.
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<PAGE> 13
1.29. "Closing Date" means the Initial Closing Date and each other
date on which any extension of credit is made pursuant to Sections 2.1, 2.2 or
2.3.
1.30. "Code" means the federal Internal Revenue Code of 1986.
1.31. "Collateral Agent" means Wells Fargo in its capacity as
collateral agent for the Lenders hereunder, as well as its successors and
assigns in such capacity pursuant to Section 10.7.
1.32. "Commitment" means, with respect to any Lender, such
Lender's obligations to extend the credits contemplated by Section 2. The
original Commitments are set forth in Exhibit 10.1 and the current Commitments
are recorded from time to time in the Register.
1.33. "Commitment Fee Rate" means, with respect to any Payment
Date or the Final Maturity Date, (a) 0.500% in the event Consolidated Total
Debt as of the end of the most recent fiscal quarter for which financial
statements have been (or are required to have been) furnished to the Lenders in
accordance with Section 6.4.1 or 6.4.2 equals or exceeds 400% of Consolidated
Annualized EBITDA for such quarter and (b) 0.375% in all other events.
1.34. "Communications Act" means the federal Communications Act of
1934.
1.35. "Company" means ATC Tower Corp., a Delaware corporation.
1.36. "Computation Covenants" means Sections 6.5, 6.6.7, 6.6.8,
6.6.14, 6.9.6, 6.10.2, 6.10.3, 6.10.4, 6.10.5, 6.11.5, 6.11.6, 6.11.7 and 6.16.
1.37. "Consolidated" and "Consolidating", when used with reference
to any term, mean that term as applied to the accounts of the Company (or other
specified Person) and all of its Subsidiaries (or other specified group of
Persons), or such of its Subsidiaries as may be specified, consolidated (or
combined) or consolidating (or combining), as the case may be, in accordance
with GAAP and with appropriate deductions for minority interests in
Subsidiaries.
1.38. "Consolidated Annualized EBITDA" means, for any period, 400%
of Consolidated EBITDA for the most recent fiscal quarter ending in such
period.
1.39. "Consolidated EBITDA" means, for any period, the total of:
(a) Consolidated Net Income;
plus (b) all amounts deducted in computing such Consolidated
Net Income in respect of:
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<PAGE> 14
(i) depreciation, amortization and other
non-cash charges,
(ii) interest on, and commitment fees with
respect to, Indebtedness (including payments in the nature
of interest under Capitalized Leases and Interest Rate
Protection Agreements),
(iii) taxes based upon or measured by net
income, and
(iv) up to $150,000 per fiscal year in
consulting payments to Max Bowen;
minus (c) all amounts included in Consolidated Net Income in
respect of deferred income tax benefits.
1.40. "Consolidated Construction Capital Expenditures" means, for
any period, amounts added or required to be added to the property, plant and
equipment or other fixed assets account on the Consolidated balance sheet of
the Company and its Subsidiaries, prepared in accordance with GAAP, in respect
of (a) the construction, improvement or replacement of Towers and the
leaseholds or real property on which such Towers are located and (b) to the
extent not included in clause (a) above, materials, contract labor and direct
labor relating thereto (excluding amounts properly expensed as repairs and
maintenance in accordance with GAAP).
1.41. "Consolidated Excess Cash Flow" means, for any period, the
total of:
(a) Consolidated EBITDA,
minus (b) Consolidated Fixed Charges,
minus (c) to the extent not included in clause (b) above,
mandatory reductions in availability under Section 2.1 and any other
revolving credit facilities of the Company and its Subsidiaries
permitted by this Agreement,
minus (d) voluntary prepayments of the Term Notes and other
term Financing Debt of the Company and its Subsidiaries permitted by
this Agreement,
minus (e) Consolidated Working Capital Factor (if a positive
number),
plus (f) Consolidated Working Capital Factor (if a negative
number); provided, however, that for all purposes of computing
Consolidated Excess Cash Flow, the amount of Consolidated Working
Capital Factor described in this clause (f) shall be treated as a
positive number.
-7-
<PAGE> 15
minus (g) $2,500,000.
1.42. "Consolidated Fixed Charges" means, for any period, the sum
of:
(a) Consolidated Interest Expense,
plus (b) the aggregate amount of all mandatory scheduled
payments and sinking fund payments with respect to principal paid by
the Company and its Subsidiaries in respect of Consolidated Total
Debt, including payments in the nature of principal under Capitalized
Leases, but in no event including contingent prepayments required by
Section 4.3,
plus (c) taxes based upon or measured by net income that
are actually paid in cash,
plus (d) Capital Expenditures.
1.43. "Consolidated Interest Expense" means, for any period, the
aggregate amount of interest, including commitment fees, payments in the nature
of interest under Capitalized Leases and net payments under Interest Rate
Protection Agreements, accrued by the Company and its Subsidiaries (whether
such interest is reflected as an item of expense or capitalized, but excluding
PIK Interest) in accordance with GAAP on a Consolidated basis.
1.44. "Consolidated Net Income" means, for any period, the net
income (or loss) of the Company and its Subsidiaries, determined in accordance
with GAAP on a Consolidated basis; provided, however, that Consolidated Net
Income shall not include:
(a) the income (or loss) of any Person (other than a
Subsidiary) in which the Company or any of its Subsidiaries has an
ownership interest; provided, however, that Consolidated Net Income
shall include amounts in respect of the income of such Person when
actually received in cash by the Company or such Subsidiary in the
form of dividends or similar Distributions; and
(b) extraordinary and nonrecurring gains and losses.
1.45. "Consolidated Pro Forma Debt Service" means, for any period,
the sum of the following items, projected to be accrued by the Company and its
Subsidiaries:
(a) Consolidated Interest Expense, plus
(b) the aggregate amount of all mandatory scheduled
payments, mandatory scheduled prepayments, sinking fund payments and
mandatory reductions in revolving loans as a result of reductions in
revolving credit availability, all with respect to
-8-
<PAGE> 16
Financing Debt of the Company and its Subsidiaries in accordance with
GAAP on a Consolidated basis.
For purposes of computing Consolidated Pro Forma Debt Service:
(i) the amount of Financing Debt outstanding
on the first day of such period shall be assumed to remain
outstanding during the entire period, except to the extent
required to be reduced by mandatory scheduled payments,
reductions in revolving credit availability and other items
described in paragraph (b) above; and
(ii) where interest varies with a floating
rate, the rate in effect on the first day of such period
will be assumed to remain constant during the entire period
(giving effect to any applicable Interest Rate Protection
Agreements).
1.46. "Consolidated Revenues" means, for any period, the total
revenues (net of discounts, commissions and other customary exclusions) of the
Company and its Subsidiaries, determined in accordance with GAAP on a
Consolidated basis.
1.47. "Consolidated Senior Debt" means, at any date, Consolidated
Total Debt minus Subordinated Debt.
1.48. "Consolidated Total Debt" means, at any date, all Financing
Debt of the Company and its Subsidiaries on a Consolidated basis.
1.49. "Consolidated Working Capital Factor" means, for any period,
the amount (whether positive or negative) equal to:
Current Assets
(a) Accounts Receivable:
(i) the amount, if any, by which accounts
receivable at the end of such period were
greater than accounts receivable at the
beginning of such period,
minus (ii) the amount, if any, by which accounts
receivable at the end of such period were
less than accounts receivable at the
beginning of such period,
(b) Prepaid Expenses:
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<PAGE> 17
plus (i) the amount, if any, by which prepaid
expenses at the end of such period were
greater than prepaid expenses at the
beginning of such period,
minus (ii) the amount, if any, by which prepaid expenses
at the end of such period were less than
prepaid expenses at the beginning of such
period,
(c) Materials and Supplies:
plus (i) the amount, if any, by which materials and
supplies at the end of such period were
greater than material and supplies at the
beginning of such period,
minus (ii) the amount, if any, by which material and
supplies at the end of such period were less
than material and supplies at the beginning
of such period,
Current Liabilities
(d) Accounts Payable:
plus (i) the amount, if any, by which accounts
payable at the end of such period were less
than accounts payable at the beginning of
such period,
minus (ii) the amount, if any, by which accounts payable
at the end of such period were greater than
accounts payable at the beginning of such
period,
(e) Accrued Interest Payable:
plus (i) the amount, if any, by which accrued interest
payable at the end of such period was less
than accrued interest payable at the
beginning of such period,
minus (ii) the amount, if any, by which accrued interest
payable at the end of such period was greater
than accrued interest payable at the
beginning of such period,
(f) Deferred Revenue:
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<PAGE> 18
plus (i) the amount, if any, by which deferred revenue
at the end of such period was less than
deferred revenue at the beginning of such
period,
minus (ii) the amount, if any, by which deferred revenue
at the end of such period was greater than
deferred revenue at the beginning of such
period,
(g) Other Current Liabilities:
plus (i) the amount, if any, by which other current
liabilities at the end of such period were
less than other current liabilities at the
beginning of such period,
minus (ii) the amount, if any, by which other current
liabilities at the end of such period were
greater than other current liabilities at the
beginning of such period,
(h) Deferred Compensation Contracts:
plus (i) the amount, if any, by which deferred
compensation contracts at the end of such
period were less than deferred compensation
contracts at the beginning of such period,
minus (ii) the amount, if any, by which deferred
compensation contracts at the end of such
period were greater than deferred
compensation contracts at the beginning of
such period,
all with respect to the Company and its Subsidiaries as determined in
accordance with GAAP on a Consolidated basis.
1.50. "Credit Documents" means:
(a) this Agreement, the Notes, each Letter of Credit,
each draft presented or accepted under a Letter of Credit, the
Guarantee Agreement, the Security Agreement, the fee agreement
contemplated by Section 5.1.2, each Assignment of Leases, each
Mortgage, each Estoppel and Consent Letter, each Assignment of License
Agreement, the Parent Pledge Agreement, the Master Subordination
Agreement, each other Subordination Agreement and each Interest Rate
Protection Agreement provided by a Lender (or an Affiliate of a
Lender) to the Company or any of its Subsidiaries, each as from time
to time in effect; and
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<PAGE> 19
(b) any other present or future agreement or instrument
from time to time entered into among the Company, any of its
Subsidiaries or any other Obligor, on one hand, and the Managing
Agent, the Collateral Agent, any Letter of Credit Issuer or all the
Lenders, on the other hand, relating to, amending or modifying this
Agreement or any other Credit Document referred to above or which is
stated to be a Credit Document, each as from time to time in effect.
1.51. "Credit Obligations" means all present and future
liabilities, obligations and Indebtedness of the Company, any of its
Subsidiaries or any other Obligor owing to the Managing Agent, the Collateral
Agent or any Lender (or any Affiliate of a Lender) under or in connection with
this Agreement or any other Credit Document, including obligations in respect
of principal, interest, reimbursement obligations under Letters of Credit and
Interest Rate Protection Agreements provided by a Lender (or an Affiliate of a
Lender), commitment fees, Letter of Credit fees, amounts provided for in
Sections 3.2.4, 3.5 and 9 and other fees, charges, indemnities and expenses
from time to time owing hereunder or under any other Credit Document (whether
accruing before or after a Bankruptcy Default).
1.52. "Credit Participant" is defined in Section 11.2.
1.53. "Credit Security" means all assets now or from time to time
hereafter subjected to a security interest, mortgage or charge (or intended or
required so to be subjected pursuant to the Security Agreement, any Assignment
of Leases, any Mortgage, any Assignment of License Agreement or any other
Credit Document) to secure the payment or performance of any of the Credit
Obligations.
1.54. "Default" means any Event of Default and any event or
condition which with the passage of time or giving of notice, or both, would
become an Event of Default and the filing against the Company, any of its
Subsidiaries or any other Obligor of a petition commencing an involuntary case
under the Bankruptcy Code.
1.55. "Delinquency Period" is defined in Section 10.4.4.
1.56. "Delinquent Lender" is defined in Section 10.4.4.
1.57. "Delinquent Payment" is defined in Section 10.4.4.
1.58. "Designated ATR Proceeds" means, with respect to calculating
Net Debt Proceeds and Net Equity Proceeds, for each fiscal year of the Company
the aggregate amount specified in the table below for application to debt
service and reasonable Capital Expenditures of American Tower Rental Inc.:
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<PAGE> 20
<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
1997 $500,000
1998 $500,000
1999 $1,000,000
2000 $2,000,000
2001 and thereafter Zero
</TABLE>
1.59. "Designated Financing Debt" means Financing Debt incurred by
the Company or any of its Subsidiaries after the date hereof other than
Financing Debt permitted by Sections 6.6.1 (the Loan), 6.6.7 (purchase money
Indebtedness and Capitalized Lease) and 6.6.9 (intercompany Indebtedness).
1.60. "Designated Real Property" means each real property owned or
leased by the Company or any of its Subsidiaries either (a) subject to a
Mortgage or Assignment of Leases pursuant to the Prior Credit Agreement, (b)
upon which any Pledged Tower is located or (c) designated in writing by the
Managing Agent as necessary for Pledged Towers to contribute at least the
percentage of Consolidated Revenues as required by Section 6.5.8.
1.61. "Distribution" means, with respect to the Company (or other
specified Person):
(a) the declaration or payment of any dividend or
distribution, including dividends payable in shares of capital stock
of or other equity interests in the Company (or such specified
Person), on or in respect of any shares of any class of capital stock
of or other equity interests in the Company (or such specified
Person);
(b) the purchase, redemption or other retirement of any
shares of any class of capital stock of or other equity interest in
the Company (or such specified Person) or of options, warrants or
other rights for the purchase of such shares, directly, indirectly
through a Subsidiary or otherwise;
(c) any other distribution on or in respect of any
shares of any class of capital stock of or equity or other beneficial
interest in the Company (or such specified Person);
(d) any payment of principal or interest with respect
to, or any purchase, redemption or defeasance of, any Financing Debt
of the Company (or such specified Person) which by its terms or the
terms of any agreement is subordinated to the payment of the Credit
Obligations; and
(e) any payment, loan or advance by the Company (or
such specified Person) to, or any other Investment by the Company (or
such specified Person) in, the holder
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<PAGE> 21
of any shares of any class of capital stock of or equity interest in
the Company (or such specified Person), or any Affiliate of such
holder (including the payment of management fees and transaction fees
and expenses);
provided, however, that the term "Distribution" shall not include (i) dividends
payable in perpetual common stock of or other similar equity interests in the
Company (or such specified Person) or (ii) payments in the ordinary course of
business in respect of (A) reasonable compensation paid to employees, officers
and directors, (B) advances and reimbursements to employees for travel
expenses, drawing accounts and similar expenditures, or (C) rent paid to, or
accounts payable for services rendered or goods sold by, non-Affiliates that
own capital stock of or other equity interests in the Company (or such
specified Person).
1.62. "ECF Prepayment Percentage" means, with respect to any
fiscal year of the Company, (a) 50% in the event Consolidated Total Debt as of
the end of such fiscal year equals or exceeds 350% of Consolidated Annualized
EBITDA for the last quarter of such fiscal year and (b) 25% in all other
events.
1.63. "Employee Trust Note" means the unsecured subordinate
promissory note of the Company in the original principal amount of $500,000,
without interest and maturing on the fifth anniversary of its issuance date, in
favor of the Company's Incentive Compensation Trust (the terms of subordination
to be satisfactory to the Managing Agent).
1.64. "Environmental Laws" means all applicable federal, state or
local statutes, laws, ordinances, codes, rules, regulations and guidelines
(including consent decrees and administrative orders) relating to protection of
the environment, including OSHA.
1.65. "Equity Transaction" means any issuance by the Parent, ATC
Holdings, the Company or any of the Company's Subsidiaries to any Person (other
than any Obligors, their officers, employees and directors) of any shares of
its capital stock, other equity interests or options, warrants or other
purchase rights to acquire such capital stock or other equity interests.
1.66. "ERISA" means the federal Employee Retirement Income
Security Act of 1974.
1.67. "ERISA Group Person" means the Company, any Subsidiary of
the Company and any Person which is a member of the controlled group or under
common control with the Company or any Subsidiary within the meaning of section
414 of the Code or section 4001(a)(14) of ERISA.
1.68. "Estoppel and Consent Letters" means estoppel and consent
letters addressed to the Collateral Agent or the Managing Agent for the benefit
of the Lenders, in form and substance satisfactory to the Required Lenders,
executed by each of the lessors under the
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<PAGE> 22
Leases and future leases of real property as the same may be renewed, modified,
extended, supplemented or rearranged, at any time and from time to time.
1.69. "Eurodollars" means, with respect to any Lender, deposits of
United States Funds in a non-United States office or an international banking
facility of such Lender.
1.70. "Eurodollar Basic Rate" means, for any Eurodollar Interest
Period, the rate of interest at which Eurodollar deposits which have a term
corresponding to such Eurodollar Interest Period are offered to the Managing
Agent by first class banks in the inter-bank Eurodollar market for delivery in
immediately available funds at a Eurodollar Office on the first day of such
Eurodollar Interest Period at approximately 10:00 a.m. (Boston time) two
Banking Days prior to the date upon which such Eurodollar Interest Period is to
commence (which determination by the Managing Agent shall, in the absence of
manifest error, be conclusive).
1.71. "Eurodollar Interest Period" means any period, selected as
provided in Section 3.2.1, of one, two, three or six months, commencing on any
Banking Day and ending on the corresponding date in the subsequent calendar
month so indicated (or, if such subsequent calendar month has no corresponding
date, on the last day of such subsequent calendar month); provided, however,
that subject to Section 3.2.3, if any Eurodollar Interest Period so selected
would otherwise begin or end on a date which is not a Banking Day, such
Eurodollar Interest Period shall instead begin or end, as the case may be, on
the immediately preceding or succeeding Banking Day as determined by the
Managing Agent in accordance with the then current banking practice in the
inter-bank Eurodollar market with respect to Eurodollar deposits at the
applicable Eurodollar Office, which determination by the Managing Agent shall,
in the absence of manifest error, be conclusive.
1.72. "Eurodollar Office" means such non-United States office or
international banking facility of any Lender as the Lender may from time to
time select.
1.73. "Eurodollar Pricing Options" means the options granted
pursuant to Section 3.2.1 to have the interest on any portion of the Loan
computed on the basis of a Eurodollar Rate.
1.74. "Eurodollar Rate" for any Eurodollar Interest Period means
the rate, rounded upward to the nearest 1/100%, obtained by dividing (a) the
Eurodollar Basic Rate for such Eurodollar Interest Period by (b) an amount
equal to 1 minus the Eurodollar Reserve Rate; provided, however, that if at any
time during such Eurodollar Interest Period the Eurodollar Reserve Rate
applicable to any outstanding Eurodollar Pricing Option changes, the Eurodollar
Rate for such Eurodollar Interest Period shall automatically be adjusted to
reflect such change, effective as of the date of such change to the extent
required by the Legal Requirement implementing such change.
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1.75. "Eurodollar Reserve Rate" means the stated maximum rate
(expressed as a decimal) of all reserves (including any basic, supplemental,
marginal or emergency reserve or any reserve asset), if any, as from time to
time in effect, required by any Legal Requirement to be maintained by any
Lender against (a) "Eurocurrency liabilities" as specified in Regulation D of
the Board of Governors of the Federal Reserve System applicable to Eurodollar
Pricing Options, or (b) any other category of liabilities that includes
Eurodollar deposits by reference to which the interest rate on portions of the
Loan subject to Eurodollar Pricing Options is determined, in each case without
the benefits of credits for prorations, exceptions or offsets that may be
available to a Lender.
1.76. "Event of Default" is defined in Section 8.1.
1.77. "Exchange Act" means the federal Securities Exchange Act of
1934.
1.78. "FAA" means the Federal Aviation Authority.
1.79. "FCC" means the Federal Communications Commission.
1.80. "Federal Funds Rate" means, for any day, the rate equal to
the weighted average (rounded upward to the nearest 1/8%) of (a) the rates on
overnight federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, (a) as such weighted average is published
for such day (or, if such day is not a Banking Day, for the immediately
preceding Banking Day) by the Federal Reserve Bank of New York or (b) if such
rate is not so published for such Banking Day, quotations received by the
Managing Agent from three federal funds brokers of recognized standing selected
by the Managing Agent. Each determination by the Managing Agent of the Federal
Funds Rate shall, in the absence of manifest error, be conclusive.
1.81. "Final Maturity Date" means October 10, 2003.
1.82. "Financial Officer" of the Company (or other specified
Person) means its chief executive officer, chief financial officer, chief
operating officer, chairman, president, treasurer, controller or any of its
vice presidents whose primary responsibility is for its financial affairs, all
of whose incumbency and signatures have been certified to the Managing Agent by
the secretary or other appropriate attesting officer of the Company (or such
specified Person).
1.83. "Financing Debt" means each of the items described in
clauses (a) through (e) of the definition of the term "Indebtedness" and,
without duplication, any Guarantees of such items.
1.84. "Foreign Trade Regulations" means (a) any act that prohibits
or restricts, or empowers the President or any executive agency of the United
States of America to prohibit or
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restrict, exports to or financial transactions with any foreign country or
foreign national, (b) the regulations with respect to certain prohibited
foreign trade transactions set forth at 22 C.F.R. Parts 120-130 and 31 C.F.R.
Part 500 and (c) any order, regulation, ruling, interpretation, direction,
instruction or notice relating to any of the foregoing.
1.85. "Funding Liability" means (a) any Eurodollar deposit which
was used (or deemed by Section 3.2.6 to have been used) to fund any portion of
the Loan subject to a Eurodollar Pricing Option, and (b) any portion of the
Loan subject to a Eurodollar Pricing Option funded (or deemed by Section 3.2.6
to have been funded) with the proceeds of any such Eurodollar deposit.
1.86. "GAAP" means generally accepted accounting principles as
from time to time in effect, including the statements and interpretations of
the United States Financial Accounting Standards Board; provided, however, that
for purposes of compliance with Section 6 (other than Section 6.4) and the
related definitions, "GAAP" means such principles as in effect on December 31,
1995 as applied by the Company and its Subsidiaries in the preparation of the
most recent annual statements referred to in Section 7.2.1(a), and consistently
followed, without giving effect to any subsequent changes thereto.
1.87. "Guarantee" means, with respect to the Company (or other
specified Person):
(a) any guarantee by the Company (or such specified
Person) of the payment or performance of, or any contingent obligation
by the Company (or such specified Person) in respect of, any
Indebtedness or other obligation of any primary obligor;
(b) any other arrangement whereby credit is extended to
a primary obligor on the basis of any promise or undertaking of the
Company (or such specified Person), including any binding "comfort
letter" or "keep well agreement" written by the Company (or such
specified Person), to a creditor or prospective creditor of such
primary obligor, to (i) pay the Indebtedness of such primary obligor,
(ii) purchase an obligation owed by such primary obligor, (iii) pay
for the purchase or lease of assets or services regardless of the
actual delivery thereof or (iv) maintain the capital, working capital,
solvency or general financial condition of such primary obligor;
(c) any liability of the Company (or such specified
Person), as a general partner of a partnership in respect of
Indebtedness or other obligations of such partnership;
(d) any liability of the Company (or such specified
Person) as a joint venturer of a joint venture in respect of
Indebtedness or other obligations of such joint venture;
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(e) any liability of the Company (or such specified
Person) with respect to the tax liability of others as a member of a
group (other than a group consisting solely of the Parent and its
Subsidiaries) that is consolidated for tax purposes; and
(f) reimbursement obligations, whether contingent or
matured, of the Company (or such specified Person) with respect to
letters of credit, bankers acceptances, surety bonds, other financial
guarantees and Interest Rate Protection Agreements,
in each case whether or not any of the foregoing are reflected on the balance
sheet of the Company (or such specified Person) or in a footnote thereto;
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The amount of any
Guarantee and the amount of Indebtedness resulting from such Guarantee shall be
the maximum amount that the guarantor may become obligated to pay in respect of
the obligations (whether or not such obligations are outstanding at the time of
computation).
1.88. "Guarantee Agreement" is defined in Section 5.1.7.
1.89. "Guarantor" means the Parent, ATC Holdings and each
Subsidiary of the Company listed on the signature pages hereto or which
subsequently becomes party to the Guarantee Agreement as a Guarantor.
1.90. "Hazardous Material" means any pollutant, toxic or hazardous
material or waste, including any "hazardous substance" or "pollutant" or
"contaminant" as defined in section 101(14) of CERCLA or any other
Environmental Law or regulated as toxic or hazardous under RCRA or any other
Environmental Law.
1.91. "Indebtedness" means all obligations, contingent or
otherwise, which in accordance with GAAP are required to be classified upon the
balance sheet of the Company (or other specified Person) as liabilities, but in
any event including (without duplication):
(a) borrowed money;
(b) indebtedness evidenced by notes, debentures or
similar instruments;
(c) Capitalized Lease Obligations;
(d) the deferred purchase price of assets or
securities, including related noncompetition, consulting and stock
repurchase obligations (other than ordinary trade accounts payable
within six months after the incurrence thereof in the ordinary course
of business);
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(e) reimbursement obligations, whether contingent or
matured, with respect to letters of credit, bankers acceptances,
surety bonds, other financial guarantees and Interest Rate Protection
Agreements (without duplication of other Indebtedness supported or
guaranteed thereby);
(f) mandatory redemption or dividend rights on capital
stock (or other equity);
(g) liabilities secured by any Lien existing on
property owned or acquired by the Company (or such specified Person),
whether or not the liability secured thereby shall have been assumed;
and
(h) all Guarantees in respect of Indebtedness of others.
1.92. "Indemnified Party" is defined in Section 9.2.
1.93. "Initial Closing Date" means October 11, 1996 or such other
date prior to December 31, 1996 agreed to by the Company and the Managing Agent
as the first Closing Date hereunder.
1.94. "Interest Rate Protection Agreement" means any interest rate
swap, interest rate cap, interest rate hedge or other contractual arrangement
that converts variable interest rates into fixed interest rates, fixed interest
rates into variable interest rates or other similar arrangements.
1.95. "Investment" means, with respect to the Company (or other
specified Person):
(a) any share of capital stock, partnership or other
equity interest, evidence of Indebtedness or other security issued by
any other Person;
(b) any loan, advance or extension of credit to, or
contribution to the capital of, any other Person;
(c) any Guarantee of the Indebtedness of any other
Person; and
(d) any acquisition of all, or any division or similar
operating unit of, the business of any other Person or the assets
comprising such business, division or unit.
The investments described in the foregoing clauses (a) through (e)
shall be included in the term "Investment" whether they are made or acquired by
purchase, exchange, issuance of stock or other securities, merger,
reorganization or any other method; provided, however, that the term
"Investment" shall not include (i) current trade and customer accounts
receivable for property leased, goods furnished or services rendered in the
ordinary course of business and
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payable in accordance with customary trade terms, (ii) deposits, advances or
prepayments to suppliers for property leased or licensed, goods furnished and
services rendered in the ordinary course of business, (iii) advances to
employees for relocation and travel expenses, drawing accounts and similar
expenditures, (iv) stock or other securities acquired in connection with the
satisfaction or enforcement of Indebtedness or claims due to the Company (or
such specified Person) or as security for any such Indebtedness or claim or (v)
demand deposits in banks or similar financial institutions.
In determining the amount of outstanding Investments:
(A) the amount of any Investment shall be the cost thereof
minus any returns of capital in cash on such Investment (determined in
accordance with GAAP without regard to amounts realized as income on
such Investment);
(B) the amount of any Investment in respect of a purchase
described in clause (d) above shall include the amount of any
Financing Debt assumed in connection with such purchase or secured by
any asset acquired in such purchase (whether or not any Financing Debt
is assumed) or for which any Person that becomes a Subsidiary is
liable on the date on which the securities of such Person are
acquired; and
(C) no Investment shall be increased as the result of an
increase in the undistributed retained earnings of the Person in which
the Investment was made or decreased as a result of an equity interest
in the losses of such Person.
1.96. "Leases" means the leases of real property on which Towers
are located.
1.97. "Legal Requirement" means any present or future requirement
imposed upon any of the Lenders or the Company and its Subsidiaries by any law,
statute, rule, regulation, directive, order, decree or guideline (or any
interpretation thereof by courts or of administrative bodies) of the United
States of America, or any jurisdiction in which any Eurodollar Office is
located or any state or political subdivision of any of the foregoing, or by
any board, governmental or administrative agency, central bank or monetary
authority of the United States of America, any jurisdiction in which any
Eurodollar Office is located, or any political subdivision of any of the
foregoing. Any such law, statute, rule, regulation, directive, order, decree,
guideline or interpretation imposed on any of the Lenders not having the force
of law shall be deemed to be a Legal Requirement for purposes of Section 3 if
such Lender reasonably believes that compliance therewith is customary
commercial practice.
1.98. "Lender" means each of the Persons listed as lenders on the
signature page hereto, including Bank of Boston and, to the extent it has a
Percentage Interest in the Credit Obligations, Wells Fargo, each in its
capacity as a Lender and such other Persons who may from time to time own a
Percentage Interest in the Credit Obligations, but the term "Lender" shall not
include any Credit Participant.
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1.99. "Lending Officer" means such individuals whom the Managing
Agent may designate by notice to the Company from time to time as an officer
who may receive telephone requests for borrowings under Section 2.1.3.
1.100. "Letter of Credit" is defined in Section 2.3.1.
1.101. "Letter of Credit Exposure" means, at any date, the sum of
(a) the aggregate face amount of all drafts that may then or thereafter be
presented by beneficiaries under all Letters of Credit then outstanding, plus
(b) the aggregate face amount of all drafts that the Letter of Credit Issuer
has previously accepted under Letters of Credit but has not paid.
1.102. "Letter of Credit Issuer" means, for any Letter of Credit,
Bank of Boston or, in the event Bank of Boston does not for any reason issue a
requested Letter of Credit, another Lender designated by the Managing Agent to
issue such Letter of Credit in accordance with Section 2.3.
1.103. "License Agreements" means the license agreements between
the Company or one of its Subsidiaries, on one hand, and its customers, on the
other hand, for the licensing of space on the Towers.
1.104. "Lien" means, with respect to the Company (or any other
specified Person):
(a) any lien, encumbrance, mortgage, pledge, charge or
security interest of any kind upon any property or assets of the
Company (or such specified Person), whether now owned or hereafter
acquired, or upon the income or profits therefrom;
(b) the acquisition of, or the agreement to acquire,
any property or asset upon conditional sale or subject to any other
title retention agreement, device or arrangement (including a
Capitalized Lease); and
(c) the sale, assignment, pledge or transfer for
security of any accounts, general intangibles or chattel paper of the
Company (or such specified Person), with or without recourse.
1.105. "Loan" means, collectively, the Revolving Loan and the Term
Loan.
1.106. "Managing Agent" means Bank of Boston in its capacity as
managing agent for the Lenders hereunder, as well as its successors and assigns
in such capacity pursuant to Section 10.7.
1.107. "Margin Stock" means "margin stock" within the meaning of
Regulations G, T, U or X of the Board of Governors of the Federal Reserve
System.
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1.108. "Master Subordination Agreement" is defined in Section
5.1.6.
1.109. "Material Adverse Change" means, since any specified date or
from the circumstances existing immediately prior to the happening of any
specified event, a material adverse change in (a) the business, assets,
operations or financial condition of the Company (on an individual basis) or
the Company and its Subsidiaries (on a Consolidated basis), or (b) the ability
of the Obligors to perform their obligations under the Credit Documents or (c)
the Lenders' rights to enforce or collect the Credit Obligations.
1.110. "Material Agreements" is defined in Section 7.2.2.
1.111. "Maximum Amount of Revolving Credit" is defined in Section
2.1.2.
1.112. "Maximum Rate" means the maximum lawful rate of interest
permitted by applicable laws, now or hereafter enacted, which interest rate
shall change when and as such laws change, to the extent permitted by such
laws, effective on the day such change in such laws becomes effective;
provided, however, that the term "Maximum Rate" shall mean a rate of interest
equal to three percentage points above the Applicable Rate, as it varies, if no
Maximum Rate exists under applicable laws.
1.113. "Moody's" means Moody's Investors Service, Inc.
1.114. "Mortgages" means the mortgages and the deeds of trust
executed by the Company on October 12, 1994 or thereafter in favor of the
Collateral Agent or the Managing Agent for the benefit of the Lenders,
encumbering the real property upon which Towers are located, in form and
substance satisfactory to the Required Lenders, as the same may be amended,
renewed, modified, extended, supplemented or rearranged, at any time and from
time to time.
1.115. "Multiemployer Plan" means any Plan that is a "multiemployer
plan" as defined in section 4001(a)(3) of ERISA.
1.116. "Net Asset Sale Proceeds" means the cash proceeds of the
sale or disposition of assets (including by way of merger) by the Company or
any of its Subsidiaries net of (a) any Indebtedness permitted by Section 6.6.7
(Capitalized Leases and purchase money indebtedness) secured by assets being
sold in such transaction required to be paid from such proceeds, (b) income
taxes that, as estimated by the Company in good faith, will be required to be
paid by the Company or any of its Subsidiaries in cash as a result of, and
within 15 months after such sale or disposition, (c) reasonable reserves for
liabilities resulting from the sale of assets and (d) all reasonable expenses
of the Company or any of its Subsidiaries payable in connection with the sale
or disposition; provided, however, that "Net Asset Sale Proceeds" shall not
include cash proceeds (i) of asset sales permitted by Section 6.11.1, (ii) of
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mergers permitted by Section 6.11.2, (iii) from the sale of Tower assets that
will be used to acquire replacement or other Tower assets within six months
after such sale or disposition; provided, however, that if any amount in this
clause (iii) is not actually used to acquire replacement or other assets within
such six-month period, such amount shall then automatically become Net Asset
Sale Proceeds and (iv) from the sale to Max Bowen (or an entity controlled by
him) of Tower assets (constituting not more than 71 Towers) acquired from Prime
in the Prime Acquisition so long as (A) such Tower assets have not contributed
(and would not be expected to have contributed on a pro forma basis) $225,000
or more in annual Consolidated Revenues for the Company and its Subsidiaries
and (B) such proceeds are applied to reduce permanently the Bowen Subordinated
Debt.
1.117. "Net Debt Proceeds" means cash proceeds of the incurrence of
Designated Financing Debt by the Parent, ATC Holdings, the Company or any of
the Company's Subsidiaries (net of reasonable out-of-pocket transaction fees
and expenses); provided, however, that Net Debt Proceeds will not include
Designated ATR Proceeds received by the Parent or ATC Holdings to the extent
(a) the Designated ATR Proceeds are actually applied solely to finance debt
service and reasonable Capital Expenditures by American Tower Rental Inc. (a
Subsidiary of ATC Holdings) and (b) the Parent has given written notice to the
Managing Agent about such proposed application of Designated ATR Proceeds at
least five Banking Days prior to the receipt thereof. If Designated ATR
Proceeds are in fact not so applied to American Tower Rental Inc. within 180
days, they shall automatically become Net Debt Proceeds.
1.118. "Net Equity Proceeds" means the cash proceeds received by
the Parent, ATC Holdings, the Company or any of the Company's Subsidiaries in
connection with any Equity Transaction (net of reasonable out-of-pocket fees
and expenses); provided, however, that Net Equity Proceeds will not include
Designated ATR Proceeds received by the Parent or ATC Holdings to the extent
(a) the Designated ATR Proceeds are actually applied solely to finance debt
service and reasonable Capital Expenditures by American Tower Rental Inc. (a
Subsidiary of ATC Holdings) and (b) the Parent has given written notice to the
Managing Agent about such proposed application of Designated ATR Proceeds at
least five Banking Days prior to the receipt thereof. If Designated ATR
Proceeds are in fact not so applied to American Tower Rental Inc. within 180
days, they shall automatically become Net Equity Proceeds.
1.119. "New License Agreements" means the license agreements
between the Company or any of its Subsidiaries and its customers for the
licensing of space on the Towers, which license agreements are entered into
after the Initial Closing Date.
1.120. "Nonperforming Lender" is defined in Section 10.4.4.
1.121. "Notes" means, collectively, the Revolving Notes and the
Term Notes.
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1.122. "Obligor" means the Company, the Parent, ATC Holdings, each
other Guarantor and each other Person guaranteeing or providing collateral for
the Credit Obligations.
1.123. "OSHA" means the federal Occupational Health and Safety Act.
1.124. "Overdue Reimbursement Rate" means, at any date, the highest
Applicable Rate then in effect.
1.125. "Parent" means American Tower Corporation, a Delaware
corporation.
1.126. "Parent Pledge Agreement" is defined in Section 5.1.8.
1.127. "Parent Guarantors" means, collectively, the Parent and ATC
Holdings.
1.128. "Payment Date" means (a) the last Banking Day of each March,
June, September and December occurring after the Initial Closing Date and (b)
the Final Maturity Date.
1.129. "PBGC" means the Pension Benefit Guaranty Corporation or any
successor entity.
1.130. "Percentage Interest" means (a) at all times when no Event
of Default under Section 8.1.1 and no Bankruptcy Default exists, the ratio that
the respective Commitments of the Lenders bear to the total Commitments of all
Lenders as from time to time in effect and reflected in the Register, and (b)
at all other times, the ratio that the respective amounts of the outstanding
Credit Obligations (including Letter of Credit Exposure) owing to the Lenders
in respect of extensions of credit under Section 2 bear to the total
outstanding Credit Obligations owing to all Lenders.
1.131. "Performing Lender" is defined in Section 10.4.4.
1.132. "Person" means any present or future natural person or any
corporation, association, partnership, joint venture, limited liability, joint
stock or other company, business trust, trust, organization, business or
government or any governmental agency or political subdivision thereof.
1.133. "PIK Interest" means any accrued interest payments on
Financing Debt that are postponed, evidenced by book-entry accrual or made
through the issuance of "payment-in-kind" notes or other similar securities,
all in accordance with the terms of such Financing Debt; provided, however,
that in no event shall PIK Interest include payments made with cash or Cash
Equivalents.
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1.134. "Plan" means, at any date, any pension benefit plan subject
to Title IV of ERISA maintained, or to which contributions have been made or
are required to be made, by any ERISA Group Person within six years prior to
such date.
1.135. "Pledged Towers" means, on any date, Towers with respect to
which the Lenders hold a perfected, first priority security interest in the
Towers and the real property or leasehold upon which such Towers are located
and, in the case of leaseholds, the Lenders have received a Collateral and
Estoppel Agreement from the lessor (including the transfer and assignment of
existing Collateral and Estoppel Agreements).
1.136. "Prime" means Prime Communications Sites Holding, L.L.C.
1.137. "Prime Acquisition" means the acquisition by the Company of
approximately 180 communications towers through a contribution and transfer of
equity interests in Prime pursuant to the Prime Acquisition Agreement.
1.138. "Prime Acquisition Agreement" means the Contribution and
Transfer Agreement dated the date hereof among ATC Holdings Corp. and the Prime
Holders.
1.139. "Prime Holders" means Carlyle-Prime Investors, L.P.,
Carlyle-Prime Investors I, L.P., Bill Kubena, Dale Harkins, Warren D. Harkins
and the other transferors of equity interests in Prime under the Prime
Acquisition Agreement.
1.140. "Prime Subordinated Debt" means the 11% Subordinated Notes
of the Company due 2004 in the aggregate principal amount of up to $2,800,000
payable to the Prime Holders and subordinated to the Credit Obligations in
accordance with the Prime Subordination Agreement.
1.141. "Prime Subordination Agreement" means the Subordination
Agreement dated as of the Initial Closing Date, as from time to time in effect,
among the Company, the Prime Holders and the Managing Agent.
1.142. "Prior Credit Agreement" is defined in the Recitals to this
Agreement.
1.143. "Qualified License Agreements" means New License Agreements
that will be effective within 90 days of acquisition of the applicable Tower
Company and the only condition to effectiveness of which is receipt approval
from the FCC in respect of the licensee's equipment to be placed on Tower(s).
1.144. "RCRA" means the federal Resource Conservation and Recovery
Act, 42 U.S.C. Section 690, et seq.
1.145. "Register" is defined in Section 11.1.3.
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1.146. "Replacement Lender" is defined in Section 11.3.
1.147. "Required Lenders" means, with respect to any approval,
consent, modification, waiver or other action to be taken by the Managing
Agent, the Collateral Agent or the Lenders under the Credit Documents which
require action by the Required Lenders, such Lenders as own at least two thirds
of the Percentage Interests; provided, however, that with respect to any
matters referred to in the proviso to Section 10.6, Required Lenders means such
Lenders as own at least the respective portions of the Percentage Interests
required by Section 10.6.
1.148. "Revolving Loan" is defined in Section 2.1.4.
1.149. "Revolving Notes" is defined in Section 2.1.4.
1.150. "S&P" means Standard & Poor's Ratings Group, a division of
McGraw Hill Corporation.
1.151. "Securities Act" means the federal Securities Act of 1933.
1.152. "Security Agreement" means one or more security agreements
in favor of the Collateral Agent or the Managing Agent for the benefit of the
Lenders, executed on October 12, 1994, in form and substance satisfactory to
the Required Lenders, as amended and restated as of the date hereof in
substantially the form of Exhibit 5.1.4 and as the same may be renewed,
modified, extended, supplemented or rearranged, at any time and from time to
time.
1.153. "Subordinated Debt" means the Indebtedness of a Person,
calculated in accordance with GAAP, heretofore or hereafter incurred, that, by
the express terms of the instrument evidencing or creating such Indebtedness or
by the terms of a subordination agreement in form and substance satisfactory to
the Required Lenders, is validly and effectively made subordinate and subject
in right to payment, to whatever extent the Required Lenders require, to the
prior payment of the Credit Obligations to the Lenders.
1.154. "Subordination Agreement" means one or more Subordination
Agreements in form and substance satisfactory to the Required Lenders, to be
entered into by the Company and certain other Persons, as applicable, and the
Managing Agent, as the same may be amended, renewed, modified, extended,
supplemented or rearranged at any time and from time to time.
1.155. "Subsidiary" means any Person of which the Company (or other
specified Person) shall at the time, directly or indirectly through one or more
of its Subsidiaries, (a) own at least 50% of the outstanding capital stock (or
other shares of beneficial interest)
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entitled to vote generally, (b) hold at least 50% of the partnership, joint
venture or similar interests or (c) be a general partner or joint venturer.
1.156. "Tax" means any present or future tax, levy, duty, impost,
deduction, withholding or other charges of whatever nature at any time required
by any Legal Requirement (a) to be paid by any Lender or (b) to be withheld or
deducted from any payment otherwise required hereby to be made to any Lender,
in each case on or with respect to its obligations hereunder, the Loan, any
payment in respect of the Credit Obligations or any Funding Liability not
included in the foregoing; provided, however, that the term "Tax" shall not
include taxes imposed upon or measured by the net income of such Lender (other
than withholding taxes) or franchise taxes that are imposed in lieu of income
taxes.
1.157. "Term Loan" is defined in Section 2.2.1.
1.158. "Term Note" is defined in Section 2.2.2.
1.159. "Tower Company" means a corporation engaged primarily in the
business of constructing, owning and/or operating communications towers and
leasing space thereon to tenants and/or managing the construction of, ownership
of, and leasing of space on communications towers for other Persons.
1.160. "Towers" means all communication towers owned by the Company
and its Subsidiaries, and any and all communication towers hereafter
constructed or acquired by the Company and its Subsidiaries (including Towers
acquired in the acquisition of stock of a Tower Company).
1.161. "Uniform Customs and Practice" is defined in Section 2.3.7.
1.162. "United States Funds" means such coin or currency of the
United States of America as at the time shall be legal tender therein for the
payment of public and private debts.
1.163. "Wells Fargo" means Wells Fargo Bank (Texas) National
Association, successor to First Interstate Bank of Texas, N.A.
1.164. "Wholly Owned Subsidiary" means any Subsidiary of which all
of the outstanding capital stock (or other shares of beneficial interest)
entitled to vote generally (other than directors' qualifying shares) is owned
by the Company (or other specified Person) directly, or indirectly through one
or more Wholly Owned Subsidiaries.
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<PAGE> 35
2. The Credits.
2.1. Revolving Credit.
2.1.1. Revolving Loan. Subject to all the terms and
conditions of this Agreement and so long as no Default exists, from
time to time on and after the Initial Closing Date and prior to the
Final Maturity Date the Lenders will, severally in accordance with
their respective Commitments in the Revolving Loan, make loans to the
Company in such amounts as may be requested by the Company in
accordance with Section 2.1.3. The sum of the aggregate principal
amount of loans made under this Section 2.1.1 at any one time
outstanding plus the Letter of Credit Exposure shall in no event
exceed the Maximum Amount of Revolving Credit. In no event will the
principal amount of loans at any one time outstanding made by any
Lender pursuant to this Section 2.1 exceed such Lender's Commitment
with respect to the Revolving Loan.
2.1.2. Maximum Amount of Revolving Credit. The term
"Maximum Amount of Revolving Credit" means, on any date specified in
the table below, the lesser of (a) (i) the amount specified opposite
such period in such table:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
Prior to January 1, 1999 . . . . . . . . . . . . . . . $23,000,000
January 1, 1999 through
March 30, 1999 . . . . . . . . . . . . . . . . . . . $22,425,000
March 31, 1999 through
June 29, 1999 . . . . . . . . . . . . . . . . . . . $21,706,250
June 30, 1999 through
September 29, 1999 . . . . . . . . . . . . . . . . . $20,987,500
September 30, 1999 through
December 30, 1999 . . . . . . . . . . . . . . . . . $20,268,750
December 31, 1999 through
March 30, 2000 . . . . . . . . . . . . . . . . . . . $19,550,000
March 31, 2000 through
June 29, 2000 . . . . . . . . . . . . . . . . . . . $18,400,000
June 30, 2000 through
September 29, 2000 . . . . . . . . . . . . . . . . . $17,250,000
</TABLE>
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<PAGE> 36
<TABLE>
<S> <C>
September 30, 2000 through
December 30, 2000 . . . . . . . . . . . . . . . . . $16,100,000
December 31, 2000 through
March 30, 2001 . . . . . . . . . . . . . . . . . . . $14,950,000
March 31, 2001 through
June 29, 2001 . . . . . . . . . . . . . . . . . . . $13,800,000
June 30, 2001 through
September 29, 2001 . . . . . . . . . . . . . . . . . $12,650,000
September 30, 2001 through
December 30, 2001 . . . . . . . . . . . . . . . . . $ 11,500,000
December 31, 2001 through
March 30, 2002 . . . . . . . . . . . . . . . . . . . $10,350,000
March 31, 2002 through
June 29, 2002 . . . . . . . . . . . . . . . . . . . $ 8,912,500
June 30, 2002 through
September 29, 2002 . . . . . . . . . . . . . . . . . $ 7,475,000
September 30, 2002 through
December 30, 2002 . . . . . . . . . . . . . . . . . $ 6,037,500
December 31, 2002 through
March 30, 2003 . . . . . . . . . . . . . . . . . . . $ 4,600,000
March 31, 2003 through
June 29, 2003 . . . . . . . . . . . . . . . . . . . $ 3,066,667
June 30, 2003 through
September 29, 2003 . . . . . . . . . . . . . . . . . $ 1,533,333
Final Maturity Date . . . . . . . . . . . . . . . . . . - $ 0 -
</TABLE>
minus (ii) Net Asset Sale Proceeds described in Section 4.3.3 and
allocated to the Revolving Loan under Section 4.6.2, Net Debt Proceeds
described in Section 4.3.4 and allocated to the Revolving Loan under
Section 4.6.2 and Net Equity Proceeds described in Section 4.3.5 and
allocated to the Revolving Loan under Section 4.6.2, minus (iii) the
portion of Consolidated Excess Cash Flow as described in Section 4.3.2
and
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<PAGE> 37
allocated to the Revolving Loan under Section 4.6.2 or (b) the amount
(in an integral multiple of $1,000,000) to which the then applicable
amount set forth in such table shall have been irrevocably reduced
from time to time by notice from the Company to the Managing Agent.
The Company shall not give a notice reducing the amount applicable to
any period in the table above unless it shall also reduce the amounts
applicable to all subsequent periods in such table to at least the
same specified lower amount, so that the Maximum Amount of Revolving
Credit for any subsequent period shall not exceed the reduced Maximum
Amount of Revolving Credit applicable to any prior period.
2.1.3. Borrowing Requests. The Company may from time
to time request a loan under Section 2.1.1 by providing to the
Managing Agent a notice not later than noon (Boston time) on the first
Banking Day (third Banking Day if any portion of such loan will be
subject to a Eurodollar Pricing Option on the requested Closing Date)
prior to the requested Closing Date for such loan. The notice must
specify (a) the amount of the requested loan (which shall be not less
than $100,000 and an integral multiple of $10,000) and (b) the
requested Closing Date therefor (which shall be a Banking Day). Upon
receipt of such notice, the Managing Agent will promptly inform each
other Lender (by telephone or otherwise). Each such loan will be made
at the Boston Office by depositing the amount thereof to the general
account of the Company with the Managing Agent. In connection with
each such loan, the Company shall furnish to the Managing Agent a
certificate in substantially the form of Exhibit 5.2.1.
2.1.4. Revolving Notes. The aggregate principal amount
of the loans outstanding from time to time under this Section 2.1 is
referred to as the "Revolving Loan". The Managing Agent shall keep a
record of the Revolving Loan in the Register. The Revolving Loan
shall be deemed owed to each Lender having a Commitment therein
severally in accordance with such Lender's Percentage Interest
therein, and all payments thereon shall be for the account of each
Lender in accordance with its Percentage Interest therein. The
Company's obligations to pay each Lender's Percentage Interest in the
Revolving Loan shall be evidenced by a separate note of the Company in
substantially the form of Exhibit 2.1.4 (the "Revolving Notes"),
payable to each Lender in accordance with such Lender's Percentage
Interest in the Revolving Loan.
2.2. Term Credit.
2.2.1. Term Loan. Subject to all the terms and
conditions of this Agreement and so long as no Default exists, on the
Initial Closing Date the Lenders will, in accordance with their
respective Percentage Interests therein, severally lend to the Company
as a term loan, an aggregate amount equal to $37,000,000. The
aggregate principal amount of the loans made pursuant to this Section
2.2.1 at any one time outstanding is referred to as the "Term Loan".
In connection with the advance of the
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<PAGE> 38
Term Loan, the Company shall furnish to the Managing Agent a
certificate in substantially the form of Exhibit 5.2.1.
2.2.2. Term Notes. The Term Loan shall be made at the
Boston Office by crediting the amount of such loan to the general
account of the Company with the Managing Agent against delivery to the
Managing Agent of the separate term notes of the Company (the "Term
Notes") payable to the respective Lenders. The Term Note issued to
each Lender shall be in a principal amount equal to such Lender's
Percentage Interest in the Term Loan, and shall be in substantially
the form of Exhibit 2.2.2.
2.3. Letters of Credit.
2.3.1. Issuance of Letters of Credit. Subject to all
the terms and conditions of this Agreement and so long as no Default
exists, from time to time on and after the Initial Closing Date and
prior to the Final Maturity Date, the Letter of Credit Issuer will
issue for the account of the Company one or more irrevocable standby
performance or financial letters of credit (the "Letters of Credit").
Letter of Credit Exposure plus the Revolving Loan shall in no event
exceed the Maximum Amount of Revolving Credit. Letter of Credit
Exposure shall in no event exceed $1,000,000.
2.3.2. Requests for Letters of Credit. The Company may
from time to time request a Letter of Credit to be issued by providing
to the Letter of Credit Issuer (and the Managing Agent if the Letter
of Credit Issuer is not the Managing Agent) a notice which is actually
received not less than three Banking Days prior to the requested
Closing Date for such Letter of Credit specifying (a) the amount of
the requested Letter of Credit, (b) the beneficiary thereof, (c) the
requested Closing Date and (d) the principal terms of the text for
such Letter of Credit. Each Letter of Credit will be issued by
forwarding it to the Company or to such other Person as directed in
writing by the Company. In connection with the issuance of any Letter
of Credit, the Company shall furnish to the Letter of Credit Issuer
(and the Managing Agent if the Letter of Credit Issuer is not the
Managing Agent) a certificate in substantially the form of Exhibit
5.2.1 and any customary application forms required by the Letter of
Credit Issuer.
2.3.3. Form and Expiration of Letters of Credit. Each
Letter of Credit issued under this Section 2.3 and each draft accepted
or paid under such a Letter of Credit shall be issued, accepted or
paid, as the case may be, by the Letter of Credit Issuer at its
principal office. No Letter of Credit shall provide for the payment
of drafts drawn thereunder, and no draft shall be payable, at a date
which is later than the earlier of (a) the date 12 months after the
date of issuance or (b) the Final Maturity Date. Each Letter of
Credit and each draft accepted under a Letter of Credit shall be in
such form and minimum amount, and shall contain such terms, as the
Letter of Credit Issuer and the Company may agree upon at the time
such Letter of Credit is issued.
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<PAGE> 39
2.3.4. Lenders' Participation in Letters of Credit.
Upon the issuance of any Letter of Credit, a participation therein, in
an amount equal to each Lender's Percentage Interest in the Revolving
Loan, shall automatically be deemed granted by the Letter of Credit
Issuer to each such Lender on the date of such issuance and such
Lenders shall automatically be obligated, as set forth in Section
10.4, to reimburse the Letter of Credit Issuer to the extent of their
respective Percentage Interests in the Revolving Loan for all
obligations incurred by the Letter of Credit Issuer to third parties
in respect of such Letter of Credit not reimbursed by the Company.
The Letter of Credit Issuer will send to each Lender (and the Managing
Agent if the Letter of Credit Issuer is not the Managing Agent) a
confirmation regarding the participations in Letters of Credit
outstanding during such month.
2.3.5. Presentation. The Letter of Credit Issuer may
accept or pay any draft presented to it, regardless of when drawn and
whether or not negotiated, if such draft, the other required documents
and any transmittal advice are presented to the Letter of Credit
Issuer and dated on or before the expiration date of the Letter of
Credit under which such draft is drawn. Except insofar as a
particular Letter of Credit contains express, contrary instructions,
the Letter of Credit Issuer may honor as complying with the terms of
any Letter of Credit and with this Agreement any drafts or other
documents otherwise in order signed or issued by an administrator,
executor, conservator, trustee in bankruptcy, debtor in possession,
assignee for benefit of creditors, liquidator, receiver or other legal
representative of the party authorized under such Letter of Credit to
draw or issue such drafts or other documents.
2.3.6. Payment of Drafts. At such time as a Letter of
Credit Issuer makes any payment on a draft presented or accepted under
a Letter of Credit, the Company will on demand pay to such Letter of
Credit Issuer in immediately available funds the amount of such
payment. Unless the Company shall otherwise pay to the Letter of
Credit Issuer the amount required by the foregoing sentence, such
amount shall be considered a loan under Section 2.1.1 and part of the
Revolving Loan as if the Company had paid in full the amount required
with respect to the Letter of Credit by borrowing such amount under
Section 2.1.1.
2.3.7. Uniform Customs and Practice. The Uniform
Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500, and any
subsequent revisions thereof approved by a Congress of the
International Chamber of Commerce and adhered to by the Letter of
Credit Issuer (the "Uniform Customs and Practice"), shall be binding
on the Company and the Letter of Credit Issuer except to the extent
otherwise provided herein, in any Letter of Credit or in any other
Credit Document. Anything in the Uniform Customs and Practice to the
contrary notwithstanding:
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<PAGE> 40
(a) Neither the Company nor any beneficiary of any
Letter of Credit shall be deemed an agent of any Letter of Credit
Issuer.
(b) With respect to each Letter of Credit, neither the
Letter of Credit Issuer nor its correspondents shall be responsible
for or shall have any duty to ascertain (unless the Letter of Credit
Issuer or such correspondent is grossly negligent or willful in
failing so to ascertain):
(i) the genuineness of any signature;
(ii) the validity, form, sufficiency,
accuracy, genuineness or legal effect of any endorsements;
(iii) delay in giving, or failure to give,
notice of arrival, notice of refusal of documents or of
discrepancies in respect of which any Letter of Credit
Issuer refuses the documents or any other notice, demand or
protest;
(iv) the performance by any beneficiary under
any Letter of Credit of such beneficiary's obligations to
the Company;
(v) inaccuracy in any notice received by the
Letter of Credit Issuer;
(vi) the validity, form, sufficiency,
accuracy, genuineness or legal effect of any instrument,
draft, certificate or other document required by such Letter
of Credit to be presented before payment of a draft if such
instrument, draft, certificate or other document appears on
its face to comply with the requirements of the Letter of
Credit, or the office held by or the authority of any Person
signing any of the same; or
(vii) failure of any instrument to bear any
reference or adequate reference to such Letter of Credit, or
failure of any Person to note the amount of any instrument
on the reverse of such Letter of Credit or to surrender such
Letter of Credit or to forward documents in the manner
required by such Letter of Credit.
(c) The occurrence of any of the events referred to in
the Uniform Customs and Practice or in the preceding clauses of this
Section 2.3.7 shall not affect or prevent the vesting of any of the
Letter of Credit Issuer's rights or powers hereunder or the Company's
obligation to make reimbursement of amounts paid under any Letter of
Credit or any draft accepted thereunder.
(d) The Company will promptly examine (i) each Letter
of Credit (and any amendments thereof) sent to it by the Letter of
Credit Issuer and (ii) all instruments and
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<PAGE> 41
documents delivered to it from time to time by the Letter of Credit
Issuer. The Company will notify the Letter of Credit Issuer of any
claim of noncompliance by notice actually received within three
Banking Days after receipt of any of the foregoing documents, the
Company being conclusively deemed to have waived any such claim
against such Letter of Credit Issuer and its correspondents unless
such notice is given. The Letter of Credit Issuer shall have no
obligation or responsibility to send any such Letter of Credit or any
such instrument or document to the Company.
(e) In the event of any conflict between the provisions
of this Agreement and the Uniform Customs and Practice, the provisions
of this Agreement shall govern.
2.3.8. Subrogation. Upon any payment by a Letter of
Credit Issuer under any Letter of Credit and until the reimbursement
of such Letter of Credit Issuer by the Company with respect to such
payment, the Letter of Credit Issuer shall be entitled to be
subrogated to, and to acquire and retain, the rights which the Person
to whom such payment is made may have against the Company, all for the
benefit of the Lenders. The Company will take such action as the
Letter of Credit Issuer may reasonably request, including requiring
the beneficiary of any Letter of Credit to execute such documents as
the Letter of Credit Issuer may reasonably request, to assure and
confirm to the Letter of Credit Issuer such subrogation and such
rights, including the rights, if any, of the beneficiary to whom such
payment is made in accounts receivable, inventory and other properties
and assets of any Obligor.
2.3.9. Modification, Consent, etc. If the Company
requests or consents in writing to any modification or extension of
any Letter of Credit, or waives any failure of any draft, certificate
or other document to comply with the terms of such Letter of Credit,
and if the Letter of Credit Issuer consents thereto, the Letter of
Credit Issuer shall be entitled to rely on such request, consent or
waiver. This Agreement shall be binding upon the Company with respect
to such Letter of Credit as so modified or extended, and with respect
to any action taken or omitted by such Letter of Credit Issuer
pursuant to any such request, consent or waiver.
2.4. Application of Proceeds.
2.4.1. Revolving Loan. Subject to Section 2.4.4, the
Company will apply the proceeds of the Revolving Loan for the
construction and acquisition of Towers, working capital and other
lawful corporate purposes of the Company and its Subsidiaries.
2.4.2. Term Loan. The Company will apply the proceeds
of the Term Loan to refinance existing senior Financing Debt, to
acquire Towers from Prime in the Prime Acquisition and to make Capital
Expenditures relating to leasehold improvements.
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<PAGE> 42
2.4.3. Letters of Credit. Letters of Credit shall be
issued only for such lawful corporate purposes as the Company has
requested in writing.
2.4.4. Specifically Prohibited Applications. The
maximum principal amount of all Financing Debt, including the Credit
Obligations, the proceeds of which are directly or indirectly used to
finance the construction of Towers, shall not exceed $4,000,000 at any
one time outstanding. The Company will not, directly or indirectly,
apply any part of the proceeds of any extension of credit made
pursuant to the Credit Documents (a) to purchase or to carry Margin
Stock or (b) to any transaction prohibited by the Foreign Trade
Regulations, by other Legal Requirements applicable to the Lenders or
by the Credit Documents or (c) to finance, directly or indirectly, any
acquisition of a Tower Company that has not been approved by such
Tower Company's Board of Directors (or similar governing body). The
Company will apply the proceeds of the Credit Obligations only for
business and commercial purposes and not for personal, family,
household or agricultural use.
2.5. Nature of Obligations of Lenders to Make Extensions of
Credit. The Lenders' obligations to extend credit under this Agreement are
several and are not joint or joint and several. If on any Closing Date any
Lender shall fail to perform its obligations under this Agreement, the
aggregate amount of Commitments to make the extensions of credit under this
Agreement shall be reduced by the amount of unborrowed Commitment of the Lender
so failing to perform and the Percentage Interests shall be appropriately
adjusted. Lenders that have not failed to perform their obligations to make
the extensions of credit contemplated by Section 2 may, if any such Lender so
desires, assume, in such proportions as such Lenders may agree, the obligations
of any Lender who has so failed and the Percentage Interests shall be
appropriately adjusted. The provisions of this Section 2.5 shall not affect
the rights of the Company against any Lender failing to perform its obligations
hereunder.
3. Interest; Eurodollar Pricing Options; Fees.
3.1. Interest. The Loan shall accrue and bear interest at a rate
per annum which shall at all times equal the Applicable Rate. Prior to any
stated or accelerated maturity of the Loan, the Company will, on each Payment
Date, pay the accrued and unpaid interest on the portion of the Loan which was
not subject to a Eurodollar Pricing Option. On the last day of each Eurodollar
Interest Period or on any earlier termination of any Eurodollar Pricing Option,
the Company will pay the accrued and unpaid interest on the portion of the Loan
which was subject to the Eurodollar Pricing Option which expired or terminated
on such date. In the case of any Eurodollar Interest Period longer than three
months, the Company will also pay the accrued and unpaid interest on the
portion of the Loan subject to the Eurodollar Pricing Option having such
Eurodollar Interest Period at three-month intervals, the first such payment to
be made on the last Banking Day of the three-month period which begins on the
first day of such Eurodollar Interest Period. On the stated or any accelerated
maturity of the
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<PAGE> 43
Loan, the Company will pay all accrued and unpaid interest on the Loan,
including any accrued and unpaid interest on any portion of the Loan which is
subject to a Eurodollar Pricing Option. All payments of interest hereunder
shall be made to the Managing Agent for the account of each Lender in
accordance with such Lender's Percentage Interest.
3.2. Eurodollar Pricing Options.
3.2.1. Election of Eurodollar Pricing Options. Subject
to all of the terms and conditions hereof and so long as no Default
exists, the Company may from time to time, by irrevocable notice to
the Managing Agent actually received not less than three Banking Days
prior to the commencement of the Eurodollar Interest Period selected
in such notice, elect to have such portion of the Loan as the Company
may specify in such notice accrue and bear interest during the
Eurodollar Interest Period so selected at the Applicable Rate computed
on the basis of the Eurodollar Rate. In the event the Company at any
time fails to elect a Eurodollar Pricing Option under this Section
3.2.1 for any portion of the Loan (upon termination of a Eurodollar
Pricing Option or otherwise), then such portion of the Loan will
accrue and bear interest at the Applicable Rate based on the Base
Rate. No election of a Eurodollar Pricing Option shall become
effective:
(a) if, prior to the commencement of any such
Eurodollar Interest Period, the Managing Agent determines that (i) the
electing or granting of the Eurodollar Pricing Option in question
would violate a Legal Requirement, (ii) Eurodollar deposits in an
amount comparable to the principal amount of the Loan as to which such
Eurodollar Pricing Option has been elected and which have a term
corresponding to the proposed Eurodollar Interest Period are not
readily available in the inter-bank Eurodollar market, or (iii) by
reason of circumstances affecting the inter-bank Eurodollar market,
adequate and reasonable methods do not exist for ascertaining the
interest rate applicable to such deposits for the proposed Eurodollar
Interest Period; or
(b) if the Required Lenders shall have advised the
Managing Agent by telephone or otherwise at or prior to noon (Boston
time) on the second Banking Day prior to the commencement of such
proposed Eurodollar Interest Period (and shall have subsequently
confirmed in writing) that, after reasonable efforts to determine the
availability of such Eurodollar deposits, the Required Lenders
reasonably anticipate that Eurodollar deposits in an amount equal to
the Percentage Interest of the Required Lenders in the portion of the
Loan as to which such Eurodollar Pricing Option has been elected and
which have a term corresponding to the Eurodollar Interest Period in
question will not be offered in the Eurodollar market to the Required
Lenders at a rate of interest that does not exceed the anticipated
Eurodollar Basic Rate.
3.2.2. Notice to Lenders and Company. The Managing
Agent will promptly inform each Lender (by telephone or otherwise) of
each notice received by it from the
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<PAGE> 44
Company pursuant to Section 3.2.1 and of the Eurodollar Interest
Period specified in such notice. Upon determination by the Managing
Agent of the Eurodollar Rate for such Eurodollar Interest Period or in
the event such election shall not become effective, the Managing Agent
will promptly notify the Company and each Lender (by telephone or
otherwise) of the Eurodollar Rate so determined or why such election
did not become effective, as the case may be.
3.2.3. Selection of Eurodollar Interest Periods.
Eurodollar Interest Periods shall be selected so that:
(a) the minimum portion of the Loan subject to any
Eurodollar Pricing Option shall be $500,000 and an integral multiple
of $100,000;
(b) no more than 12 Eurodollar Pricing Options shall be
outstanding at any one time;
(c) a portion of the Term Loan equal to or greater than
the amount of the next mandatory prepayment required by Section 4.2
shall not be subject to a Eurodollar Pricing Option on the date such
mandatory prepayment is required to be made;
(d) no Eurodollar Interest Period with respect to any
part of the Loan subject to a Eurodollar Pricing Option shall expire
later than the Final Maturity Date; and
(e) prior to the date the Managing Agent informs the
Company that the proposed syndication of the credit facilities
provided hereby will close, no Eurodollar Interest Period shall extend
beyond the earlier of (i) such syndication closing date or (ii)
December 11, 1996, except with the written consent of the Managing
Agent. The Company and the Managing Agent shall confer about the
appropriate scheduling of the selection of Eurodollar Interest Periods
to facilitate the anticipated syndication of the credit facilities
provided herein to other Lenders.
3.2.4. Additional Interest. If any portion of the Loan
subject to a Eurodollar Pricing Option is repaid, or any Eurodollar
Pricing Option is terminated for any reason (including acceleration of
maturity), on a date which is prior to the last Banking Day of the
Eurodollar Interest Period applicable to such Eurodollar Pricing
Option, the Company will pay to the Managing Agent for the account of
each Lender in accordance with such Lender's Percentage Interest, in
addition to any amounts of interest otherwise payable hereunder, an
amount equal to the present value (calculated in accordance with this
Section 3.2.4) of interest for the unexpired portion of such
Eurodollar Interest Period on the portion of the Loan so repaid, or as
to which a Eurodollar Pricing Option was so terminated, at a per annum
rate equal to the excess, if any, of (a) the rate applicable to such
Eurodollar Pricing Option minus (b) the then current Eurodollar Basic
Rate for a deemed Eurodollar Interest Period having a maturity date
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<PAGE> 45
approximating the last Banking Day of such Eurodollar Interest Period.
The present value of such additional interest shall be calculated by
discounting the amount of such interest for each day in the unexpired
portion of such Eurodollar Interest Period from such day to the date
of such repayment or termination at a per annum interest rate equal to
the interest rate determined pursuant to clause (b) of the preceding
sentence, and by adding all such amounts for all such days during such
period. The determination by the Managing Agent of such amount of
interest shall, in the absence of manifest error, be conclusive. For
purposes of this Section 3.2.4, if any portion of the Loan which was
to have been subject to a Eurodollar Pricing Option is not outstanding
on the first day of the Eurodollar Interest Period applicable to such
Eurodollar Pricing Option other than for reasons described in Section
3.2.1, the Company shall be deemed to have terminated such Eurodollar
Pricing Option.
3.2.5. Violation of Legal Requirements. If any Legal
Requirement shall prevent any Lender from funding or maintaining
through the purchase of deposits in the interbank Eurodollar market
any portion of the Loan subject to a Eurodollar Pricing Option or
otherwise from giving effect to such Lender's obligations as
contemplated by Section 3.2, (a) the Managing Agent may by notice to
the Company terminate all of the affected Eurodollar Pricing Options,
(b) the portion of the Loan subject to such terminated Eurodollar
Pricing Options shall immediately bear interest thereafter at the
Applicable Rate computed on the basis of the Base Rate and (c) the
Company shall make any payment required by Section 3.2.4.
3.2.6. Funding Procedure. The Lenders may fund any
portion of the Loan subject to a Eurodollar Pricing Option out of any
funds available to the Lenders. Regardless of the source of the funds
actually used by any of the Lenders to fund any portion of the Loan
subject to a Eurodollar Pricing Option, however, all amounts payable
hereunder, including the interest rate applicable to any such portion
of the Loan and the amounts payable under Sections 3.2.4 and 3.5,
shall be computed as if each Lender had actually funded such Lender's
Percentage Interest in such portion of the Loan through the purchase
of deposits in such amount of the type by which the Eurodollar Basic
Rate was determined with a maturity the same as the applicable
Eurodollar Interest Period relating thereto and through the transfer
of such deposits from an office of the Lender having the same location
as the applicable Eurodollar Office to one of such Lender's offices in
the United States of America.
3.3. Commitment Fees. In consideration of the Lenders'
commitments to make the extensions of the Revolving Loan provided for in
Section 2.1, while such commitments are outstanding, the Company will pay to
the Managing Agent for the account of the Lenders in accordance with the
Lenders' respective Commitments in the Revolving Loan, on each Payment Date and
on the Final Maturity Date, an amount equal to interest computed at the
Commitment Fee Rate on the amount by which (a) the average daily Maximum Amount
of Revolving Credit during the three-month period or portion thereof ending on
such Payment
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<PAGE> 46
Date exceeded (b) the sum of (i) the average daily Revolving Loan during such
period or portion thereof plus (ii) the average daily Letter of Credit Exposure
during such period or portion thereof; provided, however, that the first such
payment shall be for the period beginning on the date hereof and ending on the
first Payment Date.
3.4. Letter of Credit Fees. The Company will pay to the Managing
Agent for the account of each of the Lenders, in accordance with the Lenders'
respective Percentage Interests, on each Payment Date, a Letter of Credit fee
equal to interest at a per annum rate equal to the Applicable Margin applicable
to Eurodollar Pricing Options on the average daily Letter of Credit Exposure
during the three-month period or portion thereof ending on such Payment Date.
The Company will pay to the Letter of Credit Issuer customary service charges
and expenses for its services in connection with the Letters of Credit at the
times and in the amounts from time to time in effect in accordance with its
general rate structure, including fees and expenses relating to issuance,
amendment, negotiation, cancellation and similar operations.
3.5. Changes in Circumstances; Yield Protection.
3.5.1. Reserve Requirements, etc. If any Legal
Requirement shall (a) impose, modify, increase or deem applicable any
insurance assessment, reserve, special deposit or similar requirement
against any Funding Liability or the Letters of Credit, (b) impose,
modify, increase or deem applicable any other requirement or condition
with respect to any Funding Liability or the Letters of Credit, or (c)
change the basis of taxation of Funding Liabilities or payments in
respect of any Letter of Credit (other than changes in the rate of
taxes measured by the overall net income of such Lender) and the
effect of any of the foregoing shall be to increase the cost to any
Lender of issuing, making, funding or maintaining its respective
Percentage Interest in any portion of the Loan subject to a Eurodollar
Pricing Option or any Letter of Credit, to reduce the amounts received
or receivable by such Lender under this Agreement or to require such
Lender to make any payment or forego any amounts otherwise payable to
such Lender under this Agreement (other than any Tax or any reserves
that are included in computing the Eurodollar Reserve Rate), then such
Lender may claim compensation from the Company under Section 3.5.5.
3.5.2. Taxes. All payments of the Credit Obligations
shall be made without set-off or counterclaim and free and clear of
any deductions, including deductions for Taxes, unless the Company is
required by law to make such deductions. If (a) any Lender shall be
subject to any Tax with respect to any payment of the Credit
Obligations or its obligations hereunder or (b) the Company shall be
required to withhold or deduct any Tax on any payment on the Credit
Obligations, then such Lender may claim compensation from the Company
under Section 3.5.5. Whenever Taxes must be withheld by the Company
with respect to any payments of the Credit Obligations, the Company
shall promptly furnish to the Managing Agent for the
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account of the applicable Lender official receipts (to the extent that
the relevant governmental authority delivers such receipts) evidencing
payment of any such Taxes so withheld. If the Company fails to pay
any such Taxes when due or fails to remit to the Managing Agent for
the account of the applicable Lender the required receipts evidencing
payment of any such Taxes so withheld or deducted, the Company shall
indemnify the affected Lender for any incremental Taxes and interest
or penalties that may become payable by such Lender as a result of any
such failure. In the event any Lender receives a refund of any Taxes
for which it has received payment from the Company under this Section
3.5.2, such Lender shall promptly pay the amount of such refund to the
Company, together with any interest thereon actually earned by such
Lender.
3.5.3. Capital Adequacy. If any Lender shall determine
that compliance by such Lender with any Legal Requirement regarding
capital adequacy of banks or bank holding companies has or would have
the effect of reducing the rate of return on the capital of such
Lender and its Affiliates as a consequence of such Lender's commitment
to make the extensions of credit contemplated hereby, or such Lender's
maintenance of the extensions of credit contemplated hereby, to a
level below that which such Lender could have achieved but for such
compliance (taking into consideration the policies of such Lender and
its Affiliates with respect to capital adequacy immediately before
such compliance and assuming that the capital of such Lender and its
Affiliates was fully utilized prior to such compliance and unless the
effect of such event is already reflected in the Applicable Rate) by
an amount deemed by such Lender to be material, then such Lender may
claim compensation from the Company under Section 3.5.5.
3.5.4. Regulatory Changes. If any Lender shall
determine that (a) any change in any Legal Requirement (including any
new Legal Requirement) after the date hereof shall directly or
indirectly (i) reduce the amount of any sum received or receivable by
such Lender with respect to the Loan or the Letters of Credit or the
return to be earned by such Lender on the Loan or the Letters of
Credit, (ii) impose a cost on such Lender or any Affiliate of such
Lender that is attributable to the making or maintaining of, or such
Lender's commitment to make, its portion of the Loan or the Letters of
Credit, or (iii) require such Lender or any Affiliate of such Lender
to make any payment on, or calculated by reference to, the gross
amount of any amount received by such Lender under any Credit Document
(other than Taxes or income or franchise taxes), and (b) such
reduction, increased cost or payment shall not be fully compensated
for by an adjustment in the Applicable Rate or the Letter of Credit
fees, then such Lender may claim compensation from the Company under
Section 3.5.5.
3.5.5. Compensation Claims. Within 15 days after the
receipt by the Company of a certificate from any Lender setting forth
why it is claiming compensation under this Section 3.5 and
computations (in reasonable detail) of the amount thereof, the Company
shall pay to such Lender such additional amounts as such Lender sets
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forth in such certificate as sufficient fully to compensate it on
account of the foregoing provisions of this Section 3.5, together with
interest on such amount from the 15th day after receipt of such
certificate until payment in full thereof at the Overdue Reimbursement
Rate. The determination by such Lender of the amount to be paid to it
and the basis for computation thereof hereunder shall, in the absence
of manifest error, be conclusive, so long as such computation is
reasonable. In determining such amount, such Lender may use any
reasonable averaging and attribution methods. The Company shall be
entitled to replace any such Lender in accordance with Section 11.3.
3.5.6. Mitigation. Each Lender shall take such
commercially reasonable steps as it may determine are not
disadvantageous to it, including changing lending offices to the
extent feasible, in order to reduce amounts otherwise payable by the
Company to such Lender pursuant to Sections 3.2.4 and 3.5 or to make
Eurodollar Pricing Options available under Sections 3.2.1 and 3.2.5.
In addition, the Company shall not be responsible for costs (a) under
Section 3.5 arising more than 90 days prior to receipt by the Company
of the certificate from the affected Lender pursuant to such Section
3.5 or (b) under Section 3.2.4 arising from the termination of
Eurodollar Pricing Options more than 90 days prior to the demand by
the Managing Agent for payment under Section 3.2.4.
3.6. Computations of Interest and Fees. For purposes of this
Agreement, interest, commitment fees and Letter of Credit fees (and any other
amount expressed as interest or such fees) shall be computed on the basis of a
365-day year for actual days elapsed; provided, however, that interest based on
the Eurodollar Rate shall be computed on the basis of a 360-day year for actual
days elapsed. If any payment required by this Agreement becomes due on any day
that is not a Banking Day, such payment shall, except as otherwise provided in
the Eurodollar Interest Period, be made on the next succeeding Banking Day. If
the due date for any payment of principal is extended as a result of the
immediately preceding sentence, interest shall be payable for the time during
which payment is extended at the Applicable Rate.
4. Payment.
4.1. Payment at Maturity. On the Final Maturity Date or any
accelerated maturity of the Loan, the Company will pay to the Managing Agent
for the account of the Lenders an amount equal to the Loan then due, together
with all accrued and unpaid interest and fees with respect thereto and all
other Credit Obligations then outstanding.
4.2. Scheduled Required Prepayments. On January 1, 1999 and each
Payment Date set forth below, the Company will pay to the Managing Agent for
the account of the Lenders as a prepayment of the Term Loan the lesser of (a)
the amount set forth in such table or (b) the principal amount of the Term Loan
then outstanding.
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<TABLE>
<CAPTION>
Payment Date Amount
------------ ------
<S> <C>
January 1, 1999 $ 925,000
March 31, 1999 $1,156,250
June 30, 1999 $1,156,250
September 30, 1999 $1,156,250
December 31, 1999 $1,156,250
March 31, 2000 $1,850,000
June 30, 2000 $1,850,000
September 30, 2000 $1,850,000
December 31, 2000 $1,850,000
March 31, 2001 $1,850,000
June 30, 2001 $1,850,000
September 30, 2001 $1,850,000
December 31, 2001 $1,850,000
March 31, 2002 $2,312,500
June 30, 2002 $2,312,500
September 30, 2002 $2,312,500
December 31, 2002 $2,312,500
March 31, 2003 $2,466,667
June 30, 2003 $2,466,667
Final Maturity Date $2,446,666
</TABLE>
4.3. Contingent Required Prepayments.
4.3.1. Excess Credit Exposure. If at any time the
Revolving Loan exceeds the limits set forth in Section 2.1, the
Company shall within one Banking Day pay the amount of such excess to
the Managing Agent for the account of the Lenders. If at any time the
Letter of Credit Exposure exceeds the limits set forth in Section 2.3,
the Company shall within one Banking Day pay the amount of such excess
to the Managing Agent for the account of the Lenders to be applied as
provided in Section 4.5.
4.3.2. Excess Cash Flow. Within 120 days after the end
of each fiscal year of the Company, commencing on the date 120 days
after the end of the fiscal year ending December 31, 1999, the Company
shall prepay the Loan, to be applied as provided in Section 4.6.2, in
an amount equal to the lesser of (a) the ECF Prepayment Percentage of
Consolidated Excess Cash Flow for its most recently completed fiscal
year or (b) the amount of the Loan.
4.3.3. Net Asset Sale Proceeds. Upon receipt by the
Company or any of its Subsidiaries of Net Asset Sale Proceeds, the
Company shall within three Banking Days pay to the Managing Agent as a
prepayment of the Loan to be applied as provided in
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Section 4.6.2 the lesser of (a) the amount of such Net Asset Sale
Proceeds or (b) the amount of the Loan.
4.3.4. Net Debt Proceeds. Within five days prior to
the incurrence by the Parent, ATC Holdings, the Company or any of the
Company's Subsidiaries of Designated Financing Debt, the Company shall
provide written notice to the Lenders of the closing date for such
Designated Financing Debt and the amount of the Net Debt Proceeds.
Within three Banking Days after the incurrence of such Designated
Financing Debt, the Company shall pay to the Managing Agent as a
prepayment of the Loan to be applied as provided in Section 4.6.2 the
lesser of (a) the amount of such Net Debt Proceeds or (b) the amount
of the Loan.
4.3.5. Net Equity Proceeds. Within three Banking Days
after the receipt by the Parent, ATC Holdings, the Company or any of
the Company's Subsidiaries of Net Equity Proceeds, the Company shall
pay to the Managing Agent as a prepayment of the Loan to be applied as
provided in Section 4.6.2 the lesser of (a) an amount equal to 70% of
such Net Equity Proceeds or (b) the amount of the Loan.
4.4. Voluntary Prepayments. In addition to the prepayments
required by Sections 4.2 and 4.3, the Company may from time to time prepay all
or any portion of the Loan (in a minimum amount of $100,000 and an integral
multiple of $10,000, or such lesser amount as is then outstanding), without
premium or penalty of any type (except as provided in Section 3.2.4 with
respect to the early termination of Eurodollar Pricing Options). The Company
shall give the Managing Agent at least one Banking Day prior notice of its
intention to prepay, specifying the date of payment, the total amount of the
Loan to be paid on such date and the amount of interest to be paid with such
prepayment.
4.5. Letters of Credit. If on the Final Maturity Date or any
accelerated maturity of the Credit Obligations the Lenders shall be obligated
in respect of a Letter of Credit or a draft accepted under a Letter of Credit,
the Company will either:
(a) prepay such obligation by depositing with the
Managing Agent an amount of cash, or
(b) deliver to the Managing Agent a standby letter of
credit (designating the Managing Agent as beneficiary and issued by a
bank and on terms reasonably acceptable to the Managing Agent),
in each case in an amount equal to the portion of the then Letter of Credit
Exposure issued for the account of the Company. Any such cash so deposited and
the cash proceeds of any draw under any standby Letter of Credit so furnished,
including any interest thereon, shall be returned by the Managing Agent to the
Company only when, and to the extent that, the amount of such cash held by the
Managing Agent exceeds the Letter of Credit Exposure at such time
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and no Default then exists; provided, however, that if an Event of Default
occurs and the Credit Obligations become or are declared immediately due and
payable, the Managing Agent may apply such cash, including any interest
thereon, to the payment of any of the Credit Obligations as provided in section
2.5.6 of the Security Agreement.
4.6. Reborrowing; Application of Payments, etc.
4.6.1. Reborrowing. The amounts of the Revolving Loan
prepaid pursuant to Section 4.4 may be reborrowed from time to time
prior to the Conversion Date in accordance with Section 2.1, subject
to the limits set forth therein. No portion of the Term Loan prepaid
hereunder may be reborrowed.
4.6.2. Order of Application. Prepayments made pursuant
to Sections 4.3.2, 4.3.3, 4.3.4 or 4.3.5 shall be applied first to the
Term Loan, with any balance as a payment of, and (regardless of
whether any portion of the Revolving Loan is then outstanding)
reduction of availability under, the Revolving Loan. Prepayments of
the Term Loan made pursuant to Sections 4.3.2 (Excess Cash Flow) and
4.3.3 (Asset Sales) shall be applied to the installments required to
be made pursuant to Section 4.2 (a) 50% pro rata in the chronological
order thereof, then (b) 50% in the inverse order of maturity thereof.
Prepayments of the Term Loan made pursuant to Sections 4.3.4 (Debt
Proceeds) and 4.3.5 (Equity Proceeds) shall be applied to the
installments required to be made pursuant to Section 4.2 in the
inverse order of maturity thereof. Any prepayment of the Loan shall be
applied first to the portion of the Loan not then subject to
Eurodollar Pricing Options, then the balance of any such prepayment
shall be applied to the portion of the Loan then subject to Eurodollar
Pricing Options, in the chronological order of the respective
maturities thereof (or as the Company may otherwise specify in
writing), together with any payments required by Section 3.2.4.
4.6.3. Payment with Accrued Interest, etc. Upon all
prepayments of the Term Loan, the Company shall pay to the Managing
Agent the principal amount to be prepaid, together with unpaid
interest in respect thereof accrued to the date of prepayment. Notice
of prepayment having been given in accordance with Section 4.4, and
whether or not notice is given of prepayments pursuant to Sections 4.2
and 4.3, the amount specified to be prepaid shall become due and
payable on the date specified for prepayment.
4.6.4. Payments for Lenders. All payments of principal
hereunder shall be made to the Managing Agent for the account of the
Lenders in accordance with the Lenders' respective Percentage
Interests.
5. Conditions to Extending Credit.
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5.1. Conditions on Initial Closing Date. The obligations of the
Lenders to make any extension of credit pursuant to Section 2 shall be subject
to the satisfaction, on or before the Initial Closing Date, of the conditions
set forth in this Section 5.1 as well as the further conditions in Section 5.2.
If the conditions set forth in this Section 5.1 are not met on or prior to the
Initial Closing Date, the Lenders shall have no obligation to make any
extensions of credit hereunder.
5.1.1. Notes. The Company shall have duly executed and
delivered to the Managing Agent a Revolving Note and Term Note for
each Lender having a Percentage Interest therein.
5.1.2. Payment of Fees. The Company shall have paid to
the Managing Agent the fees contemplated by the separate agreement
between the Managing Agent and the Company dated on or prior to the
date hereof, as well as the reasonable fees and expenses of the
Managing Agent's special counsel.
5.1.3. Legal Opinions. On the Initial Closing Date,
the Lenders shall have received from the following counsel their
respective opinions with respect to the transactions contemplated by
the Credit Documents, which opinions shall be in form and substance
satisfactory to the Required Lenders:
(a) Vinson & Elkins LLP, special counsel for the
Company and its Subsidiaries.
(b) Ropes & Gray, special counsel for the Managing
Agent.
The Company authorizes and directs its counsel to furnish
the foregoing opinions.
5.1.4. Security Agreement. Each of the Company and the
Company's Subsidiaries shall have duly authorized, executed and
delivered to the Managing Agent an amended and restated Security
Agreement in substantially the form of Exhibit 5.1.4.
5.1.5. Perfection of Security. Each Obligor shall have
duly authorized, executed, acknowledged, delivered, filed, registered
and recorded such security agreements, notices, financing statements
and other instruments as the Collateral Agent or the Managing Agent
may have requested in order to perfect the Liens purported or required
pursuant to the Credit Documents to be created in the Credit Security
and shall have paid all filing or recording fees or taxes required to
be paid in connection therewith, including any recording, mortgage,
documentary, transfer or intangible taxes. The Company and its
Subsidiaries shall have duly authorized, executed, acknowledged and
delivered to the Collateral Agent a mortgage on each Designated Real
Property owned by the Company and its Subsidiaries and a leasehold
mortgage on
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each Designated Real Property leased by the Company and its
Subsidiaries, with a landlord's consent and waiver and any other
documents required to allow for the recording or filing of a leasehold
mortgage, in each case in form and substance satisfactory to the
Collateral Agent or the Managing Agent.
5.1.6. Master Subordination Agreement. Each of Max
Bowen Enterprises, the Prime Holders, Summit Capital, Inc. and certain
related Persons shall have duly authorized, executed and delivered to
the Managing Agent a Subordination Agreement in substantially the form
of Exhibit 5.1.6 (the "Master Subordination Agreement").
5.1.7. Guarantee Agreement. The Parent Guarantors, the
Company and each Subsidiary of the Company shall have duly authorized,
executed and delivered to the Managing Agent a Guarantee Agreement in
substantially the form of Exhibit 5.1.7 (the "Guarantee Agreement").
5.1.8. Parent Pledge Agreement. ATC Holdings, the
Company and the Agent shall have duly authorized, executed and
delivered to the Managing Agent a Pledge Agreement in substantially
the form of Exhibit 5.1.8 (the "Parent Pledge Agreement").
5.1.9. Prime Acquisition. Other than as consented to
by the Managing Agent in writing:
(a) The provisions of the Prime Acquisition Agreement
shall not have been amended, modified, waived or terminated.
(b) All of the representations and warranties of the
Prime Holders set forth in the Prime Acquisition Agreement shall be
complete and correct in all material respects on and as of the Initial
Closing Date with the same force and effect as though made on and as
of such date.
(c) All of the other conditions to the obligations of
the Company set forth in the Prime Acquisition Agreement shall have
been satisfied.
(d) Any material consent, authorization, order or
approval of any Person required in connection with the transactions
contemplated by the Prime Acquisition Agreement shall have been
obtained and shall be in full force and effect.
(e) All of the items required to be delivered under the
Prime Acquisition Agreement shall have been so delivered.
(f) Contemporaneously with the making by the Lenders of
the first extension of credit hereunder, the Lenders shall have
received a certificate of a Financial Officer
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of the Company to the effect that (i) the closing has occurred under
the Prime Acquisition Agreement, (ii) all communications towers owned
by Prime and its Subsidiaries immediately prior to the Prime
Acquisition shall have been contributed to the Company or one of its
Subsidiaries and (iii) each of the conditions set forth in this
Section 5.1.9 has been satisfied.
5.1.10. Solvency, etc. After giving effect to the
Prime Acquisition and the Credit Obligations, the Company and its
Subsidiaries, taken as a whole:
(a) will be solvent;
(b) will have assets having a fair saleable value in
excess of the amount required to pay their probable liability on their
existing debts as such debts become absolute and mature;
(c) have access to adequate capital for the conduct of
their business; and
(d) have the ability to pay their debts from time to
time incurred as such debts mature.
The Company shall have furnished to the Lenders a
certificate of a Financial Officer to such effect.
5.1.11. Banc One Documents. Contemporaneously with the
making by the Lenders of the first extension of credit hereunder, (a)
the Company shall have paid in full its $6,000,000 subordinated notes
due October 15, 2002 payable to Banc One, (b) Banc One shall have
released all collateral pledged to it by the Company and its
Subsidiaries and (c) Banc One and the Company shall leave entered into
an amendment to the Warrant Purchase Agreement dated October 12, 1994
among Banc One, the Parent, the Company and Gritz Tower Maintenance
Company in form and substance satisfactory to the Managing Agent.
5.1.12. Tower Information. The Company shall have
furnished to the Lenders a schedule, certified by a Financial Officer,
showing the location of all Towers, the name and address of the owner
of the real property on which each Tower is located and the
contribution by each Tower to Consolidated Revenues as then estimated
in good faith by the Company.
5.1.13. Proper Proceedings. This Agreement, each other
Credit Document and the transactions contemplated hereby and thereby
shall have been authorized by all necessary corporate or other
proceedings. All necessary consents, approvals and authorizations of
any governmental or administrative agency or any other Person of any
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of the transactions contemplated hereby or by any other Credit
Document shall have been obtained and shall be in full force and
effect.
5.1.14. General. All legal and corporate proceedings
in connection with the transactions contemplated by this Agreement
shall be satisfactory in form and substance to the Managing Agent and
the Managing Agent shall have received copies of all documents,
including certified copies of the Charter and By- Laws of the Company
and the other Obligors, records of corporate proceedings, certificates
as to signatures and incumbency of officers and opinions of counsel,
which the Managing Agent may have reasonably requested in connection
therewith, such documents where appropriate to be certified by proper
corporate or governmental authorities.
5.2. Conditions to Each Extension of Credit. The obligations of
the Lenders to make any extension of credit pursuant to Section 2 shall be
subject to the satisfaction, on or before the Closing Date for such extension
of credit, of the following conditions:
5.2.1. Officer's Certificate. The representations and
warranties contained in Section 7 shall be true and correct on and as
of such Closing Date with the same force and effect as though made on
and as of such date (except as to any representation or warranty which
refers to a specific earlier date); no Default shall exist on such
Closing Date prior to or immediately after giving effect to the
requested extension of credit; no Material Adverse Change shall have
occurred since December 31, 1995; and the Company shall have furnished
to the Managing Agent in connection with the requested extension of
credit a certificate to these effects, in substantially the form of
Exhibit 5.2.1, signed by a Financial Officer.
5.2.2. Legality, etc. The making of the requested
extension of credit shall not (a) subject any Lender to any penalty or
special tax (other than a Tax for which the Company is required to
reimburse the Lenders under Section 3.5), (b) be prohibited by any
Legal Requirement or (c) violate any credit restraint program of the
executive branch of the government of the United States of America,
the Board of Governors of the Federal Reserve System or any other
governmental or administrative agency so long as any Lender reasonably
believes that compliance therewith is in the best interests of such
Lender.
6. General Covenants. Each of the Company, the other Guarantors and the
Company covenants that, until all of the Credit Obligations shall have been
paid in full and until the Lenders' commitments to extend credit under this
Agreement and any other Credit Document shall have been irrevocably terminated,
the Company and its Subsidiaries will comply with the following provisions:
6.1. Taxes and Other Charges; Accounts Payable.
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6.1.1. Taxes and Other Charges. Each of the Company
and its Subsidiaries shall duly pay and discharge, or cause to be paid
and discharged, before the same becomes in arrears, all taxes,
assessments and other governmental charges imposed upon such Person
and its properties, sales or activities, or upon the income or profits
therefrom, as well as all claims for labor, materials or supplies
which if unpaid might by law become a Lien upon any of its property;
provided, however, that any such tax, assessment, charge or claim need
not be paid if the validity or amount thereof shall at the time be
contested in good faith by appropriate proceedings and if such Person
shall, in accordance with GAAP, have set aside on its books adequate
reserves with respect thereto; and provided, further, that each of the
Company and its Subsidiaries shall pay or bond, or cause to be paid or
bonded, all such taxes, assessments, charges or other governmental
claims immediately upon the commencement of proceedings to foreclose
any Lien which may have attached as security therefor (except to the
extent such proceedings have been dismissed or stayed).
6.1.2. Accounts Payable. Each of the Company and its
Subsidiaries shall promptly pay when due, or in conformity with
customary trade terms, all accounts payable incident to the operations
of such Person not referred to in Section 6.1.1; provided, however,
that any such accounts payable need not be paid if the validity or
amount thereof shall at the time be contested in good faith and if
such Person shall, in accordance with GAAP, have set aside on its
books adequate reserves with respect thereto.
6.2. Conduct of Business, etc.
6.2.1. Types of Business. The Company and its
Subsidiaries shall engage only in the business of (a) constructing,
owning and operating Towers (including rooftop Towers), leasing space
thereon to tenants and managing the construction of, ownership of and
leasing of space on communications towers for third parties, and (b)
other activities related thereto.
6.2.2. Maintenance of Properties. Each of the Company
and its Subsidiaries:
(a) shall keep its properties in such repair, working
order and condition, and shall from time to time make such repairs,
replacements, additions and improvements thereto as are necessary for
the efficient operation of its businesses and shall comply at all
times in all material respects with all material franchises, licenses
and leases to which it is party so as to prevent any loss or
forfeiture thereof or thereunder, except where (i) compliance is at
the time being contested in good faith by appropriate proceedings and
(ii) failure to comply with the provisions being contested has not
resulted, and does not create a reasonable risk of resulting, in the
aggregate in any Material Adverse Change; and
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(b) shall do all things necessary to preserve, renew
and keep in full force and effect and in good standing its legal
existence and authority necessary to continue its business; provided,
however, that this Section 6.2.2(b) shall not prevent the merger,
consolidation or liquidation of Subsidiaries permitted by Section
6.11.
6.2.3. Statutory Compliance. Each of the Company and
its Subsidiaries shall comply in all material respects with all valid
and applicable statutes, laws, ordinances, zoning and building codes
and other rules and regulations of the United States of America, of
the states and territories thereof and their counties, municipalities
and other subdivisions and of any foreign country or other
jurisdictions applicable to such Person, except where (a) compliance
therewith shall at the time be contested in good faith by appropriate
proceedings and (b) failure so to comply with the provisions being
contested has not resulted, and does not create a reasonable risk of
resulting, in the aggregate in any Material Adverse Change.
6.2.4. Compliance with Material Agreements. Each of
the Company and its Subsidiaries shall comply in all material respects
with the Material Agreements (to the extent not in violation of the
other provisions of this Agreement or any other Credit Document).
Without the prior written consent of the Required Lenders, no Material
Agreement shall be amended, modified, waived or terminated in any
manner that would have in any material respect an adverse effect on
the interests of the Lenders.
6.3. Insurance.
6.3.1. Property Insurance. Each of the Company and its
Subsidiaries shall keep its assets which are of an insurable character
insured by financially sound and reputable insurers against theft and
fraud and against loss or damage by fire, explosion and hazards
insured against by extended coverage to the extent, in amounts and
with deductibles at least as favorable as those generally maintained
by businesses of similar size engaged in similar activities.
6.3.2. Liability Insurance. Each of the Company and
its Subsidiaries shall maintain with financially sound and reputable
insurers insurance against liability for hazards, risks and liability
to persons and property, including product liability insurance, to the
extent, in amounts and with deductibles at least as favorable as those
generally maintained by businesses of similar size engaged in similar
activities; provided, however, that (a) it may effect workers'
compensation insurance or similar coverage with respect to operations
in any particular state or other jurisdiction through an insurance
fund operated by such state or jurisdiction or by meeting the
self-insurance requirements of such state or jurisdiction and (b) the
Company shall maintain a liability insurance policy for each of the
Towers consistent with past practice.
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6.4. Financial Statements and Reports. Each of the Company and
its Subsidiaries shall maintain a system of accounting in which correct entries
shall be made of all transactions in relation to their business and affairs in
accordance with generally accepted accounting practice. The fiscal year of the
Company and its Subsidiaries shall end on December 31 in each year and the
fiscal quarters of the Company and its Subsidiaries shall end on March 31, June
30, September 30 and December 31 in each year.
6.4.1. Annual Reports. The Company shall furnish to
the Lenders as soon as available, and in any event within 120 days
after the end of each fiscal year, the Consolidated and Consolidating
balance sheets of the Company and its Subsidiaries and of the Parent
and its Subsidiaries as at the end of such fiscal year, the
Consolidated and Consolidating statements of income and Consolidated
statements of changes in shareholders' equity and of cash flows of the
Company and its Subsidiaries and of the Parent and its Subsidiaries
for such fiscal year (all in reasonable detail) and together, in the
case of Consolidated financial statements, with comparative figures
for the immediately preceding fiscal year, all accompanied by:
(a) Reports of KPMG Peat Marwick LLP (or, if they cease
to be auditors of the Parent and its Subsidiaries, other independent
certified public accountants of recognized national standing
reasonably satisfactory to the Required Lenders), containing no
material qualification, to the effect that they have audited the
foregoing Consolidated financial statements in accordance with
generally accepted auditing standards and that such Consolidated
financial statements present fairly, in all material respects, the
financial position of the Company and its Subsidiaries and of the
Parent and its Subsidiaries at the dates thereof and the results of
their operations for the periods covered thereby in conformity with
GAAP.
(b) A certificate of the Company signed by a Financial
Officer to the effect that such officer has caused this Agreement to
be reviewed and has no knowledge of any Default, or if such officer
has such knowledge, specifying such Default and the nature thereof,
and what action the Company has taken, is taking or proposes to take
with respect thereto.
(c) Computations by the Company comparing the financial
statements referred to above with the most recent budget for such
fiscal year furnished to the Lenders in accordance with Section 6.4.5.
(d) Computations by the Company in substantially the
form of Exhibit 6.4 demonstrating, as of the end of such fiscal year,
compliance with the Computation Covenants, certified by a Financial
Officer.
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(e) A schedule, certified by a Financial Officer,
showing as of the end of such fiscal year the location of all Towers,
the ownership of the real property on which each Tower is located and
the contribution by each Tower to Consolidated Revenues as then
estimated in good faith by the Company.
(f) Calculations, as at the end of such fiscal year, of
(i) the Accumulated Benefit Obligations for each Plan covered by Title
IV of ERISA (other than Multiemployer Plans) and (ii) the fair market
value of the assets of such Plan allocable to such benefits.
(g) Supplements to Exhibits 7.1, 7.3 and 7.13 and
exhibit 2.3 to the Security Agreement showing any changes in the
information set forth in such exhibits not previously furnished to the
Lenders in writing, as well as any changes in the Charter, Bylaws or
incumbency of officers of the Obligors from those previously certified
to the Managing Agent.
(h) In the event of a change in GAAP after December 31,
1995, computations by the Company, certified by a Financial Officer,
reconciling the financial statements referred to above with financial
statements prepared in accordance with GAAP as applied to the other
covenants in Section 6 and related definitions.
6.4.2. Quarterly Reports. The Company shall furnish to
the Lenders as soon as available and, in any event, within 45 days
after the end of each of the first three fiscal quarters of the
Company, the internally prepared Consolidated and Consolidating
balance sheets of the Company and its Subsidiaries as of the end of
such fiscal quarter and the Consolidated and Consolidating statements
of income of the Company and its Subsidiaries for such fiscal quarter
and for the portion of the fiscal year then ended (all in reasonable
detail) and together, in the case of Consolidated statements, with
comparative figures for the same period in the preceding fiscal year,
all accompanied by:
(a) A certificate of the Company signed by a Financial
Officer to the effect that such financial statements have been
prepared in accordance with GAAP and present fairly, in all material
respects, the financial position of the Company and its Subsidiaries
covered thereby at the dates thereof and the results of their
operations for the periods covered thereby, subject only to normal
year-end audit adjustments and the addition of footnotes.
(b) A certificate of the Company signed by a Financial
Officer to the effect that such officer has caused this Agreement to
be reviewed and has no knowledge of any Default, or if such officer
has such knowledge, specifying such Default and the nature thereof and
what action the Company has taken, is taking or proposes to take with
respect thereto.
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(c) Computations by the Company comparing the financial
statements referred to above with the most recent budget for the
period covered thereby furnished to the Lenders in accordance with
Section 6.4.5.
(d) Computations by the Company in substantially the
form of Exhibit 6.4 demonstrating, as of the end of such quarter,
compliance with the Computation Covenants, certified by a Financial
Officer.
(e) A schedule, certified by a Financial Officer,
showing as of the end of such fiscal quarter the location of all
Towers, the ownership of the real property on which each Tower is
located and the contribution by each Tower to Consolidated Revenues as
then estimated in good faith by the Company.
(f) Supplements to Exhibits 7.1, 7.3 and 7.13 and
exhibit 2.3 to the Security Agreement showing any changes in the
information set forth in such exhibits not previously furnished to the
Lenders in writing, as well as any changes in the Charter, Bylaws or
incumbency of officers of the Obligors from those previously certified
to the Managing Agent.
6.4.3. Monthly Reports. The Company shall furnish to
the Lenders as soon as available and, in any event, within 30 days
after the end of each month, the monthly management report of the
Company and its Subsidiaries in the form prepared by the Company's
management for its own internal purposes, which report shall include
at least an income statement and balance sheet for such month.
6.4.4. Future Towers. The Company will deliver to the
Managing Agent 15 Banking Days' (seven Banking Days' if the proposed
cost is less than $1,000,000 for any acquisition or series of related
acquisitions) prior written notice of the proposed acquisition of any
new Towers or Tower Companies or construction of any new Towers and
the proposed cost and projected revenue thereof (whether or not the
costs of such acquisition or construction are to be funded by the
Company from its own sources or from the proceeds of the Loan). Such
notice shall specify a description and the location of the new Towers
(including communications towers owned by Tower Companies), the name
and address of the owner of the real property on which they are
located, all due diligence material if the proposed cost exceeds
$1,000,000 for any acquisition or series of related acquisitions and
such other documents or information as the Required Lenders may
reasonably require.
6.4.5. Other Reports. The Company shall promptly
furnish to the Lenders:
(a) As soon as prepared and in any event within 30 days
after the beginning of each fiscal year, an annual budget and
operating projections for such fiscal year of
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the Company and its Subsidiaries, prepared in a manner consistent with
the manner in which the financial projections described in Section
7.2.1 were prepared.
(b) Any material updates of such budget and projections.
(c) Any management letters furnished to the Parent or
any of its Subsidiaries by the Company's auditors.
(d) All budgets, projections, statements of operations
and other reports furnished generally to the shareholders of the
Company or the Parent.
(e) Such registration statements, proxy statements and
reports, including Forms S-1, S-2, S-3, S-4, 10-K, 10-Q and 8-K, as
may be filed by the Company or the Parent or any of its Subsidiaries
with the Securities and Exchange Commission.
(f) Any 90-day letter or 30-day letter from the federal
Internal Revenue Service (or the equivalent notice received from state
or other taxing authorities) asserting tax deficiencies against the
Parent or any of its Subsidiaries.
6.4.6. Notice of Litigation, Defaults, etc. The
Company shall promptly furnish to the Lenders notice of any litigation
or any administrative or arbitration proceeding (a) which creates a
reasonable risk of resulting, after giving effect to any applicable
insurance, in the payment by the Company and its Subsidiaries of more
than $100,000 or (b) which results, or creates a reasonable risk of
resulting, in a Material Adverse Change. Promptly upon acquiring
knowledge thereof, the Company shall notify the Lenders of the
existence of any Default or Material Adverse Change, specifying the
nature thereof and what action the Company or any Subsidiary has
taken, is taking or proposes to take with respect thereto.
6.4.7. ERISA Reports. The Company shall furnish to the
Lenders as soon as available the following items with respect to any
Plan:
(a) any request for a waiver of the funding standards
or an extension of the amortization period,
(b) any reportable event (as defined in section 4043 of
ERISA), unless the notice requirement with respect thereto has been
waived by regulation,
(c) any notice received by any ERISA Group Person that
the PBGC has instituted or intends to institute proceedings to
terminate any Plan, or that any Multiemployer Plan is insolvent or in
reorganization,
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(d) notice of the possibility of the termination of any
Plan by its administrator pursuant to section 4041 of ERISA, and
(e) notice of the intention of any ERISA Group Person
to withdraw, in whole or in part, from any Multiemployer Plan.
6.4.8. Other Information. From time to time at
reasonable intervals upon request of any authorized officer of any
Lender, each of the Company and its Subsidiaries shall furnish to the
Lenders such other information regarding the business, assets,
financial condition, income or prospects of the Company and its
Subsidiaries as such officer may reasonably request, including copies
of all tax returns, licenses, agreements, leases and instruments to
which any of the Company or its Subsidiaries is party. The Lenders'
authorized officers and representatives shall have the right during
normal business hours upon reasonable notice and at reasonable
intervals to examine the books and records of the Company and its
Subsidiaries, to make copies and notes therefrom for the purpose of
ascertaining compliance with or obtaining enforcement of this
Agreement or any other Credit Document.
6.5. Certain Financial Tests.
6.5.1. Consolidated EBITDA to Consolidated Interest
Expense. For each period of four consecutive fiscal quarters of the
Company set forth in the table below, Consolidated EBITDA shall equal
or exceed the percentage set forth in the table below of Consolidated
Interest Expense.
<TABLE>
<CAPTION>
Period Ending Percentage
-------------- ----------
<S> <C>
March 31, 1997 175%
June 30, 1997 through
June 29, 1998 200%
June 30, 1998 and thereafter 250%
</TABLE>
For the fiscal quarter ending December 31, 1996, 400% of Consolidated
EBITDA for such fiscal quarter shall equal or exceed 175% of 400% of
Consolidated Interest Expense for such fiscal quarter.
6.5.2. Consolidated Annualized EBITDA to Consolidated
Pro Forma Debt Service. On the last day of each fiscal quarter of the
Company, Consolidated Annualized EBITDA for such fiscal quarter shall
equal or exceed 125% of Consolidated Pro Forma Debt Service for the
12-month period beginning immediately after such date.
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6.5.3. Consolidated EBITDA to Consolidated Fixed
Charges. For each period of four consecutive fiscal quarters of the
Company, Consolidated EBITDA shall equal or exceed 115% of
Consolidated Fixed Charges; provided, however, that for the fiscal
quarter ending December 31, 1996, 400% of Consolidated EBITDA for such
fiscal quarter shall equal or exceed 115% of 400% of Consolidated
Fixed Charges for such fiscal quarter.
6.5.4. Consolidated Senior Debt to Consolidated
Annualized EBITDA. Consolidated Senior Debt shall not at any time
exceed the percentage set forth in the table below of Consolidated
Annualized EBITDA for the most recently completed fiscal quarter.
<TABLE>
<CAPTION>
Period Ending Percentage
------------- ----------
<S> <C>
Prior to June 30, 1997 450%
June 30, 1997 through
June 29, 1998 425%
June 30, 1998 through
June 29, 1999 350%
June 30, 1999 and thereafter 300%
</TABLE>
6.5.5. Consolidated Total Debt to Consolidated
Annualized EBITDA. Consolidated Total Debt shall not at any time
exceed the percentage set forth in the table below of Consolidated
Annualized EBITDA for the most recently completed fiscal quarter.
<TABLE>
<CAPTION>
Period Ending Percentage
------------- ----------
<S> <C>
Prior to June 30, 1997 550%
June 30, 1997 through
June 29, 1998 500%
June 30, 1998 through
June 29, 1999 450%
June 30, 1999 and thereafter 400%
</TABLE>
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6.5.6. Tower Construction Debt. The outstanding
principal amount of Financing Debt incurred by the Company and its
Subsidiaries for the construction of Towers shall at no time exceed
$4,000,000.
6.5.7. Consolidated Construction Capital Expenditures.
For each fiscal year of the Company, Consolidated Construction Capital
Expenditures shall not exceed the sum of the amount specified in the
table below plus the amount by which actual Consolidated Construction
Capital Expenditures in the previous fiscal year were less than the
amount specified in such table for such previous fiscal year:
<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
1996 $4,000,000
1997 $7,500,000
1998 $7,500,000
1999 $3,000,000
2000 and each year thereafter $2,000,000
</TABLE>
6.5.8. Pledged Towers to Consolidated Revenues. For
each period of four consecutive fiscal quarters of the Company,
Pledged Towers as of the end of such period shall have contributed at
least 80% of Consolidated Revenues; provided, however, that for any
period ending prior to December 31, 1996, Pledged Towers may
contribute less than 80%, but not less than 60%, of Consolidated
Revenues.
6.6. Indebtedness. Neither the Company nor any of its
Subsidiaries shall create, incur, assume or otherwise become or remain liable
with respect to any Indebtedness (or become contractually committed do so),
except the following:
6.6.1. Indebtedness in respect of the Credit
Obligations.
6.6.2. Guarantees permitted by Section 6.7.
6.6.3. Current liabilities, other than Financing Debt,
incurred in the ordinary course of business.
6.6.4. To the extent that payment thereof shall not at
the time be required by Section 6.1, Indebtedness in respect of taxes,
assessments, governmental charges and claims for labor, materials and
supplies.
6.6.5. Indebtedness secured by Liens of carriers,
warehouses, mechanics and landlords permitted by Sections 6.8.5 and
6.8.6.
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6.6.6. Indebtedness in respect of judgments or awards
(a) which have been in force for less than the applicable appeal
period or (b) in respect of which the Company or any Subsidiary shall
at the time in good faith be prosecuting an appeal or proceedings for
review and, in the case of each of clauses (a) and (b), the Company or
such Subsidiary shall have taken appropriate reserves therefor in
accordance with GAAP and execution of such judgment or award shall not
be levied.
6.6.7. To the extent permitted by Section 6.8.8,
Indebtedness in respect of Capitalized Lease Obligations or secured by
purchase money security interests; provided, however, that the sum of
Indebtedness under this Section 6.6.7 plus Indebtedness under Section
6.6.8 at any one time outstanding shall not exceed $1,000,000.
6.6.8. Unsecured Indebtedness owing to sellers of
Towers and Tower Companies so long as (a) such Indebtedness is
subordinated to the Credit Obligations in a manner satisfactory to the
Required Lenders and (b) Indebtedness under this Section 6.6.8 plus
Indebtedness under Section 6.6.7 at any one time outstanding shall not
exceed $1,000,000.
6.6.9. Indebtedness in respect of (a) deferred taxes
arising in the ordinary course of business and (b) deferred insurance
expense financed for a period not to exceed 12 months.
6.6.10. Indebtedness in respect of inter-company loans
and advances among the Company and its Subsidiaries which are not
prohibited by Section 6.9.
6.6.11. Bowen Subordinated Debt, Prime Subordinated
Debt, Employee Trust Notes and other Subordinated Indebtedness.
6.6.12. Unfunded pension liabilities and obligations
with respect to Plans so long as the Company is in compliance with
Section 6.16.
6.6.13. Indebtedness (in addition to the foregoing)
outstanding on the date hereof and described in Exhibit 7.3 and
(except with respect to the Prior Credit Agreement and the
subordinated notes owing to BancOne, each of which shall be paid in
full on the Initial Closing Date) all renewals and extensions thereof
not in excess of the amount thereof outstanding immediately prior to
such renewal or extension.
6.6.14. Indebtedness (other than Financing Debt) in
addition to the foregoing; provided, however, that the aggregate
amount of all such Indebtedness at any one time outstanding shall not
exceed $100,000.
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6.7. Guarantees; Letters of Credit. Neither the Company nor any
of its Subsidiaries shall become or remain liable with respect to any
Guarantee, including reimbursement obligations, whether contingent or matured,
under letters of credit or other financial guarantees by third parties (or
become contractually committed do to so), except the following:
6.7.1. Letters of Credit and Guarantees of the Credit
Obligations.
6.7.2. Guarantees by the Company of Indebtedness and
other obligations incurred by its Subsidiaries and permitted by
Section 6.6.
6.7.3. Joint and several liability of the Company and
its Subsidiaries for the income taxes of the Parent and its
Subsidiaries filed by the Parent on a Consolidated basis for itself
and its Subsidiaries; provided, however, that payments of such taxes
by the Company and its Subsidiaries may be made only in the manner and
to the extent contemplated by Section 6.10.5.
6.8. Liens. Neither the Company nor any of its Subsidiaries
shall create, incur or enter into, or suffer to be created or incurred or to
exist, any Lien (or become contractually committed to do so), except the
following:
6.8.1. Liens on the Credit Security that secure the
Credit Obligations.
6.8.2. Liens to secure taxes, assessments and other
governmental charges, to the extent that payment thereof shall not at
the time be required by Section 6.1.
6.8.3. Deposits or pledges made (a) in connection with,
or to secure payment of, workers' compensation, unemployment
insurance, old age pensions or other social security, (b) in
connection with casualty insurance maintained in accordance with
Section 6.3, (c) to secure the performance of bids, tenders, contracts
(other than contracts relating to Financing Debt) or leases, (d) to
secure statutory obligations or surety or appeal bonds, (e) to secure
indemnity, performance or other similar bonds in the ordinary course
of business or (f) in connection with contested amounts to the extent
that payment thereof shall not at that time be required by Section
6.1.
6.8.4. Liens in respect of judgments or awards, to the
extent that such judgments or awards are permitted by Section 6.6.6
but only to the extent that such Liens are junior to the Liens on the
Credit Security granted to secure the Credit Obligations.
6.8.5. Liens of carriers, warehouses, mechanics and
similar Liens, in each case (a) in existence less than 90 days from
the date of creation thereof or (b) being
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contested in good faith by the Company or any Subsidiary in
appropriate proceedings (so long as the Company or such Subsidiary
shall, in accordance with GAAP, have set aside on its books adequate
reserves with respect thereto).
6.8.6. Encumbrances in the nature of (a) zoning
restrictions, (b) easements and reservations of mineral rights, (c)
restrictions of record on the use of real property, (d) landlords' and
lessors' Liens on rented premises, (e) restrictions on transfers or
assignment of leases and (f) minor title irregularities, in all such
cases that do not in the aggregate materially detract from the value
of the Towers taken as a whole and that do not result, or create a
reasonable risk of resulting, in a Material Adverse Change.
6.8.7. Restrictions under federal and state securities
laws on the transfer of securities.
6.8.8. Liens constituting (a) purchase money security
interests (including mortgages, conditional sales, Capitalized Leases
and any other title retention or deferred purchase devices) in real
property, interests in leases or tangible personal property (other
than inventory) existing or created on the date on which such property
is acquired, and (b) the renewal, extension or refunding of any
security interest referred to in the foregoing clause (a) in an amount
not to exceed the amount thereof remaining unpaid immediately prior to
such renewal, extension or refunding; provided, however, that (i) each
such security interest shall attach solely to the particular item of
property so acquired, and the principal amount of Indebtedness
(including Indebtedness in respect of Capitalized Lease Obligations)
secured thereby shall not exceed the cost (including all such
Indebtedness secured thereby, whether or not assumed) of such item of
property; and (ii) the aggregate principal amount of all Indebtedness
secured by Liens permitted by this Section 6.8.8 shall not exceed the
amount permitted by Section 6.6.7.
6.8.9. Liens as in effect on the date hereof described
in Exhibit 7.3 and securing Indebtedness permitted by Section 6.6.13.
6.9. Investments and Acquisitions. Neither the Company nor any
of its Subsidiaries shall have outstanding, acquire or hold any Investment
(including any Investment consisting of the acquisition of any business) (or
become contractually committed to do so), except the following:
6.9.1. Investments of the Company and its Subsidiaries
in (a) Wholly Owned Subsidiaries which are Guarantors as of the date
hereof and (b) Persons that have become Wholly Owned Subsidiaries and
Guarantors after the date hereof in accordance with Section 6.9.6;
provided, however, that no such Investment shall involve the transfer
by the Company of any material assets other than cash.
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6.9.2. Intercompany loans and advances from any Wholly
Owned Subsidiary to the Company or any other Wholly Owned Subsidiary
of the Company, but in each case only to the extent reasonably
necessary for Consolidated tax planning and working capital
management.
6.9.3. Investments in Cash Equivalents.
6.9.4. Guarantees permitted by Section 6.7.
6.9.5. The acquisition on the Initial Closing Date
contemplated by the Prime Acquisition Agreement.
6.9.6. So long as immediately before and after giving
effect thereto no Default exists, Investments of the Company and its
Wholly Owned Subsidiaries consisting of the acquisition of Towers and
at least 80% of the equity of Tower Companies; provided, however, that
(a) at least 15 Banking Days (seven Banking Days in the case of
acquisitions or series of related acquisitions with a cost to the
Company and its Subsidiaries less than $1,000,000) prior to any such
acquisition, the Lenders shall receive computations provided by a
Financial Officer demonstrating pro forma compliance with the
Computation Covenants after giving effect to such acquisition and, in
the case of any acquisition (or series of related acquisitions)
involving consideration exceeding $1,000,000 by the Company and its
Subsidiaries, the due diligence materials required by Section 6.4.4,
(b) the Company shall take all necessary action to cause any such
newly acquired Tower Company to become a Guarantor and to perfect the
Lenders' security interests in the newly acquired Towers and
Designated Real Properties, and (c) in the case of any acquisition (or
series of related acquisitions) involving consideration exceeding
$5,000,000 by the Company and its Subsidiaries, the Required Lenders
shall have provided their prior written consent.
6.10. Distributions. Neither the Company nor any of its
Subsidiaries shall make any Distribution (or become contractually committed to
do so), except the following:
6.10.1. So long as immediately before and after giving
effect thereto no Default exists, Subsidiaries of the Company may make
Distributions to the Company or any Wholly Owned Subsidiary of the
Company and the Company and its Subsidiaries may make Investments
permitted by Sections 6.9.1 and 6.9.2.
6.10.2. So long as immediately before and after giving
effect thereto no Default exists, the Company may pay management fees
to (a) Summit Capital, Inc. in accordance with the Summit Capital,
Inc. Management Agreement listed on Exhibit 7.2.2 and (b) Max Bowen
in accordance with the Max Bowen Consulting Agreement listed on
Exhibit 7.2.2.
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6.10.3. To the extent permitted by the applicable
Subordination Agreement, the Company may (a) make regularly scheduled,
mandatory payments of interest with respect to the Bowen Subordinated
Debt, the Prime Subordinated Debt and any other Subordinated Debt, (b)
permanently reduce the Bowen Subordinated Debt by selling to Max Bowen
(or an entity controlled by him) Tower assets as permitted by Section
6.11.6. and (c) pay in full on the Initial Closing Date the BancOne
subordinated notes listed in Exhibit 7.2.2, including any applicable
prepayment penalties.
6.10.4. So long as no Default exists and, after giving
effect to the proposed repurchase, no Default (determined on a pro
forma basis) would exist, the Parent may redeem warrants or common
stock owned by Banc One and put to the Parent in accordance with
section 4.3 of the Banc One Warrant Purchase Agreement listed in
Exhibit 7.2.2.
6.10.5. So long as immediately before and after giving
effect thereto no Default exists, the Company may pay Distributions to
the Parent solely in an amount, and at the times, necessary (a) to pay
the portion of income taxes of the Parent and its Subsidiaries
reasonably allocable to the Company and its Subsidiaries and (b) to
redeem warrants owned by Banc One and put to the Parent in accordance
with section 4.3 of the Banc One Warrant Purchase Agreement listed on
Exhibit 7.2.2.
6.10.6. Distributions by the Company to ATC Holdings to
the extent necessary to consummate the Prime Acquisition on the
Initial Closing Date.
6.11. Asset Dispositions and Mergers. Neither the Company nor any
of its Subsidiaries shall merge or enter into a consolidation or sell, lease,
sell and lease back, sublease or otherwise dispose of any of its assets (or
become contractually committed to do so), except the following:
6.11.1. The Company and any of its Subsidiaries may
sell or otherwise dispose of (a) inventory and Cash Equivalents in the
ordinary course of business, (b) tangible assets to be replaced in the
ordinary course of business within 12 months by other tangible assets
of equal or greater value and (c) tangible assets (other than Towers)
that are no longer used or useful in the business of the Company or
such Subsidiary.
6.11.2. Any Wholly Owned Subsidiary of the Company may
merge or be liquidated into the Company or any other Wholly Owned
Subsidiary of the Company so long as after giving effect to any such
merger to which the Company is a party the Company shall be the
surviving or resulting Person.
6.11.3. Mergers constituting Investments permitted by
Section 6.9.6.
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6.11.4. Licensing of products and intangible assets for
fair value in the ordinary course of business.
6.11.5. So long as immediately before and after giving
effect thereto no Default exists and the Net Asset Sale Proceeds
thereof are applied to repay the Loan as required by Section 4.3.3,
the Company and its Subsidiaries may sell for fair value assets during
any fiscal year contributing not more than 5% of Consolidated Revenues
for the Company's most recently completed fiscal year; provided,
however, that the sum of the foregoing percentages of Consolidated
Revenues for all assets sold pursuant to this Section 6.11.5 since the
date hereof shall not exceed 15%.
6.11.6. So long as immediately before and after giving
effect thereto no Default exists, the Company may sell for fair value
to Max Bowen (or an entity controlled by him) Tower assets
constituting not more than 71 Towers acquired in the Prime Acquisition
so long as (a) such Tower assets have not contributed (and would not
be expected to have contributed on a pro forma basis) $225,000 or more
of the annual Consolidated Revenues of the Company and its
Subsidiaries and (b) the Bowen Subordinated Debt is permanently
reduced as required by Section 6.10.3.
6.11.7. So long as immediately before and after giving
effect thereto no Default exists, the Company and its Subsidiaries may
enter into sale and leaseback transactions with respect to the real
property underlying Towers (but not with respect to the Towers
themselves) in an aggregate amount not exceeding $200,000.
6.12. Issuance of Stock by Subsidiaries; Subsidiary Distributions.
6.12.1. Issuance of Stock by Subsidiaries. No
Subsidiary shall issue or sell any shares of its capital stock or
other evidence of beneficial ownership to any Person other than (a)
the Company or any Wholly Owned Subsidiary of the Company, which
shares shall have been pledged to the Managing Agent as part of the
Credit Security to the extent required by the Guarantee and Security
Agreement and (b) directors of Subsidiaries as qualifying shares to
the extent required by Legal Requirements.
6.12.2. No Restrictions on Subsidiary Distributions.
Except for this Agreement and the Credit Documents, neither the
Company nor any Subsidiary shall enter into or be bound by any
agreement (including covenants requiring the maintenance of specified
amounts of net worth or working capital) restricting the right of any
Subsidiary to make Distributions or extensions of credit to the
Company (directly or indirectly through another Subsidiary).
6.13. Voluntary Prepayments of Other Indebtedness. Neither the
Company nor any of its Subsidiaries shall make any voluntary prepayment of
principal of or interest on any Financing Debt (other than the Credit
Obligations) or make any voluntary redemptions or
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repurchases of Financing Debt (other than the Credit Obligations); provided,
however, that the Company may make the payments of Subordinated Debt permitted
by Section 6.10.3.
6.14. Derivative Contracts. Neither the Company nor any of its
Subsidiaries shall enter into any Interest Rate Protection Agreement, foreign
currency exchange contract or other financial or commodity derivative contracts
except to provide hedge protection for an underlying economic transaction in
the ordinary course of business.
6.15. Negative Pledge Clauses. Neither the Company nor any of its
Subsidiaries shall enter into any agreement, instrument, deed or lease which
prohibits or limits the ability of the Company or any of its Subsidiaries to
create, incur, assume or suffer to exist any Lien upon any of their respective
properties, assets or revenues, whether now owned or hereafter acquired, or
which requires the grant of any collateral for such obligation if collateral is
granted for another obligation, except the following:
6.15.1. This Agreement and the other Credit Documents.
6.15.2. Covenants in documents creating Liens permitted
by Section 6.8 prohibiting further Liens on the assets encumbered
thereby.
6.16. ERISA, etc. Each of the Company and its Subsidiaries shall
comply, and shall cause all ERISA Group Persons to comply, in all material
respects, with the provisions of ERISA and the Code applicable to each Plan.
Each of the Company and its Subsidiaries shall meet, and shall cause all ERISA
Group Persons to meet, all minimum funding requirements applicable to them with
respect to any Plan pursuant to section 302 of ERISA or section 412 of the
Code, without giving effect to any waivers of such requirements or extensions
of the related amortization periods which may be granted. At no time shall the
Accumulated Benefit Obligations under any Plan that is not a Multiemployer Plan
exceed the fair market value of the assets of such Plan allocable to such
benefits by more than $500,000. The Company and its Subsidiaries shall not
withdraw, and shall cause all other ERISA Group Persons not to withdraw, in
whole or in part, from any Multiemployer Plan so as to give rise to withdrawal
liability exceeding $500,000 in the aggregate. At no time shall the actuarial
present value of unfunded liabilities for post-employment health care benefits,
whether or not provided under a Plan, calculated in a manner consistent with
Statement No. 106 of the Financial Accounting Standards Board, exceed $500,000.
6.17. Transactions with Affiliates. Neither the Company nor any
of its Subsidiaries shall effect any transaction with any of their respective
Affiliates (except for the Company and its Subsidiaries) on a basis less
favorable to the Company and its Subsidiaries than would be the case if such
transaction had been effected with a non-Affiliate.
6.18. Interest Rate Protection. Upon the earlier of (a) the date
the LIBOR Basic Rate for a six-month LIBOR Interest Period first exceeds the
sum of 0.50% plus such LIBOR
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Basic Rate on the Initial Closing Date or (b) the date 180 days after the
Initial Closing Date, the Company shall obtain and thereafter keep in effect
one or more Interest Rate Protection Agreements conforming to International
Securities Dealers Association standards, each in form and substance reasonably
satisfactory to the Managing Agent, so that for a period of at least two years
at least half of all outstanding Financing Debt of the Company and its
Subsidiaries is either at fixed interest rates or covered by Interest Rate
Protection Agreements.
6.19. Environmental Laws.
6.19.1. Compliance with Law and Permits. Each of the
Company and its Subsidiaries shall use and operate all of its
facilities and properties in material compliance with all
Environmental Laws, keep all necessary permits, approvals,
certificates, licenses and other authorizations relating to
environmental matters in effect and remain in material compliance
therewith, and handle all Hazardous Materials in material compliance
with all applicable Environmental Laws.
6.19.2. Notice of Claims, etc. Each of the Company and
its Subsidiaries shall immediately notify the Managing Agent, and
provide copies upon receipt, of all written claims, complaints,
notices or inquiries from governmental authorities relating to the
condition of its facilities and properties or compliance with
Environmental Laws, and shall promptly cure and have dismissed with
prejudice to the satisfaction of the Managing Agent any actions and
proceedings relating to compliance with Environmental Laws.
7. Representations and Warranties. In order to induce the Lenders to
extend credit to the Company hereunder, each of the Company and the Guarantors
jointly and severally represents and warrants as follows:
7.1. Organization and Business.
7.1.1. The Company. The Company is a duly organized
and validly existing corporation, in good standing under the laws of
Delaware, with all power and authority, corporate or otherwise,
necessary to (a) enter into and perform this Agreement and each other
Credit Document to which it is party, (b) guarantee the Credit
Obligations, (c) grant the Lenders the security interests in the
Credit Security owned by it to secure the Credit Obligations and (d)
own its properties and carry on the business now conducted or proposed
to be conducted by it. Certified copies of the Charter and By-laws of
the Company have been previously delivered to the Managing Agent and
are correct and complete. Exhibit 7.1, as from time to time hereafter
supplemented in accordance with Sections 6.4.1 and 6.4.2, sets forth,
as of the later of the date hereof or the end of the most recent
fiscal quarter for which financial statements are required to be
furnished in accordance with such Sections, (i) the jurisdiction of
incorporation of the Company, (ii) the address of the Company's
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principal executive office and chief place of business, (iii) each
name, including any trade name, under which the Company conducts its
business and (iv) the jurisdictions in which the Company keeps
tangible personal property.
7.1.2. Subsidiaries. Each Subsidiary of the Company is
duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is organized, with all power and
authority, corporate or otherwise, necessary to (a) enter into and
perform this Agreement and each other Credit Document to which it is
party, (b) guarantee the Credit Obligations (in the case of the
Company, incur the Credit Obligations), (c) grant the Lenders the
security interest in the Credit Security owned by such Subsidiary to
secure the Credit Obligations and (d) own its properties and carry on
the business now conducted or proposed to be conducted by it.
Certified copies of the Charter and By-laws of each Subsidiary of the
Company have been previously delivered to the Managing Agent and are
correct and complete. Exhibit 7.1, as from time to time hereafter
supplemented in accordance with Sections 6.4.1 and 6.4.2, sets forth,
as of the later of the date hereof or the end of the most recent
fiscal quarter for which financial statements are required to be
furnished in accordance with such Sections, (i) the name and
jurisdiction of organization of each Subsidiary of the Company, (ii)
the address of the chief executive office and principal place of
business of each such Subsidiary, (iii) each name under which each
such Subsidiary conducts its business, (iv) each jurisdiction in which
each such Subsidiary keeps tangible personal property, and (v) the
number of authorized and issued shares and ownership of each such
Subsidiary.
7.1.3. Qualification. Each of the Company and its
Subsidiaries is duly and legally qualified to do business as a foreign
corporation or other entity and is in good standing in each state or
jurisdiction in which such qualification is required and is duly
authorized, qualified and licensed under all laws, regulations,
ordinances or orders of public authorities, or otherwise, to carry on
its business in the places and in the manner in which it is conducted,
except for failures to be so qualified, authorized or licensed which
would not in the aggregate result, or create a reasonable risk of
resulting, in any Material Adverse Change.
7.1.4. Capitalization. No options, warrants,
conversion rights, preemptive rights or other statutory or contractual
rights to purchase shares of capital stock or other securities of any
Subsidiary now exist, nor has any Subsidiary authorized any such
right, nor is any Subsidiary obligated in any other manner to issue
shares of its capital stock or other securities.
7.2. Financial Statements and Other Information; Material
Agreements.
7.2.1. Financial Statements and Other Information. The
Company has previously furnished to the Lenders copies of the
following:
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(a) The audited Consolidated and unaudited
Consolidating balance sheets of the Company and its Subsidiaries as at
December 31 in each of 1995 and 1994 and the audited Consolidated and
unaudited Consolidating statements of income and the audited
Consolidated statements of changes in shareholders' equity and of cash
flows of the Company and its Subsidiaries for the fiscal years of the
Company then ended.
(b) The unaudited Consolidated and Consolidating
balance sheets of the Company and its Subsidiaries as at June 30, 1996
and the unaudited Consolidated statements of income, of changes in
shareholders' equity and of cash flows of the Company and its
Subsidiaries for the portion of the fiscal year then ended.
(c) The seven-year financial and operational
projections for the Company and its Subsidiaries dated October 10,
1996.
(d) American Tower Corporation Offering Memorandum
dated August 1996.
The audited Consolidated financial statements (including the
notes thereto) referred to in clause (a) above were prepared in
accordance with GAAP and fairly present in all material respects the
financial position of the Company and its Subsidiaries on a
Consolidated basis at the respective dates thereof and the results of
their operations for the periods covered thereby. The unaudited
Consolidating financial statements referred to in clause (a) above and
the unaudited Consolidated and Consolidating financial statements
referred to in clause (b) above were prepared in accordance with GAAP
and fairly present in all material respects the financial position of
the Company and its Subsidiaries at the respective dates thereof and
the results of their operations for the periods covered thereby,
subject to normal year-end audit adjustment and the addition of
footnotes in the case of interim financial statements. Neither the
Company nor any of its Subsidiaries has any known contingent liability
material to the Company and its Subsidiaries on a Consolidated basis
which is not reflected in the balance sheets referred to in clauses
(a) or (b) above (or delivered pursuant to Sections 6.4.1 or 6.4.2) or
in the notes thereto.
In the Company's judgment, the financial and operational
projections referred to in clause (c) above constitute a reasonable
basis as of the Initial Closing Date for the assessment of the future
performance of the Company and its Subsidiaries during the periods
indicated therein, it being understood that any projected financial
information represents an estimate, based on various assumptions, of
future results of operations which may or may not in fact occur.
The offering memorandum described in clause (d) above does
not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to
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make the statements contained therein not misleading in light of the
circumstances under which they were made.
7.2.2. Material Agreements. The Company has previously
furnished to the Lenders correct and complete copies, including all
exhibits, schedules and amendments thereto, of the agreements, each as
in effect on the date hereof, listed in Exhibit 7.2.2 (the "Material
Agreements").
7.3. Agreements Relating to Financing Debt, Investments, etc.
Exhibit 7.3, as from time to time hereafter supplemented in accordance with
Sections 6.4.1 and 6.4.2, sets forth (a) the amounts (as of the dates indicated
in Exhibit 7.3, as so supplemented) of all Financing Debt of the Company and
its Subsidiaries and all agreements which relate to such Financing Debt, (b)
all Liens and Guarantees with respect to such Financing Debt, (c) all
agreements which directly or indirectly require the Company or any Subsidiary
to make any Investment, and (d) all trademarks, tradenames, service marks,
service names and patents registered with the federal Patent and Trademark
Office (or with respect to which applications for such registration have been
filed). The Company has furnished the Lenders with correct and complete copies
of any agreements described in clauses (a) through (d) above requested by the
Required Lenders.
7.4. Changes in Condition. Since December 31, 1995 no Material
Adverse Change has occurred and between December 31, 1995 and the date hereof,
neither the Company nor any Subsidiary of the Company has entered into any
material transaction outside the ordinary course of business except for the
transactions contemplated by this Agreement and the Material Agreements.
7.5. Title to Assets. The Company and its Subsidiaries have good
and marketable title to all assets necessary for or used in the operations of
their business as now conducted by them and reflected in the most recent
balance sheet referred to in Section 7.2.1 (or the balance sheet most recently
furnished to the Lenders pursuant to Sections 6.4.1 or 6.4.2), and to all
assets acquired subsequent to the date of such balance sheet, subject to no
Liens except for Liens permitted by Section 6.8 and except for assets disposed
of as permitted by Section 6.11.
7.6. Operations in Conformity With Law, etc. The operations of
the Company and its Subsidiaries as now conducted or proposed to be conducted
are not in violation of, nor is the Company or its Subsidiaries in default
under, any Legal Requirement presently in effect, except for such violations
and defaults as do not and will not, in the aggregate, result, or create a
reasonable risk of resulting, in any Material Adverse Change. The Company has
received no notice of any such violation or default and has no knowledge of any
basis on which the operations of the Company or its Subsidiaries, as now
conducted and as currently proposed to be conducted after the date hereof,
would be held so as to violate or to give rise to any such violation or
default.
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7.7. Litigation. No litigation, at law or in equity, or any
proceeding before any court, board or other governmental or administrative
agency or any arbitrator is pending or, to the knowledge of the Company or any
Guarantor, threatened which involves any reasonable risk of any final judgment,
order or liability which, after giving effect to any applicable insurance, has
resulted, or creates a reasonable risk of resulting, in any Material Adverse
Change or which seeks to enjoin the consummation, or which questions the
validity, of any of the transactions contemplated by this Agreement or any
other Credit Document. No judgment, decree or order of any court, board or
other governmental or administrative agency or any arbitrator has been issued
against or binds the Company or any of its Subsidiaries which has resulted, or
creates a reasonable risk of resulting, in any Material Adverse Change.
7.8. Authorization and Enforceability. Each of the Company and
each other Obligor has taken all corporate action required to execute, deliver
and perform this Agreement and each other Credit Document to which it is party.
No consent of stockholders of the Company is necessary in order to authorize
the execution, delivery or performance of this Agreement or any other Credit
Document to which the Company is party. Each of this Agreement and each other
Credit Document constitutes the legal, valid and binding obligation of each
Obligor party thereto and is enforceable against such Obligor in accordance
with its terms.
7.9. No Legal Obstacle to Agreements. Neither the execution and
delivery of this Agreement or any other Credit Document, nor the making of any
borrowings hereunder, nor the guaranteeing of the Credit Obligations, nor the
securing of the Credit Obligations with the Credit Security, nor the
consummation of any transaction (other than the Prime Acquisition) referred to
in or contemplated by this Agreement or any other Credit Document, nor the
fulfillment of the terms hereof or thereof (other than the consummation of the
Prime Acquisition) or of any other agreement, instrument, deed or lease
contemplated by this Agreement or any other Credit Document (other than the
Prime Acquisition Agreement), has constituted or resulted in or will constitute
or result in:
(a) any breach or termination of the provisions of any
agreement, instrument, deed or lease to which the Company, any of its
Subsidiaries or any other Obligor is a party or by which it is bound,
or of the Charter or By-laws of the Company, any of its Subsidiaries
or any other Obligor;
(b) the violation of any law, statute, judgment, decree
or governmental order, rule or regulation applicable to the Company,
any of its Subsidiaries or any other Obligor;
(c) the creation under any agreement, instrument, deed
or lease of any Lien (other than Liens on the Credit Security which
secure the Credit Obligations) upon any of the assets of the Company,
any of its Subsidiaries or any other Obligor; or
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(d) any redemption, retirement or other repurchase
obligation of the Company, any of its Subsidiaries or any other
Obligor under any Charter, By-law, agreement, instrument, deed or
lease.
No approval, authorization or other action by, or declaration to or filing
with, any governmental or administrative authority or any other Person is
required to be obtained or made by the Company, any of its Subsidiaries or any
other Obligor in connection with the execution, delivery and performance of
this Agreement, the Notes or any other Credit Document, the transactions
contemplated hereby or thereby, the making of any borrowing hereunder, the
guaranteeing of the Credit Obligations or the securing of the Credit
Obligations with the Credit Security (other than filings necessary to perfect
the Managing Agent's security interest in the Credit Security).
7.10. Defaults. Neither the Company nor any of its Subsidiaries
is in default under any provision of its Charter or By-laws or of this
Agreement or any other Credit Document. Neither the Company nor any of its
Subsidiaries is in default under any provision of any agreement, instrument,
deed or lease to which it is party or by which it or its property is bound so
as to result, or create a reasonable risk of resulting, in any Material Adverse
Change. Neither the Company nor any of its Subsidiaries has violated any law,
judgment, decree or governmental order, rule or regulation, in each case so as
to result, or create a reasonable risk of resulting, in any Material Adverse
Change.
7.11. Licenses, etc. The Company and its Subsidiaries have all
FCC licenses, patents, patent applications, patent licenses, patent rights,
trademarks, trademark rights, trade names, trade name rights, copyrights,
licenses, franchises, permits, authorizations and other rights as are necessary
for the conduct of the business of the Company and its Subsidiaries as now
conducted by them. All of the foregoing are in full force and effect in all
material respects, and each of the Company and its Subsidiaries is in
substantial compliance with the foregoing without any known conflict with the
valid rights of others which has resulted, or creates a reasonable risk of
resulting, in any Material Adverse Change. No event has occurred which
permits, or after notice or lapse of time or both would permit, the revocation
or termination of any such license, franchise or other right or which affects
the rights of any of the Company and its Subsidiaries thereunder so as to
result, or to create a reasonable risk of resulting, in any Material Adverse
Change. No litigation or other proceeding or dispute exists with respect to
the validity or, where applicable, the extension or renewal, of any of the
foregoing which has resulted, or creates a reasonable risk of resulting, in any
Material Adverse Change.
7.12. Tax Returns. Each of the Company and its Subsidiaries has
filed all material tax and information returns which are required to be filed
by it and has paid, or made adequate provision for the payment of, all taxes
which have or may become due pursuant to such returns or to any assessment
received by it, other than taxes and assessments being contested by the Company
and its Subsidiaries in good faith by appropriate proceedings and for which
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adequate reserves have been taken in accordance with GAAP. Neither the Company
nor any of its Subsidiaries knows of any material additional assessments or any
basis therefor. The Company reasonably believes that the charges, accruals and
reserves on the books of the Company and its Subsidiaries in respect of taxes
or other governmental charges are adequate.
7.13. Certain Business Representations.
7.13.1. Labor Relations. No dispute or controversy
between the Company or any of its Subsidiaries and any of their
respective employees has resulted, or is reasonably likely to result,
in any Material Adverse Change, and neither the Company nor any of its
Subsidiaries anticipates that its relationships with its unions or
employees will result, or are reasonably likely to result, in any
Material Adverse Change. The Company and each of its Subsidiaries is
in compliance in all material respects with all federal and state laws
with respect to (a) non-discrimination in employment with which the
failure to comply, in the aggregate, has resulted, or creates a
reasonable risk of resulting, in a Material Adverse Change and (b) the
payment of wages.
7.13.2. Antitrust. Each of the Company and its
Subsidiaries is in compliance in all material respects with all
federal and state antitrust laws relating to its business and the
geographic concentration of its business.
7.13.3. Tower Sites. Each of the Towers is constructed
so as to be capable of being moved from its present location and
except to the extent recordation of any renewal, extension, amendment,
assignment or other instrument in connection with any lease of real
property in the State of Louisiana in the applicable public records
may be required in order to permit removal of a Tower, the Company and
its Subsidiaries have the right to remove the Towers from their
present locations. None of the Towers located on Designated Real
Property shall be removed from their locations without the prior
written consent of the Required Lenders, which consent shall not be
unreasonably withheld or delayed, unless (a) such removal is in the
ordinary course of business, (b) such actions and making such filings
of record as may be necessary to continue the first priority perfected
Lien of the Lenders therein have been taken and (c) the Managing Agent
has received Estoppel and Consent Letters relating to the new
locations.
7.13.4. Real Property Leases. The present and
contemplated use of the Real Property is in compliance in all material
respects with all applicable zoning ordinances and regulations and
other laws and regulations where failure so to comply would result, or
create reasonable risk of resulting, in a Material Adverse Change.
Each Lease is in full force and effect, the Company or one of its
Subsidiaries has all rights of lessee thereunder, there has been no
default in the performance of any of its terms or conditions by any
party thereto, and no claims of default have been asserted with
respect thereto where such default would result, or create a
reasonable risk of resulting, in a Material Adverse Change.
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7.13.5. Operation and Maintenance of Equipment. To the
best of the Company's knowledge, no Person owning or operating any
equipment necessary for the operation of the business of the Company
and its Subsidiaries has used, operated or maintained the same in a
manner which now or hereafter could result in the cancellation or
termination of the right of the Company and its Subsidiaries to use
the same or which could result in any material liability of the
Company and its Subsidiaries for damages in connection therewith. All
of the equipment and other tangible personal property which will be
owned by the Company and its Subsidiaries and used in connection with
the business of the Company and its Subsidiaries upon the Initial
Closing Date is in good operating condition and repair, reasonable
wear and tear in the ordinary course of business excepted, and has
been used, operated and maintained in substantial compliance with all
applicable laws, rules and regulations. To the Company's knowledge,
all of the Towers owned by the Company and its Subsidiaries are in
good operating condition and repair and have been used, operated and
maintained in compliance in all material respects with all applicable
laws, rules and regulations.
7.13.6. FCC and FAA Matters. No FCC licenses or
permits are necessary to the conduct of the business of the Company
and its Subsidiaries as presently conducted and proposed to be
conducted, and the Company and its Subsidiaries are not subject to FCC
regulation. The Company (a) has duly and timely filed all material
reports and other material filings, if any, which are required to be
filed by it or any of its Subsidiaries under the Communications Act or
any other applicable law, rule or regulation of any governmental
authority, including the FAA, the nonfiling of which would not result,
or be materially likely to result, in a Material Change, and (b) is in
compliance with all such laws, rules, regulations and ordinances,
including those promulgated by the FAA, to the extent the
noncompliance with which would not result, or not be materially likely
to result, in a Material Adverse Change. All information provided by
or on behalf of the Company or any Affiliate in any material filing,
if any, with the FCC relating to the business of the Company and its
Subsidiaries was, to the knowledge of such Person at the time of
filing, true, complete and correct in all material respects when made,
and the FCC has been notified of any substantial or significant
changes in such information as may be required in accordance with
applicable laws, rules and regulations.
7.14. Environmental Regulations.
7.14.1. Environmental Compliance. Each of the Company
and its Subsidiaries is in compliance in all material respects with
the Clean Air Act, the Federal Water Pollution Control Act, the Marine
Protection Research and Sanctuaries Act, RCRA, CERCLA and any other
Environmental Law in effect in any jurisdiction in which any
properties of the Company or any of its Subsidiaries are located or
where
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any of them conducts its business, and with all applicable published
rules and regulations (and applicable standards and requirements) of
the federal Environmental Protection Agency and of any similar
agencies in states or foreign countries in which the Company or its
Subsidiaries conducts its business other than those which in the
aggregate have not resulted, and do not create a reasonable risk of
resulting, in a Material Adverse Change.
7.14.2. Environmental Litigation. No suit, claim,
action or proceeding of which the Company or any of its Subsidiaries
has been given notice or otherwise has knowledge is now pending before
any court, governmental agency or board or other forum, or to the
Company's or any of its Subsidiaries knowledge, threatened by any
Person (nor to the Company's or any of its Subsidiaries' knowledge,
does any factual basis exist therefor) for, and neither the Company
nor any of its Subsidiaries have received written correspondence from
any federal, state or local governmental authority with respect to:
(a) noncompliance by the Company or any of its
Subsidiaries with any Environmental Law;
(b) personal injury, wrongful death or other tortious
conduct relating to materials, commodities or products used,
generated, sold, transferred or manufactured by the Company or any of
its Subsidiaries (including products made of, containing or
incorporating asbestos, lead or other hazardous materials, commodities
or toxic substances); or
(c) the release into the environment by the Company or
any of its Subsidiaries of any Hazardous Material generated by the
Company or any of its Subsidiaries whether or not occurring at or on a
site owned, leased or operated by the Company or any of its
Subsidiaries.
7.14.3. Hazardous Material. Any waste disposal or dump
sites at which Hazardous Material generated by either the Company or
any of its Subsidiaries has been disposed of directly by the Company
or any of its Subsidiaries and all independent contractors to whom the
Company or any of its Subsidiaries have delivered Hazardous Material,
or to the Company's or any of its Subsidiaries' knowledge, where
Hazardous Material finally came to be located, has not resulted, and
does not create a reasonable risk of resulting, in a Material Adverse
Change.
7.14.4. Environmental Condition of Properties. None of
the properties owned or leased by the Company or any of its
Subsidiaries has been used as a treatment, storage or disposal site,
other than as disclosed in Exhibit 7.14. No Hazardous Material is
present in any real property currently or formerly owned or
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operated by the Company or any of its Subsidiaries except that which
has not resulted, and does not create a reasonable risk of resulting,
in a Material Adverse Change.
7.15. Pension Plans. Each Plan (other than a Multiemployer Plan)
and, to the knowledge of the Company and its Subsidiaries, each Multiemployer
Plan is in material compliance with the applicable provisions of ERISA and the
Code. Each Multiemployer Plan and each Plan that constitutes a "defined
benefit plan" (as defined in ERISA) are set forth in Exhibit 7.15. Each ERISA
Group Person has met all of the funding standards applicable to all Plans that
are not Multiemployer Plans, and no condition exists which would permit the
institution of proceedings to terminate any Plan that is not a Multiemployer
Plan under section 4042 of ERISA. To the best knowledge of the Company and
each Subsidiary, no Plan that is a Multiemployer Plan is currently insolvent or
in reorganization or has been terminated within the meaning of ERISA.
7.16. Prime Acquisition Agreement, etc. The Prime Acquisition
Agreement is a valid and binding contract as to ATC Holdings and, to the best
of the Company's knowledge, as to the Prime Holders. ATC Holdings is not in
default in any material respect of its obligations under the Prime Acquisition
Agreement and, to the best of the Company's knowledge, the Prime Holders are
not in default in any material respect of any of their obligations thereunder.
The representations and warranties of the ATC Holdings set forth in the Prime
Acquisition Agreement are true and correct in all material respect as of the
date hereof with the same force and effect as though made on and as of the date
hereof. To the Company's knowledge all of the representations and warranties
of the Prime Holders set forth in the Prime Acquisition Agreement are true and
correct in all material respects as of the date hereof with the same force and
effect as though made on and as of the date hereof.
7.17. Foreign Trade Regulations; Government Regulation; Margin
Stock.
7.17.1. Foreign Trade Regulations. Neither the
execution and delivery of this Agreement or any other Credit Document,
nor the making by the Company of any borrowings hereunder, nor the
guaranteeing of the Credit Obligations by any Guarantor, nor the
securing of the Credit Obligations with the Credit Security, has
constituted or resulted in or will constitute or result in the
violation of any Foreign Trade Regulation.
7.17.2. Government Regulation. Neither the Company nor
any of its Subsidiaries, nor any Person controlling the Company or any
of its Subsidiaries or under common control with the Company or any of
its Subsidiaries, is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Investment
Company Act, the Interstate Commerce Act or any statute or regulation
which regulates the incurring by the Company or any of its
Subsidiaries of Financing Debt as contemplated by this Agreement and
the other Credit Documents.
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7.17.3. Margin Stock. Neither the Company nor any of
its Subsidiaries owns any Margin Stock.
7.18. Disclosure. Neither this Agreement nor any other Credit
Document to be furnished to the Lenders by or on behalf of the Company or any
of its Subsidiaries in connection with the transactions contemplated hereby or
by such Credit Document contains any untrue statement of material fact or omits
to state a material fact necessary in order to make the statements contained
herein or therein not misleading in light of the circumstances under which they
were made. No fact is actually known to the Company or any of its Subsidiaries
which has resulted, or in the future (so far as the Company or any of its
Subsidiaries can reasonably foresee) will result, or creates a reasonable risk
of resulting, in any Material Adverse Change, except to the extent that present
or future general economic conditions may result in a Material Adverse Change.
8. Defaults.
8.1. Events of Default. The following events are referred to as
"Events of Default":
8.1.1. Payment. The Company shall fail to make any
payment in respect of: (a) interest or any fee on or in respect of
any of the Credit Obligations owed by it as the same shall become due
and payable, and such failure shall continue for a period of three
days, or (b) any Credit Obligation with respect to payments made by
any Letter of Credit Issuer under any Letter of Credit or any draft
drawn thereunder within three days after demand therefor by such
Letter of Credit Issuer or (c) principal of any of the Credit
Obligations owed by it as the same shall become due, whether at
maturity or by acceleration or otherwise.
8.1.2. Specified Covenants. The Company or any of its
Subsidiaries shall fail to perform or observe any of the provisions of
Section 6.4.6 or Sections 6.5 through 6.19.
8.1.3. Other Covenants. The Company, any of its
Subsidiaries or any other Obligor shall fail to perform or observe any
other covenant, agreement or provision to be performed or observed by
it under this Agreement or any other Credit Document, and such failure
shall not be rectified or cured to the written satisfaction of the
Required Lenders within 30 days after the earlier of (a) notice
thereof by the Managing Agent to the Company or (b) a Financial
Officer shall have actual knowledge thereof.
8.1.4. Representations and Warranties. Any
representation or warranty of or with respect to the Company, any of
its Subsidiaries or any other Obligor made to the Lenders or the
Managing Agent in, pursuant to or in connection with this Agreement or
any other Credit Document, including any financial statements,
reports,
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notices, mortgages, assignments, UCC financing statements or
certificates delivered to the Agent or any of the Lenders by the
Company, any of its Subsidiaries or any other Obligor in connection
herewith or therewith, shall be materially false on the date as of
which it was made.
8.1.5. Cross Default, etc.
(a) The Company or any of its Subsidiaries shall fail
to make any payment when due (after giving effect to any applicable
grace periods) in respect of any Financing Debt (other than the Credit
Obligations) outstanding in an aggregate amount of principal (whether
or not due) and accrued interest exceeding $1,000,000;
(b) the Company or any of its Subsidiaries shall fail
to perform or observe the terms of any agreement or instrument
relating to such Financing Debt, and such failure shall continue,
without having been duly cured, waived or consented to, beyond the
period of grace, if any, specified in such agreement or instrument,
and such failure shall permit the acceleration of such Financing Debt;
(c) all or any part of such Financing Debt of the
Company or any of its Subsidiaries shall be accelerated or shall
become due or payable prior to its stated maturity (except with
respect to voluntary prepayments thereof) for any reason whatsoever;
(d) any Lien on any property of the Company or any of
its Subsidiaries securing any such Financing Debt shall be enforced by
foreclosure or similar action; or
(e) any holder of any such Financing Debt shall
exercise any right of rescission with respect to the issuance thereof
or put or repurchase rights against any Obligor with respect to such
Financing Debt (other than any such rights that may be satisfied with
"payment in kind" notes or other similar securities).
8.1.6. Ownership; Liquidation; etc. Except as
permitted by Section 6.11:
(a) the Company shall cease to own, directly or
indirectly, all the capital stock of its Subsidiaries, except to the
extent permitted by Section 6.12.1; or
(b) the Parent shall cease to own at least 80% of all
the outstanding capital stock and of the outstanding capital stock
entitled to vote generally in ATC Holdings and ATC Holdings shall
cease to own all the capital stock of the Company; or
(c) any Person, together with "affiliates" and
"associates" of such Person within the meaning of Rule 12b-2 of the
Exchange Act, or any "group" including such Person under sections
13(d) and 14(d) of the Exchange Act, other than Summit Capital,
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Inc., shall acquire after the date hereof beneficial ownership within
the meaning of Rule 13d-3 of the Exchange Act of 50% or more of either
the voting stock or total equity capital of the Parent; or
(d) the Parent, ATC Holdings, the Company, any of the
Company's Subsidiaries or any other Obligor shall initiate any action
to dissolve, liquidate or otherwise terminate its existence.
8.1.7. Enforceability, etc. Any Credit Document shall
cease for any reason (other than the scheduled termination thereof in
accordance with its terms) to be enforceable in accordance with its
terms or in full force and effect; or any party to any Credit Document
shall so assert in a judicial or similar proceeding; or the security
interests created by this Agreement or any other Credit Documents
shall cease to be enforceable and of the same effect and priority
purported to be created hereby.
8.1.8. Judgments. A final judgment (a) which, with
other outstanding final judgments against the Company and its
Subsidiaries, exceeds an aggregate of $750,000 in excess of applicable
insurance coverage shall be rendered against the Company or any of its
Subsidiaries, or (b) which grants injunctive relief that results, or
creates a reasonable risk of resulting, in a Material Adverse Change
and in either case if, (i) within 30 days after entry thereof, such
judgment shall not have been discharged or execution thereof stayed
pending appeal or (ii) within 30 days after the expiration of any such
stay, such judgment shall not have been discharged.
8.1.9. ERISA. Any "reportable event" (as defined in
section 4043 of ERISA) shall have occurred that reasonably could be
expected to result in termination of a Plan or the appointment by the
appropriate United States District Court of a trustee to administer
any Plan or the imposition of a Lien in favor of a Plan; or any ERISA
Group Person shall fail to pay when due amounts aggregating in excess
of $500,000 which it shall have become liable to pay to the PBGC or to
a Plan under Title IV of ERISA; or notice of intent to terminate a
Plan shall be filed under Title IV of ERISA by any ERISA Group Person
or administrator; or the PBGC shall institute proceedings under Title
IV of ERISA to terminate or to cause a trustee to be appointed to
administer any Plan or a proceeding shall be instituted by a fiduciary
of any Plan against any ERISA Group Person to enforce section 515 or
4219(c)(5) of ERISA and such proceeding shall not have been dismissed
within 30 days thereafter; or a condition shall exist by reason of
which the PBGC would be entitled to obtain a decree adjudicating that
any Plan must be terminated.
8.1.10. Bankruptcy, etc. The Company, any of its
Subsidiaries or any other Obligor shall:
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(a) commence a voluntary case under the Bankruptcy Code
or authorize, by appropriate proceedings of its board of directors or
other governing body, the commencement of such a voluntary case;
(b) (i) have filed against it a petition commencing an
involuntary case under the Bankruptcy Code that shall not have been
dismissed within 60 days after the date on which such petition is
filed, or (ii) file an answer or other pleading within such 60-day
period admitting or failing to deny the material allegations of such a
petition or seeking, consenting to or acquiescing in the relief
therein provided, or (iii) have entered against it an order for relief
in any involuntary case commenced under the Bankruptcy Code;
(c) seek relief as a debtor under any applicable law,
other than the Bankruptcy Code, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification or
alteration of the rights of creditors, or consent to or acquiesce in
such relief;
(d) have entered against it an order by a court of
competent jurisdiction (i) finding it to be bankrupt or insolvent,
(ii) ordering or approving its liquidation or reorganization as a
debtor or any modification or alteration of the rights of its
creditors or (iii) assuming custody of, or appointing a receiver or
other custodian for, all or a substantial portion of its property; or
(e) make an assignment for the benefit of, or enter
into a composition with, its creditors, or appoint, or consent to the
appointment of, or suffer to exist a receiver or other custodian for,
all or a substantial portion of its property.
8.2. Certain Actions Following an Event of Default. If any one
or more Events of Default shall occur, then in each and every such case:
8.2.1. Terminate Obligation to Extend Credit. The
Managing Agent on behalf of the Lenders may (and upon written request
of the Required Lenders the Managing Agent shall) terminate the
obligations of the Lenders to make any further extensions of credit
under the Credit Documents by furnishing notice of such termination to
the Company.
8.2.2. Specific Performance; Exercise of Rights. The
Managing Agent on behalf of the Lenders may (and upon written request
of the Required Lenders the Managing Agent shall) proceed to protect
and enforce the Lenders' rights by suit in equity, action at law
and/or other appropriate proceeding, either for specific performance
of any covenant or condition contained in this Agreement or any other
Credit Document or in any instrument or assignment delivered to the
Lenders pursuant to this Agreement or any other Credit Document, or in
aid of the exercise of any power
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granted in this Agreement or any other Credit Document or any such
instrument or assignment.
8.2.3. Acceleration. The Managing Agent on behalf of
the Lenders may (and upon written request of the Required Lenders the
Managing Agent shall) by notice in writing to the Company (a) declare
all or any part of the unpaid balance of the Credit Obligations then
outstanding to be immediately due and payable, and (b) require the
Company immediately to deposit with the Managing Agent in cash an
amount equal to the then Letter of Credit Exposure (which cash shall
be held and applied as provided in Section 4.5), and thereupon such
unpaid balance or part thereof and such amount equal to the Letter of
Credit Exposure shall become so due and payable without presentation,
protest or further demand or notice of any kind, all of which are
hereby expressly waived; provided, however, that if a Bankruptcy
Default shall have occurred, the unpaid balance of the Credit
Obligations shall automatically become immediately due and payable.
8.2.4. Enforcement of Payment; Credit Security; Setoff.
The Managing Agent on behalf of the Lenders may (and upon written
request of the Required Lenders the Managing Agent shall) proceed to
enforce payment of the Credit Obligations in such manner as it may
elect, to cancel, or instruct other Letter of Credit Issuers to
cancel, any outstanding Letters of Credit which permit the
cancellation thereof and, in cooperation with the Collateral Agent, to
realize upon any and all rights in the Credit Security. The Lenders
may offset and apply toward the payment of the Credit Obligations
(and/or toward the curing of any Event of Default) any Indebtedness
from the Lenders to the respective Obligors, including any
Indebtedness represented by deposits in any account maintained with
the Lenders, regardless of the adequacy of any security for the Credit
Obligations. The Lenders shall have no duty to determine the adequacy
of any such security in connection with any such offset.
8.2.5. Cumulative Remedies. To the extent not
prohibited by applicable law which cannot be waived, all of the
Lenders' rights hereunder and under each other Credit Document shall
be cumulative.
8.3. Annulment of Defaults. Once an Event of Default has
occurred, such Event of Default shall be deemed to exist and be continuing for
all purposes of the Credit Documents until the Required Lenders or the Managing
Agent (with the consent of the Required Lenders) shall have waived such Event
of Default in writing, stated in writing that the same has been cured to such
Lenders' reasonable satisfaction or entered into an amendment to this Agreement
which by its express terms cures such Event of Default, at which time such
Event of Default shall no longer be deemed to exist or to have continued. No
such action by the Lenders or the Managing Agent shall extend to or affect any
subsequent Event of Default or impair any rights of the Lenders upon the
occurrence thereof. The making of any extension of credit during the existence
of any Default or Event of Default shall not constitute a waiver thereof.
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8.4. Waivers. To the extent that such waiver is not prohibited
by the provisions of applicable law that cannot be waived, each of the Company
and the other Obligors waives:
(a) all presentments, demands for performance, notices
of nonperformance (except to the extent required by this Agreement or
any other Credit Document), protests, notices of protest and notices
of dishonor;
(b) any requirement of diligence or promptness on the
part of any Lender in the enforcement of its rights under this
Agreement, the Notes or any other Credit Document;
(c) any and all notices of every kind and description
which may be required to be given by any statute or rule of law; and
(d) any defense (other than indefeasible payment in
full) which it may now or hereafter have with respect to its liability
under this Agreement, the Notes or any other Credit Document or with
respect to the Credit Obligations.
9. Expenses; Indemnity.
9.1. Expenses. Whether or not the transactions contemplated
hereby shall be consummated, the Company will pay:
(a) all reasonable expenses of the Agents (including
the out-of-pocket expenses related to forming the group of Lenders and
reasonable fees and disbursements of the counsel to the Agents) in
connection with the preparation and duplication of this Agreement and
each other Credit Document, examinations by, and reports of, any
Agent's commercial financial examiners, fixed asset appraisers and
environmental consultants, the transactions contemplated hereby and
thereby and amendments, waivers, consents and other operations
hereunder and thereunder;
(b) all recording and filing fees and transfer and
documentary stamp and similar taxes at any time payable in respect of
this Agreement, any other Credit Document, any Credit Security or the
incurrence of the Credit Obligations; and
(c) all other reasonable expenses incurred by the
Lenders or the holder of any Credit Obligation in connection with the
enforcement of any rights hereunder or under any other Credit
Document, including costs of collection and reasonable attorneys' fees
(including a reasonable allowance for the hourly cost of attorneys
employed by the Lenders on a salaried basis) and expenses.
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9.2. General Indemnity. The Company shall indemnify the Lenders
and the Managing Agent and hold them harmless from any liability, loss or
damage resulting from the violation by the Company of Section 2.4. In
addition, the Company shall indemnify each Lender, each Agent, each of the
Lenders' or any Agent's directors, officers, employees, agents, attorneys,
accountants, consultants and each Person, if any, who controls any Lender or
any Agent (each Lender, each Agent and each of such directors, officers,
employees, agents, attorneys, accountants, consultants and control Persons is
referred to as an "Indemnified Party") and hold each of them harmless from and
against any and all claims, damages, liabilities and reasonable expenses
(including reasonable fees and disbursements of counsel with whom any
Indemnified Party may consult in connection therewith and all reasonable
expenses of litigation or preparation therefor) which any Indemnified Party may
incur or which may be asserted against any Indemnified Party in connection with
(a) the Indemnified Party's compliance with or contest of any subpoena or other
process issued against it in any proceeding involving the Company or any of its
Subsidiaries or their Affiliates, (b) any litigation or investigation involving
the Company, any of its Subsidiaries or their Affiliates, or any officer,
director or employee thereof, (c) the existence or exercise of any security
rights with respect to the Credit Security in accordance with the Credit
Documents, or (d) this Agreement, any other Credit Document or any transaction
contemplated hereby or thereby; provided, however, that the foregoing indemnity
shall not apply to (i) litigation commenced by the Company against the Lenders
or any Agent which seeks enforcement of any of the rights of the Company
hereunder or under any other Credit Document and is determined adversely to the
Lenders or such Agent in a final nonappealable judgment or to the extent such
claims, damages, liabilities and expenses result from a Lender's or such
Agent's gross negligence or willful misconduct and (ii) indirect or
consequential damages incurred by any Indemnified Party.
9.3. Indemnity With Respect to Letters of Credit. The Company
shall indemnify each Letter of Credit Issuer and its correspondents and hold
each of them harmless from and against any and all claims, losses, liabilities,
damages and reasonable expenses (including reasonable attorneys' fees) arising
from or in connection with any Letter of Credit, including any such claim,
loss, liability, damage or expense arising out of any transfer, sale, delivery,
surrender or endorsement of any invoice, bill of lading, warehouse receipt or
other document at any time held by the Managing Agent, any other Letter of
Credit Issuer or held for their respective accounts by any of their
correspondents, in connection with any Letter of Credit, except to the extent
such claims, losses, liabilities, damages and expenses result from gross
negligence or willful misconduct on the part of the Managing Agent or any other
Letter of Credit Issuer.
10. Operations; Managing Agent.
10.1. Interests in Credits. The Percentage Interest of each
Lender in the Loan and Letters of Credit, and the related Commitments, shall be
computed based on the maximum principal amount for each Lender as set forth in
the Register, as from time to time in effect.
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The current Percentage Interests are set forth in Exhibit 10.1, which may be
updated by the Managing Agent from time to time to conform to the Register.
10.2. Agents' Authority to Act, etc. Each of the Lenders appoints
and authorizes (a) Bank of Boston to act for the Lenders as the Managing Agent
and (b) Wells Fargo to act for the Lenders as the Collateral Agent, in each
case in connection with the transactions contemplated by this Agreement and the
other Credit Documents on the terms set forth herein and therein. In acting
hereunder, each Agent is acting for its own account to the extent of its
Percentage Interest and for the account of each other Lender to the extent of
the Lenders' respective Percentage Interests, and all action in connection with
the enforcement of, or the exercise of any remedies (other than the Lenders'
rights of set-off as provided in Section 8.2.4 or in any Credit Document) in
respect of the Credit Obligations and Credit Documents shall be taken by an
Agent.
10.3. Company to Pay Managing Agent, etc. The Company and each
Guarantor shall be fully protected in making all payments in respect of the
Credit Obligations to the Managing Agent, in relying upon consents,
modifications and amendments executed by the Managing Agent purportedly on the
Lenders' behalf, and in dealing with the Managing Agent as herein provided.
The Managing Agent may charge the accounts of the Company, on the dates when
the amounts thereof become due and payable, with the amounts of the principal
of and interest on the Loan, any amounts paid by the Letter of Credit Issuers
to third parties under Letters of Credit or drafts presented thereunder,
commitment fees, Letter of Credit fees and all other fees and amounts owing
under any Credit Document.
10.4. Lender Operations for Advances, Letters of Credit, etc.
10.4.1. Advances. On each Closing Date, each Lender
shall advance to the Managing Agent in immediately available funds
such Lender's Percentage Interest in the portion of the Loan advanced
on such Closing Date prior to 12:00 noon (Boston time). If such funds
are not received at such time, but all applicable conditions set forth
in Section 5 have been satisfied, each Lender authorizes and requests
the Managing Agent to advance for the Lender's account, pursuant to
the terms hereof, the Lender's respective Percentage Interest in such
portion of the Loan and agrees to reimburse the Managing Agent in
immediately available funds for the amount thereof prior to 2:00 p.m.
(Boston time) on the day any portion of the Loan is advanced
hereunder; provided, however, that the Managing Agent is not
authorized to make any such advance for the account of any Lender who
has previously notified the Managing Agent in writing that such Lender
will not be performing its obligations to make further advances
hereunder; and provided, further, that the Managing Agent shall be
under no obligation to make any such advance.
10.4.2. Letters of Credit. Each of the Lenders
authorizes and requests each Letter of Credit Issuer to issue the
Letters of Credit provided for in Section 2.3 and to
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grant each Lender a participation in each of such Letters of Credit in
an amount equal to its Percentage Interest in the amount of each such
Letter of Credit. Promptly upon the request of the Letter of Credit
Issuer, each Lender shall reimburse the Letter of Credit Issuer in
immediately available funds for such Lender's Percentage Interest in
the amount of all obligations to third parties incurred by the Letter
of Credit Issuer in respect of each Letter of Credit and each draft
accepted under a Letter of Credit to the extent not reimbursed by the
Company. The Letter of Credit Issuer will notify each Lender of the
issuance of any Letter of Credit, the amount and date of payment of
any draft drawn or accepted under a Letter of Credit and whether in
connection with the payment of any such draft the amount thereof was
added to the Revolving Loan or was reimbursed by the Company.
10.4.3. Managing Agent to Allocate Payments, etc. All
payments of principal and interest in respect of the extensions of
credit made pursuant to this Agreement, reimbursement of amounts paid
by any Letter of Credit Issuer to third parties under Letters of
Credit or drafts presented thereunder, commitment fees, Letter of
Credit fees and other fees under this Agreement shall, as a matter of
convenience, be made by the Company and the Guarantors to the Managing
Agent in immediately available funds. The share of each Lender shall
be credited to such Lender by the Managing Agent in immediately
available funds in such manner that the principal amount of the Credit
Obligations to be paid shall be paid proportionately in accordance
with the Lenders' respective Percentage Interests in such Credit
Obligations, except as otherwise provided in this Agreement. Under no
circumstances shall any Lender be required to produce or present its
Notes as evidence of its interests in the Credit Obligations in any
action or proceeding relating to the Credit Obligations.
10.4.4. Delinquent Lenders; Nonperforming Lenders. In
the event that any Lender fails to reimburse the Managing Agent
pursuant to Section 10.4.1 for the Percentage Interest of such lender
(a "Delinquent Lender") in any credit advanced by the Managing Agent
pursuant hereto, overdue amounts (the "Delinquent Payment") due from
the Delinquent Lender to the Managing Agent shall bear interest,
payable by the Delinquent Lender on demand, at a per annum rate equal
to (a) the Federal Funds Rate for the first three days overdue and (b)
the sum of 2% plus the Federal Funds Rate for any longer period. Such
interest shall be payable to the Managing Agent for its own account
for the period commencing on the date of the Delinquent Payment and
ending on the date the Delinquent Lender reimburses the Managing Agent
on account of the Delinquent Payment (to the extent not paid by any
Obligor as provided below) and the accrued interest thereon (the
"Delinquency Period"), whether pursuant to the assignments referred to
below or otherwise. Upon notice by the Managing Agent, the Company
will pay to the Managing Agent the principal (but not the interest)
portion of the Delinquent Payment. During the Delinquency Period, in
order to make reimbursements for the Delinquent Payment and accrued
interest thereon, the Delinquent Lender shall be deemed to have
assigned to the Managing Agent all
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interest, commitment fees and other payments made by the Company under
Section 3 that would have thereafter otherwise been payable under the
Credit Documents to the Delinquent Lender. During any other period in
which any Lender is not performing its obligations to extend credit
under Section 2 (a "Nonperforming Lender"), the Nonperforming Lender
shall be deemed to have assigned to each Lender that is not a
Nonperforming Lender (a "Performing Lender") all principal and other
payments made by the Company under Section 4 that would have
thereafter otherwise been payable under the Credit Documents to the
Nonperforming Lender. The Managing Agent shall credit a portion of
such payments to each Performing Lender in an amount equal to the
Percentage Interest of such Performing Lender in an amount equal to
the Percentage Interest of such Performing Lender divided by one minus
the Percentage Interest of the Nonperforming Lender until the
respective portions of the Loan owed to all the Lenders are the same
as the Percentage Interests of the Lenders immediately prior to the
failure of the Nonperforming Lender to perform its obligations under
Section 2. The foregoing provisions shall be in addition to any other
remedies the Managing Agent, the Performing Lenders or the Company may
have under law or equity against the Delinquent Lender as a result of
the Delinquent Payment or against the Nonperforming Lender as a result
of its failure to perform its obligations under Section 2.
10.5. Sharing of Payments, etc. Each Lender agrees that (a) if by
exercising any right of set-off or counterclaim or otherwise, it shall receive
payment of (i) a proportion of the aggregate amount due with respect to its
Percentage Interest in the Loan and Letter of Credit Exposure which is greater
than (ii) the proportion received by any other Lender in respect of the
aggregate amount due with respect to such other Lender's Percentage Interest in
the Loan and Letter of Credit Exposure and (b) if such inequality shall
continue for more than 10 days, the Lender receiving such proportionately
greater payment shall purchase participations in the Percentage Interests in
the Loan and Letter of Credit Exposure held by the other Lenders, and such
other adjustments shall be made from time to time (including rescission of such
purchases of participations in the event the unequal payment originally
received is recovered from such Lender through bankruptcy proceedings or
otherwise), as may be required so that all such payments of principal and
interest with respect to the Loan and Letter of Credit Exposure held by the
Lenders shall be shared by the Lenders pro rata in accordance with their
respective Percentage Interests; provided, however, that this Section 10.5
shall not impair the right of any Lender to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to such exercise to
the payment of Indebtedness of any Obligor other than such Obligor's
Indebtedness with respect to the Loan and Letter of Credit Exposure. Each
Lender that grants a participation in the Credit Obligations to a Credit
Participant shall require as a condition to the granting of such participation
that such Credit Participant agree to share payments received in respect of the
Credit Obligations as provided in this Section 10.5. The provisions of this
Section 10.5 are for the sole and exclusive benefit of the Lenders and no
failure of any Lender to comply with the terms hereof shall be available to any
Obligor as a defense to the payment of the Credit Obligations.
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10.6. Amendments, Consents, Waivers, etc. Except as otherwise set
forth herein, the Managing Agent may (and upon the written request of the
Required Lenders the Managing Agent shall) take or refrain from taking any
action under this Agreement or any other Credit Document, including giving its
written consent to any modification of or amendment to and waiving in writing
compliance with any covenant or condition in this Agreement or any other Credit
Document (other than an Interest Rate Protection Agreement) or any Default or
Event of Default, all of which actions shall be binding upon all of the
Lenders; provided, however, that:
(a) Except as provided below, without the written
consent of the Lenders owning at least two thirds of the Percentage
Interests (other than Delinquent Lenders during the existence of a
Delinquency Period so long as such Delinquent Lender is treated the
same as the other Lenders with respect to any actions enumerated
below), no written modification of, amendment to, consent with respect
to, waiver of compliance with or waiver of a Default under, any of the
Credit Documents (other than an Interest Rate Protection Agreement)
shall be made.
(b) Without the written consent of such Lenders as own
100% of the Percentage Interests (other than Delinquent Lenders during
the existence of a Delinquency Period so long as such Delinquent
Lender is treated the same as the other Lenders with respect to any
actions enumerated below):
(i) No reduction shall be made in (A) the
amount of principal of the Loan or reimbursement obligations
for payments made under Letters of Credit, (B) the interest
rate on the Loan (other than amendments and waivers that
modify defined terms used in calculating the Applicable
Margin or that waive an increase in the Applicable Rate as a
result of an Event of Default) or (C) the Letter of Credit
fees or commitment fees with respect to the credit facility
provided herein.
(ii) No change shall be made in the stated,
scheduled time of payment of all or any portion of the Loan
(other than amendments and waivers that modify defined terms
used in calculating Consolidated Excess Cash Flow) or
interest thereon or reimbursement of payments made under
Letters of Credit or fees relating to any of the foregoing
payable to all of the Lenders and no waiver shall be made of
any Default under Section 8.1.1.
(iii) No increase shall be made in the
amount, or extension of the term, of the stated Commitments
beyond that provided for under Section 2.
(iv) No alteration shall be made of the
Lenders' rights of set-off contained in Section 8.2.4.
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(v) No release of any Credit Security or of
any Guarantor shall be made (except that the Collateral
Agent may release particular items of Credit Security or
particular Guarantors in dispositions permitted by Section
6.11 and may release all Credit Security pursuant to Section
16 upon payment in full of the Credit Obligations and
termination of the Commitments without the written consent
of the Lenders).
(vi) No amendment to or modification of this
Section 10.6(b) shall be made.
10.7. Agent's Resignation. Either Agent may resign at any time by
giving at least 60 days' prior written notice of its intention to do so to each
of the Lenders and the Company and upon the appointment by the Required Lenders
of a successor Agent satisfactory to the Company. If no successor Managing
Agent shall have been so appointed and shall have accepted such appointment
within 45 days after the retiring Managing Agent's giving of such notice of
resignation, then the retiring Managing Agent may with the consent of the
Company, which shall not be unreasonably withheld, appoint a successor Managing
Agent which shall be a bank or a trust company organized under the laws of the
United States of America or any state thereof and having a combined capital,
surplus and undivided profit of at least $100,000,000; provided, however, that
any successor Managing Agent appointed under this sentence may be removed upon
the written request of the Required Lenders, which request shall also appoint a
successor Managing Agent satisfactory to the Company. Upon the resignation or
removal of the Collateral Agent, the Managing Agent shall act as Collateral
Agent. Upon the appointment of a new Managing Agent or Collateral Agent
hereunder, the term "Managing Agent" and "Collateral Agent", as the case may
be, shall for all purposes of this Agreement thereafter mean such successor.
After any retiring Agent's resignation hereunder as Agent, or the removal
hereunder of any successor Agent, the provisions of this Agreement shall
continue to inure to the benefit of such retiring or removed Agent as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.
10.8. Concerning the Agents.
10.8.1. Action in Good Faith, etc. Each Agent and its
officers, directors, employees and agents shall be under no liability
to any of the Lenders or to any future holder of any interest in the
Credit Obligations for any action or failure to act taken or suffered
in good faith, and any action or failure to act in accordance with an
opinion of its counsel shall conclusively be deemed to be in good
faith. Each Agent shall in all cases be entitled to rely, and shall
be fully protected in relying, on instructions given to such Agent by
the required holders of Credit Obligations as provided in this
Agreement.
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10.8.2. No Implied Duties, etc. Each Agent shall have
and may exercise such powers as are specifically delegated to the
Agent under this Agreement or any other Credit Document together with
all other powers incidental thereto. The Agents shall have no implied
duties to any Person or any obligation to take any action under this
Agreement or any other Credit Document except for action specifically
provided for in this Agreement or any other Credit Document to be
taken by the Agent. Before taking any action under this Agreement or
any other Credit Document, any Agent may request an appropriate
specific indemnity satisfactory to it from each Lender in addition to
the general indemnity provided for in Section 10.11. Until the Agent
has received such specific indemnity, the Agent shall not be obligated
to take (although it may in its sole discretion take) any such action
under this Agreement or any other Credit Document. Each Lender
confirms that the Agents do not have a fiduciary relationship to it
under the Credit Documents. Each of the Company and its Subsidiaries
party hereto confirms that neither Agent nor any other Lender has a
fiduciary relationship to it under the Credit Documents.
10.8.3. Validity, etc. The Agents shall not be
responsible to any Lender or any future holder of any interest in the
Credit Obligations (a) for the legality, validity, enforceability or
effectiveness of this Agreement or any other Credit Document, (b) for
any recitals, reports, representations, warranties or statements
contained in or made in connection with this Agreement or any other
Credit Document, (c) for the existence or value of any assets included
in any security for the Credit Obligations, (d) for the effectiveness
of any Lien purported to be included in the Credit Security, (e) for
the specification or failure to specify any particular assets to be
included in the Credit Security, or (f) unless the Collateral Agent
shall have failed to comply with Section 10.8.1, for the perfection of
the security interests in the Credit Security.
10.8.4. Compliance. The Agents shall not be obligated
to ascertain or inquire as to the performance or observance of any of
the terms of this Agreement or any other Credit Document; and in
connection with any extension of credit under this Agreement or any
other Credit Document, the Agents shall be fully protected in relying
on a certificate of the Company as to the fulfillment by the Company
of any conditions to such extension of credit.
10.8.5. Employment of Agents and Counsel. The Agents
may execute any of its duties as Agent under this Agreement or any
other Credit Document by or through employees, agents and
attorneys-in-fact and shall not be responsible to any of the Lenders,
the Company or any other Obligor for the default or misconduct of any
such Managing Agents or attorneys-in-fact selected by the Agent acting
in good faith. The Agents shall be entitled to advice of counsel
concerning all matters pertaining to the agency hereby created and
their duties hereunder or under any other Credit Document.
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10.8.6. Reliance on Documents and Counsel. The Agents
shall be entitled to rely, and shall be fully protected in relying,
upon any affidavit, certificate, cablegram, consent, instrument,
letter, notice, order, document, statement, telecopy, telegram, telex
or teletype message or writing reasonably believed in good faith by
the Agents to be genuine and correct and to have been signed, sent or
made by the Person in question, including any telephonic or oral
statement made by such Person, and, with respect to legal matters,
upon an opinion or the advice of counsel selected by the Agent.
10.8.7. Agent's Reimbursement. Each of the Lenders
severally agrees to reimburse the Agents, in the amount of such
Lender's Percentage Interest, for any reasonable expenses not
reimbursed by the Company or the Guarantors (without limiting the
obligation of the Company or the Guarantors to make such
reimbursement): (a) for which any Agent is entitled to reimbursement
by the Company or the Guarantors under this Agreement or any other
Credit Document, and (b) after the occurrence of a Default, for any
other reasonable expenses incurred by the Agents on the Lenders'
behalf in connection with the enforcement of the Lenders' rights under
this Agreement or any other Credit Document; provided, however, that
the Agents shall not be reimbursed for any such expenses arising as a
result of their gross negligence or willful misconduct.
10.9. Rights as a Lender. With respect to any credit extended by
it hereunder, Bank of Boston and Wells Fargo shall have the same rights,
obligations and powers hereunder as any other Lender and may exercise such
rights and powers as though it were not an Agent, and unless the context
otherwise specifies, Bank of Boston and Wells Fargo shall be treated in its
individual capacity as though it were not an Agent hereunder. Without limiting
the generality of the foregoing, the Percentage Interest of Bank of Boston and
Wells Fargo shall be included in any computations of Percentage Interests.
Bank of Boston and Wells Fargo and their respective Affiliates may accept
deposits from, lend money to, act as trustee for and generally engage in any
kind of banking or trust business with the Company, any of its Subsidiaries or
any Affiliate of any of them and any Person who may do business with or own an
equity interest in the Company, any of its Subsidiaries or any Affiliate of any
of them, all as if Bank of Boston and Wells Fargo were not Agents and without
any duty to account therefor to the other Lenders.
10.10. Independent Credit Decision. Each of the Lenders
acknowledges that it has independently and without reliance upon the Agents,
based on the financial statements and other documents referred to in Section
7.2, on the other representations and warranties contained herein and on such
other information with respect to the Company and its Subsidiaries as such
Lender deemed appropriate, made such Lender's own credit analysis and decision
to enter into this Agreement and to make the extensions of credit provided for
hereunder. Each Lender represents to the Agents that such Lender will continue
to make its own independent credit and other decisions in taking or not taking
action under this Agreement
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or any other Credit Document. Each Lender expressly acknowledges that neither
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates has made any representations or warranties to such Lender, and no
act by such Agent taken under this Agreement or any other Credit Document,
including any review of the affairs of the Company and its Subsidiaries, shall
be deemed to constitute any representation or warranty by the Agents. Except
for notices, reports and other documents expressly required to be furnished to
each Lender by the Agents under this Agreement or any other Credit Document,
the Agents shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the business, operations, property,
condition, financial or otherwise, or creditworthiness of the Company or any
Subsidiary which may come into the possession of the Agents or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
10.11. Indemnification. The holders of the Credit Obligations
shall indemnify the Agents and their respective officers, directors, employees,
agents, attorneys, accountants, consultants and controlling Persons (to the
extent not reimbursed by the Obligors and without limiting the obligation of
any of the Obligors to do so), pro rata in accordance with their respective
Percentage Interests, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time be imposed on,
incurred by or asserted against the Agents or such Persons relating to or
arising out of this Agreement, any other Credit Document, the transactions
contemplated hereby or thereby, or any action taken or omitted by the Agents in
connection with any of the foregoing; provided, however, that the foregoing
shall not extend to actions or omissions which are taken by the Agents with
gross negligence or willful misconduct.
11. Successors and Assigns; Lender Assignments and Participations. Any
reference in this Agreement or any other Credit Document to any of the parties
hereto shall be deemed to include the successors and assigns of such party, and
all covenants and agreements by or on behalf of the Company, the other
Obligors, the Managing Agent, the Collateral Agent or the Lenders that are
contained in this Agreement or any other Credit Document shall bind and inure
to the benefit of their respective successors and assigns; provided, however,
that (a) the Company and its Subsidiaries may not assign their rights or
obligations under this Agreement or any other Credit Document except for
mergers or liquidations permitted by Section 6.11, and (b) the Lenders shall be
not entitled to assign their respective Percentage Interests in the credits
extended hereunder or their Commitments except as set forth below in this
Section 11.
11.1. Assignments by Lenders.
11.1.1. Assignees and Assignment Procedures. Each
Lender may (a) without the consent of the Managing Agent or the
Company if the proposed assignee is already a Lender hereunder or a
Wholly Owned Subsidiary of the same corporate parent of which the
assigning Lender is a Subsidiary, or (b) otherwise with the consents
of the Managing Agent and (so long as no Event of Default exists) the
Company (which
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consents will not be unreasonably withheld), in compliance with
applicable laws in connection with such assignment, assign to one or
more commercial banks or other financial institutions (each, an
"Assignee") all or a portion of its interests, rights and obligations
under this Agreement and the other Credit Documents, including all or
a portion, which need not be pro rata between the Loan and the Letter
of Credit Exposure, of its Commitment, the portion of the Loan and
Letter of Credit Exposure at the time owing to it and the Notes held
by it, but excluding its rights and obligations as a Letter of Credit
Issuer; provided, however, that:
(i) the aggregate amount of the Commitment of
the assigning Lender subject to each such assignment to any
Assignee other than another Lender (determined as of the
date the Assignment and Acceptance with respect to such
assignment is delivered to the Managing Agent) shall be not
less than $5,000,000 and in increments of $1,000,000; and
(ii) the parties to each such assignment
shall execute and deliver to the Managing Agent an
Assignment and Acceptance (the "Assignment and Acceptance")
substantially in the form of Exhibit 11.1.1, together with
the Note subject to such assignment and a processing and
recordation fee of $3,500 payable to the Managing Agent by
the assigning Lender or the Assignee.
Upon acceptance and recording pursuant to Section 11.1.4, from and
after the effective date specified in each Assignment and Acceptance
(which effective date shall be at least five Banking Days after the
execution thereof unless waived by the Managing Agent):
(A) the Assignee shall be a party hereto and, to the
extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender under
this Agreement and
(B) the assigning Lender shall, to the extent provided
in such assignment, be released from its
obligations under this Agreement (and, in the case
of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall
continue to be entitled to the benefits of
Sections 3.2.4, 3.5 and 9, as well as to any fees
accrued for its account hereunder and not yet
paid).
11.1.2. Terms of Assignment and Acceptance. By
executing and delivering an Assignment and Acceptance, the assigning
Lender and Assignee shall be deemed to confirm to and agree with each
other and the other parties hereto as follows:
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(a) other than the representation and warranty that it
is the legal and beneficial owner of the interest being assigned
thereby free and clear of any adverse claim, such assigning Lender
makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement,
any other Credit Document or any other instrument or document
furnished pursuant hereto;
(b) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial
condition of the Company and its Subsidiaries or the performance or
observance by the Company or any of its Subsidiaries of any of its
obligations under this Agreement, any other Credit Document or any
other instrument or document furnished pursuant hereto;
(c) such Assignee confirms that it has received a copy
of this Agreement, together with copies of the most recent financial
statements delivered pursuant to Section 7.2 or Section 6.4 and such
other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance;
(d) such Assignee will independently and without
reliance upon the Managing Agent, such assigning Lender or any other
Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement;
(e) such Assignee appoints and authorizes the Managing
Agent to take such action as Managing Agent on its behalf and to
exercise such powers under this Agreement as are delegated to the
Managing Agent by the terms hereof, together with such powers as are
reasonably incidental thereto; and
(f) such Assignee agrees that it will perform in
accordance with the terms of this Agreement all the obligations which
are required to be performed by it as a Lender.
11.1.3. Register. The Managing Agent shall maintain at
the Boston Office a register (the "Register") for the recordation of
(a) the names and addresses of the Lenders and the Assignees which
assume rights and obligations pursuant to an assignment under Section
11.1.1, (b) the Percentage Interest of each such Lender as set forth
in Exhibit 10.1 and (c) the amount of the Loan and Letter of Credit
Exposure owing to each Lender from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and
the Company, the Agents and the Lenders may treat each Person whose
name is registered therein for all purposes as a party to this
Agreement. The Register shall be available for inspection by the
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Company or any Lender at any reasonable time and from time to time
upon reasonable prior notice.
11.1.4. Acceptance of Assignment and Assumption. Upon
its receipt of a completed Assignment and Acceptance executed by an
assigning Lender and an Assignee together with the Note subject to
such assignment, and the processing and recordation fee referred to in
Section 11.1.1, the Managing Agent shall (a) accept such Assignment
and Acceptance, (b) record the information contained therein in the
Register and (c) give prompt notice thereof to the Company. Within
five Banking Days after receipt of notice, the Company, at its own
expense, shall execute and deliver to the Managing Agent, in exchange
for the surrendered Note, a new Note to the order of such Assignee in
a principal amount equal to the applicable Commitment and Loan assumed
by it pursuant to such Assignment and Acceptance and, if the assigning
Lender has retained a Commitment and Loan, a new Note to the order of
such assigning Lender in a principal amount equal to the applicable
Commitment and Loan retained by it. Such new Note shall be in an
aggregate principal amount equal to the aggregate principal amount of
such surrendered Note, and shall be dated the date of the surrendered
Note which it replaces.
11.1.5. Federal Reserve Bank. Notwithstanding the
foregoing provisions of this Section 11, any Lender may at any time
pledge or assign all or any portion of such Lender's rights under this
Agreement and the other Credit Documents to a Federal Reserve Bank;
provided, however, that no such pledge or assignment shall release
such Lender from such Lender's obligations hereunder or under any
other Credit Document.
11.1.6. Further Assurances. The Company and its
Subsidiaries shall sign such documents and take such other actions
from time to time reasonably requested by an Assignee to enable it to
share in the benefits of the rights created by the Credit Documents.
11.2. Credit Participants. Each Lender may, without the consent
of the Company or the Managing Agent, in compliance with applicable laws in
connection with such participation, sell to one or more commercial banks or
other financial institutions (each a "Credit Participant") participations in
all or a portion of its interests, rights and obligations under this Agreement
and the other Credit Documents (including all or a portion of its Commitment,
the Loan and Letter of Credit Exposure owing to it and the Note held by it);
provided, however, that:
(a) such Lender's obligations under this Agreement
shall remain unchanged;
(b) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations;
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(c) the Credit Participant shall be entitled to the
benefit of the cost protection provisions contained in Sections 3.2.4,
3.5 and 9, but shall not be entitled to receive any greater payment
thereunder than the selling Lender would have been entitled to receive
with respect to the interest so sold if such interest had not been
sold; and
(d) the Company, the Managing Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this
Agreement, and such Lender shall retain the sole right as one of the
Lenders to vote with respect to the enforcement of the obligations of
the Company relating to the Loan and Letter of Credit Exposure and the
approval of any amendment, modification or waiver of any provision of
this Agreement (other than amendments, modifications, consents or
waivers described in clause (b) of the proviso to Section 10.6).
Each Obligor agrees, to the fullest extent permitted by applicable law, that
any Credit Participant and any Lender purchasing a participation from another
Lender pursuant to Section 10.5 may exercise all rights of payment (including
the right of set-off), with respect to its participation as fully as if such
Credit Participant or such Lender were the direct creditor of the Obligors and
a Lender hereunder in the amount of such participation.
11.3. Replacement of Lender. In the event that any Lender or, to
the extent applicable, any Credit Participant (the "Affected Lender"):
(a) fails to perform its obligations to fund any
portion of the Loan or to issue any Letter of Credit on any Closing
Date when required to do so by the terms of the Credit Documents, or
fails to provide its portion of any Eurodollar Pricing Option pursuant
to Section 3.2.1 or on account of a Legal Requirement as contemplated
by Section 3.2.5;
(b) demands payment under the provisions of Section 3.5
in an amount the Company deems materially in excess of the amounts
with respect thereto demanded by the other Lenders;
(c) refuses to consent to a proposed extension of the
Final Maturity Date that is consented to by the other Lenders; or
(d) refuses to consent to a proposed amendment,
modification, waiver or other action requiring consent of the holders
of 100% of the Percentage Interests under Section 10.6(b) that is
consented to by the other Lenders;
then, so long as no Event of Default exists, the Company shall have the right
to seek a replacement lender which is reasonably satisfactory to the Managing
Agent (the "Replacement Lender"). The Replacement Lender shall purchase the
interests of the Affected Lender in the
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Loan, Letters of Credit and its Commitment and shall assume the
obligations of the Affected Lender hereunder and under the other
Credit Documents upon execution by the Replacement Lender of an
Assignment and Acceptance and the tender by it to the Affected Lender
of a purchase price agreed between it and the Affected Lender (or, if
they are unable to agree, a purchase price in the amount of the
Affected Lender's Percentage Interest in the Loan and Letter of Credit
Exposure, or appropriate credit support for contingent amounts
included therein, and all other outstanding Credit Obligations then
owed to the Affected Lender). No assignment fee pursuant to Section
11.1.1(ii) shall be required in connection with such assignment. Such
assignment by the Affected Lender shall be deemed an early termination
of any Eurodollar Pricing Option to the extent of the Affected
Lender's portion thereof, and the Company will pay to the Affected
Lender any resulting amounts due under Section 3.2.4. Upon
consummation of such assignment, the Replacement Lender shall become
party to this Agreement as a signatory hereto and shall have all the
rights and obligations of the Affected Lender under this Agreement and
the other Credit Documents with a Percentage Interest equal to the
Percentage Interest of the Affected Lender, the Affected Lender shall
be released from its obligations hereunder and under the other Credit
Documents, and no further consent or action by any party shall be
required. Upon the consummation of such assignment, the Company, the
Managing Agent and the Affected Lender shall make appropriate
arrangements so that a new Revolving Note is issued to the Replacement
Lender if it has acquired a portion of the Revolving Loan. The
Company and the Guarantors shall sign such documents and take such
other actions reasonably requested by the Replacement Lender to enable
it to share in the benefits of the rights created by the Credit
Documents. Until the consummation of an assignment in accordance with
the foregoing provisions of this Section 11.3, the Company shall
continue to pay to the Affected Lender any Credit Obligations as they
become due and payable.
12. Confidentiality. Each Lender will make no disclosure of confidential
information furnished to it by the Company or any of its Subsidiaries unless
such information shall have become public, except:
(a) in connection with operations under or the
enforcement of this Agreement or any other Credit Document to Persons
who have a reasonable need to be furnished such confidential
information and who agree to comply with the restrictions contained in
this Section 12 with respect to such information;
(b) pursuant to any statutory or regulatory requirement
or any mandatory court order, subpoena or other legal process;
(c) to any parent or corporate Affiliate of such Lender
or to any Credit Participant, proposed Credit Participant or proposed
Assignee; provided, however, that any such Person shall agree to
comply with the restrictions set forth in this Section 12 with respect
to such information;
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(d) to its independent counsel, auditors and other
professional advisors with an instruction to such Person to keep such
information confidential; and
(e) with the prior written consent of the Company, to
any other Person.
13. Foreign Lenders. If any Lender is not incorporated or organized under
the laws of the United States of America or a state thereof, such Lender shall
deliver to the Company and the Managing Agent the following:
(a) Two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224 or successor form, as the case may
be, certifying in each case that such Person is entitled to receive
payments under this Agreement, the Notes and reimbursement obligations
under Letters of Credit payable to it, without deduction or
withholding of any United States federal income taxes; and
(b) A duly completed Internal Revenue Service Form W-8
or W-9 or successor form, as the case may be, to establish an
exemption from United States backup withholding tax.
Each such Lender that delivers to the Company and the Managing Agent a
Form 1001 or 4224 and Form W-8 or W-9 pursuant to this Section 13 further
undertakes to deliver to the Company and the Managing Agent two further copies
of Form 1001 or 4224 and Form W-8 or W-9, or successor applicable form, or
other manner of certification, as the case may be, on or before the date that
any such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form previously delivered by it to the
Company and the Managing Agent. Such Forms 1001 or 4224 shall certify that
such Lender is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes. The
foregoing documents need not be delivered in the event any change in treaty,
law or regulation or official interpretation thereof has occurred which renders
all such forms inapplicable or which would prevent such Lender from delivering
any such form with respect to it, or such Lender advises the Company that it is
not capable of receiving payments without any deduction or withholding of
United States federal income tax and, in the case of a Form W-8 or W-9,
establishing an exemption from United States backup withholding tax. Until
such time as the Company and the Managing Agent have received such forms
indicating that payments hereunder are not subject to United States withholding
tax or are subject to such tax at a rate reduced by an applicable tax treaty,
the Company shall withhold taxes from such payments at the applicable statutory
rate without regard to Section 3.5.
14. Notices. Except as otherwise specified in this Agreement or any other
Credit Document, any notice required to be given pursuant to this Agreement or
any other Credit Document shall be given in writing. Any notice, consent,
approval, demand or other communication in connection with this Agreement or
any other Credit Document shall be deemed to be given if given in writing
(including telex, telecopy or similar teletransmission)
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addressed as provided below (or to the addressee at such other address as the
addressee shall have specified by notice actually received by the addressor),
and if either (a) actually delivered in fully legible form to such address
(evidenced in the case of a telex by receipt of the correct answerback) or (b)
in the case of a letter, unless actual receipt of the notice is required by any
Credit Document five days shall have elapsed after the same shall have been
deposited in the United States mails, with first-class postage prepaid and
registered or certified.
If to the Company or any of its Subsidiaries, to it at its address set
forth in Exhibit 7.1 (as supplemented pursuant to Sections 6.4.1 and 6.4.2), to
the attention of the chief financial officer.
If to any Lender or any Agent, to it at its address set forth on the
signature pages of this Agreement or in the Register, with a copy to the
Managing Agent.
15. Course of Dealing; Amendments and Waivers. No course of dealing
between any Lender or the Managing Agent, on one hand, and the Company or any
other Obligor, on the other hand, shall operate as a waiver of any of the
Lenders' or the Managing Agent's rights under this Agreement or any other
Credit Document or with respect to the Credit Obligations. Each of the Company
and the Guarantors acknowledges that if the Lenders or the Managing Agent,
without being required to do so by this Agreement or any other Credit Document,
give any notice or information to, or obtain any consent from, the Company or
any other Obligor, the Lenders and the Managing Agent shall not by implication
have amended, waived or modified any provision of this Agreement or any other
Credit Document, or created any duty to give any such notice or information or
to obtain any such consent on any future occasion. No delay or omission on the
part of any Lender or the Managing Agent in exercising any right under this
Agreement or any other Credit Document or with respect to the Credit
Obligations shall operate as a waiver of such right or any other right
hereunder or thereunder. A waiver on any one occasion shall not be construed
as a bar to or waiver of any right or remedy on any future occasion. No
waiver, consent or amendment with respect to this Agreement or any other Credit
Document shall be binding unless it is in writing and signed by the Managing
Agent or the Required Lenders.
16. Defeasance. When all Credit Obligations have been paid, performed and
reasonably determined by the Lenders to have been indefeasibly discharged in
full, and if at the time no Lender continues to be committed to extend any
credit to the Company hereunder or under any other Credit Document, this
Agreement and the other Credit Documents shall terminate and, at the Company's
written request, accompanied by such certificates and other items as the
Managing Agent shall reasonably deem necessary, the Credit Security shall
revert to the Obligors and the right, title and interest of the Lenders therein
shall terminate. Thereupon, on the Obligors' demand and at their cost and
expense, the Managing Agent and the Collateral Agent shall execute proper
instruments, acknowledging satisfaction of and discharging this Agreement and
the other Credit Documents, and shall redeliver to the Obligors any Credit
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Security then in its possession; provided, however, that Sections 3.2.4, 3.5,
9, 10.8.7, 10.11, 12, 16 and 19 shall survive the termination of this
Agreement.
17. Venue; Service of Process. Each of the Company and the other Obligors:
(a) Irrevocably submits to the nonexclusive
jurisdiction of the state courts of The Commonwealth of Massachusetts
and to the nonexclusive jurisdiction of the United States District
Court for the District of Massachusetts for the purpose of any suit,
action or other proceeding arising out of or based upon this Agreement
or any other Credit Document or the subject matter hereof or thereof.
(b) Waives to the extent not prohibited by applicable
law that cannot be waived, and agrees not to assert, by way of motion,
as a defense or otherwise, in any such proceeding brought in any of
the above-named courts, any claim that it is not subject personally to
the jurisdiction of such court, that its property is exempt or immune
from attachment or execution, that such proceeding is brought in an
inconvenient forum, that the venue of such proceeding is improper, or
that this Agreement or any other Credit Document, or the subject
matter hereof or thereof, may not be enforced in or by such court.
Each of the Company and the other Obligors consents to service of process in
any such proceeding in any manner at the time permitted by Chapter 223A of the
General Laws of The Commonwealth of Massachusetts and agrees that service of
process by registered or certified mail, return receipt requested, at its
address specified in or pursuant to Section 14 is reasonably calculated to give
actual notice.
18. Maximum Interest.
18.1. No Interest in Excess of Maximum Interest. It is the
intention of the parties hereto to conform strictly to applicable usury laws.
Accordingly, notwithstanding any provision to the contrary in this Agreement,
the Notes, the other Credit Documents or in any of the documents securing or
guarantying payment hereof or otherwise relating hereto, or in any
communication or writing by the Managing Agent, the Lenders, or any of them, or
any other Person, relating to the Loan, whether now or hereafter arising, in no
event or contingency shall this Agreement or such instruments or documents,
communications or writings permit or require the payment of any sums which
constitute interest under applicable law, or permit or require the charging,
taking, reserving or receiving by the Managing Agent, the Lenders, or any of
them, or any other Person, of any sums which constitute interest under
applicable law, in excess of the maximum amount permitted by such law. If any
excess interest otherwise would be deemed to be contracted for, charged, taken,
reserved or received under this Agreement, the Notes, the other Credit
Documents or under the terms of any of the documents, communications or writing
by the Agent, the Lenders or any of them, or any other Person, securing payment
thereof or otherwise relating thereto, or in the event the maturity of
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the Notes is accelerated in whole or in part, or in the event all or part of
the principal or interest on the Notes shall be prepaid, then it is agreed as
follows: (i) any excess or unearned interest contracted for, charged, taken,
reserved, or received, shall be deemed a mistake and canceled automatically,
without the necessity of any other communication or writing by the Agent, the
Lenders, or any of them, or any other Person, (ii) any excess or unearned
interest which is paid shall be credited to the unpaid principal amount hereof
or, to the extent the unpaid principal amount hereof shall have been or would
be paid in full, refunded to the Company or the other Obligors, as the case may
be, at the holder's option and (iii) this Agreement, the Notes, the other
Credit Documents or document securing payment thereof or otherwise relating
thereto, communication or writing, as the case may be, shall be reformed
automatically to permit only the payment, charging, taking, reserving or
receiving of accrued unpaid interest at the maximum lawful rate. Without
limiting the foregoing, in determining the maximum amount of lawful interest
under this Agreement, the Notes, the other Credit Documents or under such other
documents or instruments which are made for the purpose of determining such
rate, all interest at any time contracted for, charged, taken, reserved or
received from the Company, the other Obligors or otherwise by the holder or
holders thereof in connection with the Notes, the other Credit Documents or
this Agreement, shall be amortized, prorated, allocated and spread, to the full
extent permitted by applicable law, during the period of the full term of the
Loan, taking into account all renewal and extension periods.
18.2. Incorporation by Reference. The provisions set forth in
this Section 18 shall be deemed to be incorporated into each of the documents
executed in connection with this Agreement, the Notes, the other Credit
Documents or under the terms of any of the documents securing payment thereof
or otherwise relating thereto, and in every communication and writing relating
to this Agreement, the Notes, the other Credit Documents or under the terms of
any of the documents securing payment thereof or otherwise relating thereto,
now or hereafter arising, whether or not the same expressly references the
preceding paragraph, and may and all figures set forth therein shall, for the
purpose of determining the extent of the indebtedness set forth or asserted
therein, or otherwise contracted for, charged, taken, reserved or received, as
applicable, be recomputed automatically by the Company or the other Obligors,
or by any court with proper jurisdiction considering the same, or both, as
necessary to give effect to the adjustments and credits required and agreed
upon therein and the other agreements set forth therein, without the necessity
of any other communication or writing.
18.3. Changes in Usury Laws. If the applicable state or federal
usury law is amended after the date hereof to permit a greater rate of interest
to be contracted for, charged, taken, reserved or received under this
Agreement, the Notes, the other Credit Documents or under the terms of any of
the documents securing payment thereof otherwise relating thereto, than is
permitted under applicable state or federal law as of the date hereof, then the
maximum lawful rate of interest applicable to this Agreement, the Notes, the
other Credit Documents or under the terms of any of the documents securing
payment thereof otherwise relating thereto, shall be increased to the maximum
rate of interest allowed by such subsequent law or
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amendment, to be effective as of the effective date of such law or amendment,
and such additional charges that may become owing by reason of such increase
shall be payable on demand.
19. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
THAT CANNOT BE WAIVED, EACH OF THE COMPANY, THE OTHER OBLIGORS, THE AGENTS AND
THE LENDERS WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE, CLAIM OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR ANY
OTHER CREDIT DOCUMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY CREDIT
OBLIGATION OR IN ANY WAY CONNECTED WITH THE DEALINGS OF THE LENDERS, THE
AGENTS, THE COMPANY OR ANY OTHER OBLIGOR IN CONNECTION WITH ANY OF THE ABOVE,
IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT,
TORT OR OTHERWISE. Each of the Company and the other Obligors acknowledges
that it has been informed by the Managing Agent that the provisions of this
Section 19 constitute a material inducement upon which each of the Lenders has
relied and will rely in entering into this Agreement and any other Credit
Document, and that it has reviewed the provisions of this Section 19 with its
counsel. Any Lender, any Agent, the Company or any other Obligor may file an
original counterpart or a copy of this Section 19 with any court as written
evidence of the consent of the Company, the other Obligors, such Agent and the
Lenders to the waiver of their rights to trial by jury.
20. DTPA WAIVER. TO THE MAXIMUM EXTENT NOT PROHIBITED BY APPLICABLE LAW
FROM TIME TO TIME IN EFFECT, THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY,
INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES THE PROVISIONS OF THE
TEXAS DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT (TEXAS BUSINESS AND
COMMERCE CODE, CHAPTER 17, SECTIONS 17.41-17.63).
21. General. All covenants, agreements, representations and warranties
made in this Agreement or any other Credit Document or in certificates
delivered pursuant hereto or thereto shall be deemed to have been relied on by
each Lender, notwithstanding any investigation made by any Lender on its
behalf, and shall survive the execution and delivery to the Lenders hereof and
thereof. The invalidity or unenforceability of any provision hereof shall not
affect the validity or enforceability of any other provision hereof. The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof. This Agreement and the other
Credit Documents constitute the entire understanding of the parties with
respect to the subject matter hereof and thereof and supersede all prior and
contemporaneous understandings and agreements, whether written or oral. This
Agreement may be executed in any number of counterparts which together shall
constitute one instrument. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE
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<PAGE> 107
WITH THE LAWS (OTHER THAN THE CONFLICT OF LAWS RULES) OF THE COMMONWEALTH OF
MASSACHUSETTS.
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<PAGE> 108
Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first above written.
ATC TOWER CORP.
GRITZ TOWER MAINTENANCE COMPANY
WESTARK TOWERS, INCORPORATED
By /s/ Marty L. Jimmerson
--------------------------------
As Vice President of each of the
foregoing corporations
ATC-PRIME I, L.L.C.
ATC-PRIME II, L.L.C.
By /s/ Fred R. Lummis
--------------------------------
As President of each of the
foregoing companies
THE FIRST NATIONAL BANK OF BOSTON
By /s/ Reginald T. Dawson
--------------------------------
Title: Director
The First National Bank of Boston
Media and Communications
Division
100 Federal Street
Boston, Massachusetts 02110
Telecopy: (617) 434-3401
Telex: 940581
<PAGE> 109
WELLS FARGO BANK (TEXAS)
NATIONAL ASSOCIATION
By /s/ Mitchell Schulman
--------------------------------
Title: Vice President
Wells Fargo Bank (Texas)
National Association
1000 Louisiana Street
Houston, Texas 77002
Telecopy: (713) 599-8752
<PAGE> 1
EXHIBIT 10.4
Conformed Copy
================================================================================
ATC TOWER CORP.
SECURITY AGREEMENT
Dated as of October 11, 1996
THE FIRST NATIONAL BANK OF BOSTON, as Managing Agent
WELLS FARGO BANK (TEXAS) NATIONAL ASSOCIATION, as Collateral Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. Amendment and Restatement; Credit Agreement; Definitions; Certain Rules
of Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1. Credit Security . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1.1. Tangible Personal Property . . . . . . . . . . . . . . 2
2.1.2. Rights to Payment of Money . . . . . . . . . . . . . . 3
2.1.3. Intangibles . . . . . . . . . . . . . . . . . . . . . 3
2.1.4. Pledged Stock . . . . . . . . . . . . . . . . . . . . 3
2.1.5. Pledged Rights . . . . . . . . . . . . . . . . . . . . 3
2.1.6. Pledged Indebtedness . . . . . . . . . . . . . . . . . 3
2.1.7. Chattel Paper, Instruments and Documents . . . . . . . 3
2.1.8. Leases . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1.9. Deposit Accounts . . . . . . . . . . . . . . . . . . . 4
2.1.10. Collateral . . . . . . . . . . . . . . . . . . . . . 4
2.1.11. Books and Records . . . . . . . . . . . . . . . . . . 4
2.1.12. Insurance . . . . . . . . . . . . . . . . . . . . . . 4
2.1.13. Designated Real Property. . . . . . . . . . . . . . . 4
2.1.14. All Other Property . . . . . . . . . . . . . . . . . 4
2.1.15. Proceeds and Products . . . . . . . . . . . . . . . . 4
2.1.16. Excluded Property . . . . . . . . . . . . . . . . . . 4
2.2. Additional Credit Security . . . . . . . . . . . . . . . . . . 5
2.3. Representations, Warranties and Covenants with Respect to Credit
Security . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3.1. Pledged Stock . . . . . . . . . . . . . . . . . . . . 5
2.3.2. Accounts and Pledged Indebtedness . . . . . . . . . . 6
2.3.3. Government Contract Receivables . . . . . . . . . . . 6
2.3.4. No Liens or Restrictions on Transfer or Change of Control7
2.3.5. Location of Credit Security . . . . . . . . . . . . . 7
2.3.6. Trade Names. . . . . . . . . . . . . . . . . . . . . . 7
2.3.7. Insurance . . . . . . . . . . . . . . . . . . . . . . 7
2.3.8. Modifications to Credit Security . . . . . . . . . . . 8
2.3.9. Delivery of Documents. . . . . . . . . . . . . . . . . 8
2.4. Administration of Credit Security . . . . . . . . . . . . . . . 9
2.4.1. Use of Credit Security . . . . . . . . . . . . . . . . 9
2.4.2. Deposits; Accounts . . . . . . . . . . . . . . . . . . 9
3. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
<PAGE> 3
EXHIBITS
2.3 - Restrictions on Change of Control; Restrictions on Creation of
Liens; Obligors; Office and Principal Place of Business;
Permitted Jurisdiction for Personal Tangible Property; Trade
Names; Depository Institutions
2.3.3 - Government Contract Collateral Assignment; Notice of Assignment
-ii-
<PAGE> 4
ATC TOWER CORP.
SECURITY AGREEMENT
This Agreement, dated as of October 11, 1996, is among ATC Tower Corp.,
a Delaware corporation (the "Company"), the Subsidiaries (as defined below) of
the Company party hereto, The First National Bank of Boston, as managing agent
(the "Managing Agent") for itself and the other Lenders (as defined below)
under the Credit Agreement (as defined below), and Wells Fargo Bank (Texas)
National Association, as collateral agent (the "Collateral Agent") for itself
and such other Lenders. The parties agree as follows:
1. Amendment and Restatement; Credit Agreement; Definitions; Certain Rules
of Construction. This Agreement amends and restates the Security Agreement
dated as of October 12, 1994, as amended and restated as of December 28, 1995,
as in effect on the date hereof immediately prior to giving effect to this
Agreement, among the Company (as successor to Bowen-Smith Corp.), Wells Fargo
Bank (Texas) National Association, (as successor to First Interstate Bank of
Texas, N.A.), as agent, and certain other lenders. Reference is made to the
Credit Agreement dated as of the date hereof, as from time to time in effect
(the "Credit Agreement"), among the Company, the Subsidiaries of the Company
from time to time party thereto, the Lenders and the Agents. As a condition to
providing loans to the Company under the Credit Agreement, the Lenders are
requiring the Obligors to grant a security interest in the Credit Security (as
defined below) to secure the payment of the Credit Obligations (as defined
below). Capitalized terms defined in the Credit Agreement and not otherwise
defined herein are used herein with the meanings so defined. Certain other
capitalized terms are used in this Agreement as specifically defined below in
this Section 1. Except as the context otherwise explicitly requires, (a) the
capitalized term "Section" refers to sections of this Agreement, (b) the
capitalized term "Exhibit" refers to exhibits to this Agreement, (c) references
to a particular Section shall include all subsections thereof, (d) the word
"including" shall be construed as "including without limitation", (e) terms
defined in the UCC and not otherwise defined herein have the meaning provided
under the UCC, (f) references to a particular statute or regulation include all
rules and regulations thereunder and any successor statute, regulation or
rules, in each case as from time to time in effect and (g) references to a
particular Person include such Person's successors and assigns to the extent
not prohibited by this Agreement and the other Credit Documents. References to
"the date hereof" mean the date first set forth above.
1.1. "Accounts" is defined in Section 2.1.2.
1.2. "Credit Security" is defined in Section 2.1.
<PAGE> 5
1.3. "FACA" means the Federal Assignment of Claims Act, which
is set forth in 31 U.S.C. Section 3727 and 41 U.S.C. Section 15.
1.4. "FCC License" means any license, authorization or permit
issued by the FCC to any Obligor.
1.5. "Government Receivables" means any Accounts as to which
the United States of America or any agency or department thereof is the
obligor.
1.6. "Pledged Indebtedness" is defined in Section 2.1.6.
1.7. "Pledged Rights" is defined in Section 2.1.5.
1.8. "Pledged Securities" means the Pledged Stock, the Pledged
Rights and the Pledged Indebtedness, collectively.
1.9. "Pledged Stock" is defined in Section 2.1.4.
1.10. "UCC" means the Uniform Commercial Code as in effect in
Massachusetts on the date hereof; provided, however, that with respect to the
perfection of the Managing Agent's Lien in the Credit Security and the effect
of nonperfection thereof, the term "UCC" means the Uniform Commercial Code as
in effect in any jurisdiction the laws of which are made applicable by section
9-103 of the Uniform Commercial Code as in effect in Massachusetts.
2. Security.
2.1. Credit Security. As security for the payment and
performance of the Credit Obligations, each Obligor mortgages, pledges and
collaterally grants and assigns to the Managing Agent for the benefit of the
Lenders and the holders from time to time of any Credit Obligation, and creates
a security interest in favor of the Managing Agent for the benefit of the
Lenders and such holders in, all of such Obligor's right, title and interest in
and to (but none of its obligations or liabilities with respect to) the items
and types of present and future property described in Sections 2.1.1 through
2.1.15 (subject, however, to Section 2.1.16), whether now owned or hereafter
acquired, all of which shall be included in the term "Credit Security":
2.1.1. Tangible Personal Property. All goods,
machinery, equipment, inventory and all other tangible
personal property of any nature whatsoever, wherever
located, including Towers, maintenance and repair
materials, raw materials, work in process, finished parts
and products, supplies, spare parts, replacement parts,
merchandise for resale, computers, tapes, disks and
computer equipment.
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<PAGE> 6
2.1.2. Rights to Payment of Money. All rights
to receive the payment of money, including accounts and
receivables, rights to receive the payment of money under
contracts, franchises, licenses, permits, subscriptions or
other agreements (whether or not earned by performance),
and rights to receive payments from any other source. All
such rights (other than Financing Debt) are collectively
referred to as "Accounts".
2.1.3. Intangibles. All of the following (to
the extent not included in Section 2.1.2): (a) contracts,
franchises, licenses, permits, subscriptions and other
agreements and all other rights thereunder; (b) rights
granted by others which permit such Obligor to sell or
market items of personal property; (c) United States and
foreign common law and statutory copyrights and rights in
literary property and rights and licenses thereunder; (d)
trade names, United States and foreign trademarks, service
marks, any registrations thereof and any related good
will; (e) United States and foreign patents and patent
applications; (f) computer software, designs, models,
know-how, trade secrets, rights in proprietary
information, formulas, customer lists, backlog, orders,
subscriptions, royalties, catalogues, sales material,
documents, good will, inventions and processes; (g)
judgments, causes in action and claims, whether or not
inchoate; and (h) all other general intangibles and
intangible property and all rights thereunder.
2.1.4. Pledged Stock. (a) All shares of capital
stock or other evidence of beneficial interest in any
corporation, business trust or limited liability company,
(b) all limited partnership interests in any limited
partnership, (c) all general partnership interests in any
general partnership, (d) all joint venture interests in
any joint venture and (e) all options, warrants and
similar rights to acquire such capital stock or such
interests. All such capital stock, interests, options,
warrants and other rights are collectively referred to as
the "Pledged Stock".
2.1.5. Pledged Rights. All rights to receive
profits or surplus of, or other Distributions (including
income, return of capital and liquidating distributions)
from, any partnership, joint venture or limited liability
company, including any distributions by any such Person to
partners, joint venturers or members. All such rights are
collectively referred to as the "Pledged Rights".
2.1.6. Pledged Indebtedness. All Financing Debt
from time to time owing to such Obligor from any Person.
All such Financing Debt is referred to as the "Pledged
Indebtedness".
2.1.7. Chattel Paper, Instruments and Documents.
All chattel paper, non-negotiable instruments, negotiable
instruments and documents.
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<PAGE> 7
2.1.8. Leases. All leases of personal property,
whether such Obligor is the lessor or the lessee
thereunder.
2.1.9. Deposit Accounts. All general or special
deposit accounts, including any demand, time, savings,
passbook or similar account maintained by such Obligor
with any bank, trust company, savings and loan
association, credit union or similar organization, and all
money, cash and cash equivalents of such Obligor, whether
or not deposited in any such deposit account.
2.1.10. Collateral. All collateral granted by
third parties to, or held by, such Obligor with respect to
the Accounts, Pledged Securities, chattel paper,
instruments, leases and other items of Credit Security.
2.1.11. Books and Records. All books and
records, including books of account and ledgers of every
kind and nature, all electronically recorded data
(including all computer programs, disks, tapes, electronic
data processing media and software used in connection with
maintaining such Obligor's books and records), all files
and correspondence and all containers for the foregoing.
2.1.12. Insurance. All insurance policies which
insure against any loss or damage to any other Credit
Security or which are otherwise owned by such Obligor.
2.1.13. Designated Real Property. All
Designated Real Property and immovable property and
fixtures thereon, leasehold interests constituting
Designated Real Property and related easements wherever
located, together with any and all estates and interests
of such Obligor therein, including lands, buildings,
stores, manufacturing facilities and other structures
erected on such property, fixed plant, fixed equipment and
all permits, rights, licenses, benefits and other
interests of any kind or nature whatsoever in respect of
such real and immovable property.
2.1.14. All Other Property. All other property,
assets and items of value of every kind and nature,
tangible or intangible, absolute or contingent, legal or
equitable.
2.1.15. Proceeds and Products. All proceeds,
including insurance proceeds, and products of the items of
Credit Security described or referred to in Sections 2.1.1
through 2.1.14 and, to the extent not included in the
foregoing, all Distributions with respect to the Pledged
Securities.
2.1.16. Excluded Property. Notwithstanding
Sections 2.1.1 through 2.1.15, the payment and performance
of the Credit Obligations shall not be secured by:
-4-
<PAGE> 8
(a) any rights arising under, and any property, tangible or
intangible, acquired under, any agreement which validly prohibits the
creation by such Obligor of a security interest in such rights or
property;
(b) any rights or property (including any FCC License) to the
extent that any valid and enforceable law or regulation applicable to
such rights or property prohibits the creation of a security interest
therein; provided, however, that, to the extent permitted by applicable
law, this Section 2.16(b) shall not apply to any rights incident or
appurtenant to any FCC License, including the right to receive all
proceeds derived or arising from or in connection with the assignment or
transfer of such FCC License);
(c) more than 66% of the outstanding stock or other equity in any
Subsidiary organized under the laws of, and operating solely in, a
country other than the United States of America;
(d) the items described in Section 2.2 (but only in the event and
to the extent the Managing Agent has not specified that such items be
included in the Credit Security pursuant thereto); or
(e) motor vehicles.
In addition, in the event any Obligor disposes of assets to third
parties in a transaction permitted by section 6.11 of the Credit Agreement,
such assets, but not the proceeds or products thereof, shall be released from
the Lien of the Credit Security.
2.2. Additional Credit Security. As additional Credit Security, each
Obligor covenants that it will mortgage, pledge and collaterally grant and
assign to the Managing Agent for the benefit of the Lenders and the holders
from time to time of any Credit Obligation, and will create a security interest
in favor of the Managing Agent for the benefit of the Lenders and such holders
in, all of its right, title and interest in and to (but none of its obligations
with respect to) present or future aircraft as the Managing Agent may from time
to time specify by notice to such Obligor, whether now owned or hereafter
acquired, and the proceeds and products thereof, except to the extent
consisting of rights or property of the types referred to in Section 2.1.16(a)
through (c), subject only to Liens permitted by Section 2.3.4, all of which
shall thereupon be included in the term "Credit Security".
2.3. Representations, Warranties and Covenants with Respect to Credit
Security. Each Obligor represents, warrants and covenants that:
2.3.1. Pledged Stock. All shares of capital stock, limited
partnership interests and similar securities included in the Pledged
Stock are and shall be at all times duly authorized, validly issued,
fully paid and (in the case of capital stock and limited partnership
interests) nonassessable. Each Obligor will deliver to the Managing
Agent
-5-
<PAGE> 9
certificates representing the Pledged Stock, registered,
if the Managing Agent so requests, in the name of the
Managing Agent or its nominee, as pledgee, or accompanied
by a stock transfer power executed in blank and, if the
Managing Agent so requests, with the signature guaranteed,
all in form and manner satisfactory to the Managing Agent.
Pledged Stock that is not evidenced by a certificate will
be registered in the Managing Agent's name as pledgee on
the issuer's records, all in form and substance
satisfactory to the Managing Agent. The Managing Agent
may at any time transfer into its name or the name of its
nominee, as pledgee, any Pledged Stock. In the event the
Pledged Stock includes any Margin Stock, the Obligors will
furnish to the Lenders Federal Reserve Form U-1 and take
such other action as the Managing Agent may request to
ensure compliance with applicable laws.
2.3.2. Accounts and Pledged Indebtedness. All
Accounts and Pledged Indebtedness owed by an Affiliate of
any Obligor shall be on open account and shall not be
evidenced by any note or other instrument; provided,
however, that all Pledged Indebtedness owed by an
Affiliate of any Obligor shall, if the Managing Agent
requests, be evidenced by a promissory note, which note
shall be delivered to the Managing Agent after having been
endorsed in blank. Each Obligor will, immediately upon
the receipt thereof, deliver to the Managing Agent any
promissory note or similar instrument representing any
Account or Pledged Indebtedness, after having endorsed
such promissory note or instrument in blank.
2.3.3. Government Contract Receivables. Any
Obligor's right, title and interest in any Government
Receivables shall constitute Accounts for all purposes
hereunder; provided, however, that nothing in this
Agreement shall obligate any Obligor to cause the grant of
security in Government Receivables hereunder to comply
with FACA except if requested by the Managing Agent after
an Event of Default shall have occurred or as set forth
below. If at any time all Government Receivables
constitute more than 15% of total Accounts, the Company
shall give prompt notice thereof to the Managing Agent
and, if requested by the Managing Agent, take such actions
required to comply with FACA as necessary to ensure that
not more than 15% of the total Accounts consist of
Government Receivables as to which there has been no
compliance with FACA. Such actions will include
furnishing to the Agent a list of all contracts resulting
in Government Receivables, providing the name and address
for each of the government agency, the contracting officer
or head of such officer's department or agency, any
sureties or bonds relating to such contract and any
disbursing officer designated in such contract and
executing and delivering to the Managing Agent a separate
collateral assignment in substantially the form of Exhibit
2.3.3 for each such contract. No contracts of any Obligor
with government contractors provide that payments to such
Obligor are contingent or dependent upon the government
contractor receiving payment from the federal government.
-6-
<PAGE> 10
2.3.4. No Liens or Restrictions on Transfer or
Change of Control. All Credit Security shall be free and
clear of any Liens and restrictions on the transfer
thereof, including contractual provisions which prohibit
the assignment of rights under contracts, except for Liens
permitted by section 6.8 of the Credit Agreement. Without
limiting the generality of the foregoing, each Obligor
will exclude from contracts to which it becomes a party
after the date hereof provisions that would prevent such
Obligor from creating a security interest in such contract
or any property acquired thereunder as contemplated
hereby. None of the Pledged Stock is subject to any
option to purchase or similar rights of any Person.
Except (a) as set forth on Exhibit 2.3 or (b) with the
written consent of the Managing Agent, no Obligor is, and
none of them will be, party to or bound by any agreement,
instrument, deed or lease that restricts the change of
control or ownership, or the creation of a security
interest in the ownership, of the Company or any of its
Subsidiaries.
2.3.5. Location of Credit Security. Each
Obligor shall at all times keep its records concerning the
Accounts at its chief executive office and principal place
of business, which office and place of business shall be
set forth in Exhibit 2.3 or, so long as such Obligor shall
have taken all steps reasonably necessary to perfect the
Lenders' security interest in the Credit Security with
respect to such new address, at such other address as such
Obligor may specify by notice actually received by the
Managing Agent not less than 10 Banking Days prior to such
change of address. No Obligor shall at any time keep
tangible personal property of the type referred to in
Section 2.1.1 in any jurisdiction other than the
jurisdictions specified in Exhibit 2.3 or, so long as such
Obligor shall have taken all steps reasonably necessary to
perfect the Lenders' security interest in the Credit
Security with respect to such other jurisdiction, other
jurisdictions as such Obligor may specify by notice
actually received by the Managing Agent not less than 10
days prior to moving such tangible personal property into
such other jurisdiction.
2.3.6. Trade Names. No Obligor will adopt or do
business under any name other than its name or names
designated in Exhibit 2.3 or any other name specified by
notice actually received by the Managing Agent not less
than 10 Banking Days prior to the conduct of business
under such additional name. Since its incorporation, no
Obligor has changed its corporate name or adopted or
conducted business under any trade name other than a name
specified on Exhibit 2.3.
2.3.7. Insurance. Each insurance policy
included in, or insuring against loss or damage to, the
Credit Security shall name the Managing Agent as
additional insured party or as loss payee. No such
insurance policy shall be cancelable or subject to
termination or reduction in amount or scope of coverage
until after at least 15 days' prior written notice from
the insurer to the Managing Agent. At least 10 days prior
to the expiration of any such insurance policy for any
reason, each Obligor shall furnish the Managing Agent with
a renewal or replacement policy and evidence of payment of
-7-
<PAGE> 11
the premiums therefor when due. Each Obligor grants to
the Managing Agent full power and authority as its
attorney-in-fact, effective upon notice to such Obligor
after the occurrence of an Event of Default, to obtain,
cancel, transfer, adjust and settle any such insurance
policy and to endorse any drafts thereon. Any amounts
that the Managing Agent receives under any such policy
(including return of unearned premiums) insuring against
loss or damage to the Credit Security prior to the
occurrence of an Event of Default shall be delivered to
the Obligors for the replacement, restoration and
maintenance of the Credit Security. Any such amounts that
the Managing Agent receives after the occurrence of an
Event of Default shall, at the Managing Agent's option, be
applied to payment of the Credit Obligations or to the
replacement, restoration and maintenance of the Credit
Security. If any Obligor fails to provide insurance as
required by this Agreement, the Managing Agent may, at its
option, purchase such insurance, and such Obligor will on
demand pay to the Managing Agent the amount of any
payments made by the Managing Agent or the Lenders for
such purpose, together with interest on the amounts so
disbursed from five Banking Days after the date demanded
until payment in full thereof at the Overdue Reimbursement
Rate.
2.3.8. Modifications to Credit Security. Except
with the prior written consent of the Managing Agent, no
Obligor shall amend or modify, or waive any of its rights
under or with respect to, any material Accounts, general
intangibles, Pledged Securities or leases if the effect of
such amendment, modification or waiver would be to reduce
the amount of any such items or to extend the time of
payment thereof, to waive any default by any other party
thereto, or to waive or impair any remedies of the
Obligors or the Lenders under or with respect to any such
Accounts, general intangibles, Pledged Securities or
leases, in each case other than consistent with past
practice in the ordinary course of business and on an
arm's-length basis. Each Obligor will promptly give the
Managing Agent written notice of any request by any Person
for any material credit or adjustment with respect to any
Account, general intangible, Pledged Securities or leases.
2.3.9. Delivery of Documents. Upon the Managing
Agent's request, each Obligor shall deliver to the
Managing Agent, promptly upon such Obligor's receipt
thereof, copies of any agreements, instruments, documents
or invoices comprising or relating to the Credit Security.
Pending such request, such Obligor shall keep such items
at its chief executive office and principal place of
business (as specified pursuant to Section 2.3.5).
2.3.10. Perfection of Credit Security. Upon the
Managing Agent's request from time to time, the Obligors
will execute and deliver, and file and record in the
proper filing and recording places, all such instruments,
including financing statements, collateral assignments of
copyrights, trademarks and patents, mortgages or deeds of
trust and notations on certificates of title, and will
take all such other action, as the
-8-
<PAGE> 12
Managing Agent deems advisable for confirming to it the
Credit Security or to carry out any other purpose of this
Agreement or any other Credit Document; provided, however,
that the Obligors will not be required to grant security
interests to the Managing Agent in any real property (or
leases thereof) other than Designated Real Property.
2.4. Administration of Credit Security. The Credit
Security shall be administered as follows, and if an Event of Default
shall have occurred, Section 2.5 shall also apply.
2.4.1. Use of Credit Security. Until the
Managing Agent provides written notice to the contrary,
each Obligor may use, commingle and dispose of any part of
the Credit Security in the ordinary course of its
business, all subject to section 6.11 of the Credit
Agreement.
2.4.2. Deposits; Accounts. Each Obligor shall
keep all its bank and deposit accounts only with the
Managing Agent, other Lenders or the financial
institutions listed on Exhibit 2.3. Upon the occurrence
of an Event of Default and to the extent specified by
prior written notice from the Managing Agent, all sums
collected or received and all property recovered or
possessed by any Obligor in connection with any Credit
Security shall be received and held by such Obligor in
trust for and on the Lenders' behalf, shall be segregated
from the assets and funds of such Obligor, and shall be
delivered to the Managing Agent for the benefit of the
Lenders. Without limiting the foregoing, upon the
occurrence of an Event of Default and to the extent
specified by written notice from the Managing Agent, each
Obligor shall institute depositary collateral accounts,
lock-box receipts and similar credit procedures, providing
for the direct receipt of payment on Accounts at a
separate address, the segregation of such proceeds for
direct payment to the Managing Agent and appropriate
notices to Account debtors. Upon the occurrence of an
Event of Default and to the extent specified by written
notice from the Managing Agent, each Obligor will cause
its accounting books and records to be marked with such
legends and segregated in such manner as the Managing
Agent may specify.
2.4.3. Distributions on Pledged Securities.
(a) Until an Event of Default shall occur, the
respective Obligors shall be entitled, to the extent
permitted by the Credit Documents, to receive all
Distributions on or with respect to the Pledged Securities
(other than Distributions constituting additional Pledged
Securities). All Distributions constituting additional
Pledged Securities will be retained by the Managing Agent
(or if received by any Obligor shall be held by such
Person in trust and shall be immediately delivered by such
Person to the Managing Agent in the original form
received, endorsed in blank) and held by the Managing
Agent as part of the Credit Security.
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<PAGE> 13
(b) If an Event of Default shall have occurred,
all Distributions on or with respect to the Pledged
Securities shall be retained by the Managing Agent (or if
received by any Obligor shall be held by such Person in
trust and shall be immediately delivered by it to the
Managing Agent in the original form received, endorsed in
blank) and held by the Managing Agent as part of the
Credit Security or applied by the Managing Agent to the
payment of the Credit Obligations in accordance with
Section 2.5.6.
2.4.4. Voting Pledged Securities.
(a) Until an Event of Default shall occur, the
respective Obligors shall be entitled to vote or consent
with respect to the Pledged Securities in any manner not
inconsistent with the terms of any Credit Document, and
the Managing Agent will, if so requested, execute
appropriate revocable proxies therefor.
(b) If an Event of Default shall have occurred,
if and to the extent that the Managing Agent shall so
notify in writing the Obligor pledging the Pledged
Securities in question, only the Managing Agent shall be
entitled to vote or consent or take any other action with
respect to the Pledged Securities (and any Obligor will,
if so requested, execute appropriate proxies therefor).
2.5. Right to Realize upon Credit Security. Except to
the extent prohibited by applicable law that cannot be waived, this
Section 2.5 shall govern the Lender's and the Managing Agent's rights to
realize upon the Credit Security if any Event of Default shall have
occurred. The provisions of this Section 2.5 are in addition to any
rights and remedies available at law or in equity and in addition to the
provisions of any other Credit Document. In the case of a conflict
between this Section 2.5 and any other Credit Document, this Section 2.5
shall govern.
2.5.1. Assembly of Credit Security; Receiver.
Each Obligor shall, upon the Managing Agent's request,
assemble the Credit Security and otherwise make it
available to the Managing Agent. The Managing Agent may
have a receiver appointed for all or any portion of the
Obligors' assets or business which constitutes the Credit
Security in order to manage, protect, preserve, sell and
otherwise dispose of all or any portion of the Credit
Security in accordance with the terms of the Credit
Documents, to continue the operations of the Obligors and
to collect all revenues and profits therefrom to be
applied to the payment of the Credit Obligations,
including the compensation and expenses of such receiver.
2.5.2. General Authority. To the extent
specified in written notice from the Managing Agent to the
Obligor in question, each Obligor grants the Managing
Agent full and exclusive power and authority, subject to
the other terms hereof and applicable law, to take any of
the following actions (for the sole benefit of the
Managing Agent on
-10-
<PAGE> 14
behalf of the Lenders and the holders from time to time of
any Credit Obligations, but at such Obligor's expense):
(a) To ask for, demand, take, collect, sue for
and receive all payments in respect of any Accounts,
general intangibles, Pledged Securities or leases which
such Obligor could otherwise ask for, demand, take,
collect, sue for and receive for its own use.
(b) To extend the time of payment of any
Accounts, general intangibles, Pledged Securities or
leases and to make any allowance or other adjustment with
respect thereto.
(c) To settle, compromise, prosecute or defend
any action or proceeding with respect to any Accounts,
general intangibles, Pledged Securities or leases and to
enforce all rights and remedies thereunder which such
Obligor could otherwise enforce.
(d) To enforce the payment of any Accounts,
general intangibles, Pledged Securities or leases, either
in the name of such Obligor or in its own name, and to
endorse the name of such Obligor on all checks, drafts,
money orders and other instruments tendered to or received
in payment of any Credit Security.
(e) To notify the third party payor with respect
to any Accounts, general intangibles, Pledged Securities
or leases of the existence of the security interest
created hereby and to cause all payments in respect
thereof thereafter to be made directly to the Managing
Agent; provided, however, that whether or not the Managing
Agent shall have so notified such payor, such Obligor will
at its expense render all reasonable assistance to the
Managing Agent in collecting such items and in enforcing
claims thereon.
(f) To sell, transfer, assign or otherwise deal
in or with any Credit Security or the proceeds thereof, as
fully as such Obligor otherwise could do.
2.5.3. Marshaling, etc. Neither the Managing
Agent nor the Lenders shall be required to make any demand
upon, or pursue or exhaust any of their rights or remedies
against, any Obligor or any other guarantor, pledgor or
any other Person with respect to the payment of the Credit
Obligations or to pursue or exhaust any of their rights or
remedies with respect to any collateral therefor or any
direct or indirect guarantee thereof. Neither the
Managing Agent nor the Lenders shall be required to
marshal the Credit Security or any guarantee of the Credit
Obligations or to resort to the Credit Security or any
such guarantee in any particular order, and all of its and
their rights hereunder or under any other Credit Document
shall be cumulative. To the extent it may lawfully do so,
each Obligor absolutely and irrevocably waives and
relinquishes the benefit and advantage of, and covenants
not to assert against the
-11-
<PAGE> 15
Managing Agent or the Lenders, any valuation, stay,
appraisement, extension, redemption or similar laws now or
hereafter existing which, but for this provision, might be
applicable to the sale of any Credit Security made under
the judgment, order or decree of any court, or privately
under the power of sale conferred by this Agreement, or
otherwise. Without limiting the generality of the
foregoing, each Obligor (a) agrees that it will not invoke
or utilize any law which might prevent, cause a delay in
or otherwise impede the enforcement of the rights of the
Managing Agent or any Lender in the Credit Security, (b)
waives all such laws, and (c) agrees that it will not
invoke or raise as a defense to any enforcement by the
Managing Agent or any Lender of any rights and remedies
relating to the Credit Security or the Credit Obligations
any legal or contractual requirement with which the
Managing Agent or any Lender may have in good faith failed
to comply. In addition, each Obligor waives any right to
prior notice (except to the extent expressly required by
this Agreement) or judicial hearing in connection with
foreclosure on or disposition of any Credit Security,
including any such right which such Obligor would
otherwise have under the Constitution of the United States
of America, any state or territory thereof or any other
jurisdiction.
2.5.4. Sales of Credit Security. All or any
part of the Credit Security may be sold for cash or other
value in any number of lots at public or private sale,
without demand, advertisement or notice; provided,
however, that unless the Credit Security to be sold
threatens to decline speedily in value or is of a type
customarily sold on a recognized market, the Managing
Agent shall give the Obligor granting the security
interest in such Credit Security 10 days' prior written
notice of the time and place of any public sale, or the
time after which a private sale may be made, which notice
each of the Obligors and the Managing Agent agrees to be
reasonable. At any sale or sales of Credit Security, any
Lender or any of its respective officers acting on its
behalf, or such Lender's assigns, may bid for and purchase
all or any part of the property and rights so sold, may
use all or any portion of the Credit Obligations owed to
such Lender as payment for the property or rights so
purchased, and upon compliance with the terms of such sale
may hold and dispose of such property and rights without
further accountability to the respective Obligors, except
for the proceeds of such sale or sales pursuant to Section
2.5.6. The Obligors acknowledge that any such sale will
be made by the Managing Agent on an "as is" basis with
disclaimers of all warranties, whether express or implied.
The respective Obligors will execute and deliver or cause
to be executed and delivered such instruments, documents,
assignments, waivers, certificates and affidavits, will
supply or cause to be supplied such further information
and will take such further action, as the Managing Agent
shall request in connection with any such sale.
2.5.5. Sale without Registration. If, at any
time when the Managing Agent shall determine to exercise
its rights hereunder to sell all or part of the securities
included in the Credit Security, the securities in
question shall not be effectively
-12-
<PAGE> 16
registered under the Securities Act (or other applicable law), the
Managing Agent may, in its sole discretion, sell such securities by
private or other sale not requiring such registration in such manner and
in such circumstances as the Managing Agent may deem necessary or
advisable in order that such sale may be effected in accordance with
applicable securities laws without such registration and the related
delays, uncertainty and expense. Without limiting the generality of the
foregoing, in any event the Managing Agent may, in its sole discretion,
(a) approach and negotiate with a single purchaser or one or more
possible purchasers to effect such sale, (b) restrict such sale to one
or more purchasers each of whom will represent and agree that such
purchaser is purchasing for its own account, for investment and not with
a view to the distribution or sale of such securities and (c) cause to
be placed on certificates representing the securities in question a
legend to the effect that such securities have not been registered under
the Securities Act (or other applicable law) and may not be disposed of
in violation of the provisions thereof. Each Obligor agrees that such
manner of disposition is commercially reasonable, that it will upon the
Managing Agent's request give any such purchaser access to such
information regarding the issuer of the securities in question as the
Managing Agent may reasonably request and that the Managing Agent and
the Lenders shall not incur any responsibility for selling all or part
of the securities included in the Credit Security at any private or
other sale not requiring such registration, notwithstanding the
possibility that a substantially higher price might be realized if the
sale were deferred until after registration under the Securities Act (or
other applicable law) or until made in compliance with certain other
rules or exemptions from the registration provisions under the
Securities Act (or other applicable law). Each Obligor acknowledges
that no adequate remedy at law exists for breach by it of this Section
2.5.5 and that such breach would not be adequately compensable in
damages and therefore agrees that this Section 2.5.5 may be specifically
enforced.
2.5.6. Application of Proceeds. The proceeds of all sales and
collections in respect of any Credit Security or other assets of any
Obligor, all funds collected from the Obligors and any cash contained in
the Credit Security, the application of which is not otherwise
specifically provided for herein, shall be applied as follows:
First, to the payment of the costs and expenses of such sales and
collections, the reasonable expenses of the Managing Agent and the
reasonable fees and expenses of its special counsel;
Second, any surplus then remaining to the payment of the Credit
Obligations in such order and manner as the Managing Agent may in its
sole discretion determine; provided, however, that any such payment of
Credit Obligations owed to all Lenders shall be pro rata in accordance
with the respective Percentage Interests of the Lenders in such Credit
Obligations; and
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<PAGE> 17
Third, any surplus then remaining shall be paid to the Obligors,
subject, however, to the rights of the holder of any then existing Lien
of which the Managing Agent has actual notice.
2.6. Custody of Credit Security. Except as provided by applicable
law that cannot be waived, the Managing Agent will have no duty as to the
custody and protection of the Credit Security, the collection of any part
thereof or of any income thereon or the preservation or exercise of any rights
pertaining thereto, including rights against prior parties, except for the use
of reasonable care in the custody and physical preservation of any Credit
Security in its possession. The Lenders will not be liable or responsible for
any loss or damage to any Credit Security, or for any diminution in the value
thereof, by reason of the act or omission of any Managing Agent selected by the
Managing Agent acting in good faith.
3. General. Addresses for notices, consent to jurisdiction, jury trial
waiver, defeasance and numerous other provisions applicable to this Agreement
are contained in the Credit Agreement. The invalidity or unenforceability of
any term or provision hereof shall not affect the validity or enforceability of
any other term or provision hereof. The headings in this Agreement are for
convenience of reference only and shall not limit, alter or otherwise affect
the meaning hereof. This Agreement and the other Credit Documents constitute
the entire understanding of the parties with respect to the subject matter
hereof and thereof and supersede all prior and current understandings and
agreements, whether written or oral. This Agreement is a Credit Document and
may be executed in any number of counterparts, which together shall constitute
one instrument. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS (OTHER THAN THE CONFLICT OF LAWS RULES) OF THE
COMMONWEALTH OF MASSACHUSETTS, EXCEPT AS MAY BE REQUIRED BY THE UCC OF OTHER
JURISDICTIONS WITH RESPECT TO MATTERS INVOLVING THE PERFECTION OF THE MANAGING
AGENT'S LIEN ON THE CREDIT SECURITY LOCATED IN SUCH OTHER JURISDICTIONS.
-14-
<PAGE> 18
Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first written above.
ATC TOWER CORP.
GRITZ TOWER MAINTENANCE COMPANY
WESTARK TOWERS, INCORPORATED
By /s/ Marty L. Jimmerson
-----------------------------
As Vice President of each of
the foregoing
corporations
ATC-PRIME I, L.L.C.
ATC-PRIME II, L.L.C.
By /s/ Fred R. Lummis
-----------------------------
As President of each of the
foregoing
companies
THE FIRST NATIONAL BANK OF BOSTON,
as Managing Agent under the Credit
Agreement
By /s/ Reginald T. Dawson
-----------------------------
Title: Director
WELLS FARGO BANK (TEXAS) NATIONAL
ASSOCIATION, as Collateral Agent
under the Credit Agreement
By /s/ Mitchell Schulman
-----------------------------
Title: Vice President
<PAGE> 1
EXHIBIT 10.5
Conformed Copy
================================================================================
ATC TOWER CORP.
GUARANTEE AGREEMENT
Dated as of October 11, 1996
THE FIRST NATIONAL BANK OF BOSTON, as Managing Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1. Reference to Credit Agreement; Definitions;
Certain Rules of Construction . . . . . . . . . . . . . . . . . . . . 1
2. Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1. Guarantee of Credit Obligations . . . . . . . . . . . . . . . . 1
2.2. Continuing Obligation . . . . . . . . . . . . . . . . . . . . . 2
2.3. Waivers with Respect to Credit Obligations . . . . . . . . . . 2
2.4. Lenders' Power to Waive, etc . . . . . . . . . . . . . . . . . 4
2.5. Information Regarding the Company, etc. . . . . . . . . . . . . 4
2.6. Certain Guarantor Representations . . . . . . . . . . . . . . . 5
2.7. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.8. Subordination . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.9. Future Subsidiaries: Further Assurances . . . . . . . . . . . 6
2.10. Contribution Among Guarantors . . . . . . . . . . . . . . . . 6
3. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
<PAGE> 3
ATC TOWER CORP.
GUARANTEE AGREEMENT
This Agreement, dated as of October 11, 1996, is among ATC Tower Corp.,
a Delaware corporation (the "Company"), American Tower Corporation, a Delaware
corporation (the "Parent"), ATC Holdings Corp., a Delaware corporation ("ATC
Holdings"), the Subsidiaries (as defined below) of the Company party hereto and
The First National Bank of Boston, as managing agent (the "Managing Agent") for
itself and the other Lenders (as defined below) under the Credit Agreement (as
defined below). The parties agree as follows:
1. Reference to Credit Agreement; Definitions; Certain Rules of
Construction. Reference is made to the Credit Agreement dated as of the date
hereof, as from time to time in effect (the "Credit Agreement"), among the
Company, the Subsidiaries of the Company from time to time party thereto, the
Lenders and the Agents. As a condition to providing loans to the Company under
the Credit Agreement, the Lenders are requiring the Guarantors (as defined
below) to guarantee the payment of the Credit Obligations (as defined below).
Capitalized terms defined in the Credit Agreement and not otherwise defined
herein are used herein with the meanings so defined. Certain other capitalized
terms are used in this Agreement as specifically defined below in this Section
1. Except as the context otherwise explicitly requires, (a) the capitalized
term "Section" refers to sections of this Agreement, (b) references to a
particular Section shall include all subsections thereof, (c) the word
"including" shall be construed as "including without limitation", (d)
references to a particular statute or regulation include all rules and
regulations thereunder and any successor statute, regulation or rules, in each
case as from time to time in effect, and (e) references to a particular Person
include such Person's successors and assigns to the extent not prohibited by
this Agreement or the other Credit Documents. References to "the date hereof"
mean the date first set forth above.
2. Guarantee.
2.1. Guarantee of Credit Obligations. Each Guarantor
unconditionally guarantees that the Credit Obligations will be performed and
paid in full in cash when due and payable, whether at the stated or accelerated
maturity thereof or otherwise, this guarantee being a guarantee of payment and
not of collectability and being absolute and in no way conditional or
contingent. In the event any part of the Credit Obligations shall not have
been so paid in full when due and payable, each Guarantor will, immediately
upon notice by the Managing Agent or, without notice, immediately upon the
occurrence of a Bankruptcy Default, pay or cause to be paid to the Managing
Agent for the account of each Lender in accordance with the Lenders' respective
Percentage Interests therein the amount of such Credit Obligations which are
then due and payable and unpaid. The obligations of each Guarantor hereunder
shall not be affected by the invalidity, unenforceability or irrecoverability
of any of the Credit Obligations as against any other Obligor, any other
guarantor thereof or any other Person. For purposes
<PAGE> 4
hereof, the Credit Obligations shall be due and payable when and as the same
shall be due and payable under the terms of the Credit Agreement or any other
Credit Document notwithstanding the fact that the collection or enforcement
thereof may be stayed or enjoined under the Bankruptcy Code or other applicable
law.
2.2. Continuing Obligation. Each Guarantor acknowledges that
the Lenders have entered into the Credit Agreement (and, to the extent that the
Lenders or the Agents may enter into any future Credit Document, will have
entered into such agreement) in reliance on this Section 2 being a continuing
irrevocable agreement, and such Guarantor agrees that its guarantee may not be
revoked in whole or in part. The obligations of the Guarantors hereunder shall
terminate when the commitment of the Lenders to extend credit under the Credit
Agreement shall have terminated and all of the Credit Obligations have been
indefeasibly paid in full in cash and discharged; provided, however, that the
obligations of each Guarantor pursuant to this Agreement shall continue to be
effective or automatically be reinstated, as the case may be, if at any time
payment of any of the Credit Obligations is rescinded or otherwise must be
restored or returned by the Lenders upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Guarantor, the Company or any
other guarantor of the Credit Obligations or otherwise, all as though such
payment had not been made.
2.3. Waivers with Respect to Credit Obligations. Except to
the extent expressly required by the Credit Agreement or any other Credit
Document, each Guarantor waives, to the fullest extent permitted by the
provisions of applicable law, all of the following (including all defenses,
counterclaims and other rights of any nature based upon any of the following):
(a) presentment, demand for payment and protest of
nonpayment of any of the Credit Obligations, and notice of
protest, dishonor or nonperformance;
(b) notice of acceptance of this guarantee and notice
that credit has been extended in reliance on such Guarantor's
guarantee of the Credit Obligations;
(c) notice of any Default or of any inability to
enforce performance of the obligations of the Company or any
other Person with respect to any Credit Document, or notice of
any acceleration of maturity of any Credit Obligations;
(d) demand for performance or observance of, and any
enforcement of any provision of the Credit Agreement, the Credit
Obligations or any other Credit Document or any pursuit or
exhaustion of rights or remedies with respect to any Credit
Security or against the Company or any other Person in respect of
the Credit Obligations or any requirement of diligence or
promptness on the part of the Agents or the Lenders in connection
with any of the foregoing;
-2-
<PAGE> 5
(e) any act or omission on the part of the Agents or
the Lenders which may impair or prejudice the rights of such
Guarantor, including rights to obtain subrogation, exoneration,
contribution, indemnification or any other reimbursement from the
Company or any other Person, or otherwise operate as a deemed
release or discharge;
(f) failure or delay to perfect or continue the
perfection of any security interest in any Credit Security or any
other action which harms or impairs the value of, or any failure
to preserve or protect the value of, any Credit Security;
(g) any statute of limitations or any statute or rule
of law which provides that the obligation of a surety must be
neither larger in amount nor in other respects more burdensome
than the obligation of the principal;
(h) any "single action" or "anti-deficiency" law which
would otherwise prevent the Lenders from bringing any action,
including any claim for a deficiency, against such Guarantor
before or after the Agents' or the Lenders' commencement or
completion of any foreclosure action, whether judicially, by
exercise of power of sale or otherwise, or any other law which
would otherwise require any election of remedies by the Agents or
the Lenders;
(i) all demands and notices of every kind with respect
to the foregoing; and
(j) to the extent not referred to above, all defenses
(other than payment) which the Company may now or hereafter have
to the payment of the Credit Obligations, together with all
suretyship defenses, which could otherwise be asserted by such
Guarantor.
Each Guarantor represents that it has obtained the advice of counsel as to the
extent to which suretyship and other defenses may be available to it with
respect to its obligations hereunder in the absence of the waivers contained in
this Section 2.3.
No delay or omission on the part of the Managing Agent or the
Lenders in exercising any right under this Agreement or any other Credit
Document or under any guarantee of the Credit Obligations or with respect to
the Credit Security shall operate as a waiver or relinquishment of such right.
No action which the Managing Agent or the Lenders or the Company may take or
refrain from taking with respect to the Credit Obligations, including any
amendments thereto or modifications thereof or waivers with respect thereto,
shall affect the provisions of this Agreement or the obligations of each
Guarantor hereunder. None of the Lenders' or the Managing Agent's rights shall
at any time in any way be prejudiced or impaired by any act or failure to act
on the part of any Obligor, or by any noncompliance by the Company with the
terms, provisions and covenants of the Credit Agreement, regardless of any
knowledge thereof which the Managing Agent or the Lenders may have or otherwise
be charged with.
-3-
<PAGE> 6
2.4. Lenders' Power to Waive, etc. Each Guarantor grants to
the Managing Agent and the Lenders full power in their discretion, without
notice to or consent of such Guarantor, such notice and consent being expressly
waived to the fullest extent permitted by applicable law, and without in any
way affecting the liability of such Guarantor under its guarantee hereunder:
(a) to waive compliance with, and any Default under,
and to consent to any amendment to or modification or termination
of any terms or provisions of, or to give any waiver in respect
of, the Credit Agreement, any other Credit Document, the Credit
Security, the Credit Obligations or any guarantee thereof (each
as from time to time in effect);
(b) to grant any extensions of the Credit Obligations
(for any duration), and any other indulgence with respect
thereto, and to effect any total or partial release (by operation
of law or otherwise), discharge, compromise or settlement with
respect to the obligations of the Obligors or any other Person in
respect of the Credit Obligations, whether or not rights against
such Guarantor under this Agreement are reserved in connection
therewith;
(c) to take security in any form for the Credit
Obligations, and to consent to the addition to or the
substitution, exchange, release or other disposition of, or to
deal in any other manner with, any part of any property contained
in the Credit Security whether or not the property, if any,
received upon the exercise of such power shall be of a character
or value the same as or different from the character or value of
any property disposed of, and to obtain, modify or release any
present or future guarantees of the Credit Obligations and to
proceed against any of the Credit Security or such guarantees in
any order;
(d) to collect or liquidate or realize upon any of the
Credit Obligations or the Credit Security in any manner or to
refrain from collecting or liquidating or realizing upon any of
the Credit Obligations or the Credit Security; and
(e) to extend credit under the Credit Agreement, any
other Credit Document or otherwise in such amount as the Lenders
may determine, including increasing the amount of credit and the
interest rate and fees with respect thereto, even though the
condition of the Obligors (financial or otherwise, on an
individual or Consolidated basis) may have deteriorated since the
date hereof.
2.5. Information Regarding the Company, etc. Each Guarantor
has made such investigation as it deems desirable of the risks undertaken by it
in entering into this Agreement and is fully satisfied that it understands all
such risks. Each Guarantor waives any obligation which may now or hereafter
exist on the part of the Managing Agent or the Lenders to inform it of the
risks being undertaken by entering into this Agreement or of any changes in
such risks
-4-
<PAGE> 7
and, from and after the date hereof, each Guarantor undertakes to keep itself
informed of such risks and any changes therein. Each Guarantor expressly
waives any duty which may now or hereafter exist on the part of the Managing
Agent or the Lenders to disclose to such Guarantor any matter related to the
business, operations, character, collateral, credit, condition (financial or
otherwise), income or prospects of the Company or its Affiliates or their
properties or management, whether now or hereafter known by the Managing Agent
or the Lenders. Each Guarantor represents, warrants and agrees that it assumes
sole responsibility for obtaining from the Company all information concerning
the Credit Agreement and all other Credit Documents and all other information
as to the Company and its Affiliates or their properties or management as such
Guarantor deems necessary or desirable.
2.6. Certain Guarantor Representations. Each Guarantor
represents that:
(a) it is in its best interest and in pursuit of the
purposes for which it was organized as an integral part of the
business conducted and proposed to be conducted by the Company
and its Subsidiaries, and reasonably necessary and convenient in
connection with the conduct of the business conducted and
proposed to be conducted by them, to induce the Lenders to enter
into the Credit Agreement and to extend credit to the Company by
making the guarantee contemplated by this Section 2;
(b) the credit available hereunder will directly or
indirectly inure to its benefit;
(c) by virtue of the foregoing it is receiving at least
reasonably equivalent value from the Lenders for its guarantee;
(d) it will not be rendered insolvent as a result of
entering into this Agreement;
(e) after giving effect to the transactions
contemplated by this Agreement and the guarantees and grants of
collateral by the other Obligors to the Credit Obligations, it
will have assets having a fair saleable value in excess of the
amount required to pay its probable liability on its existing
debts as such debts become absolute and matured;
(f) it has, and will have, access to adequate capital
for the conduct of its business;
(g) it has the ability to pay its debts from time to
time incurred in connection therewith as such debts mature; and
(h) it has been advised by the Managing Agent that the
Lenders are unwilling to enter into the Credit Agreement unless
the guarantee contemplated by this Section 2 is given by it.
-5-
<PAGE> 8
2.7. Subrogation. Each Guarantor agrees that, until the
Credit Obligations are paid in full, it will not exercise any right of
reimbursement, subrogation, contribution, offset or other claims against the
other Obligors arising by contract or operation of law in connection with any
payment made or required to be made by such Guarantor under this Agreement.
After the payment in full of the Credit Obligations, each Guarantor shall be
entitled to exercise against the Company and the other Obligors all such rights
of reimbursement, subrogation, contribution and offset, and all such other
claims, to the fullest extent permitted by law.
2.8. Subordination. Each Guarantor covenants and agrees that,
after the occurrence of an Event of Default, all Indebtedness, claims and
liabilities then or thereafter owing by the Company or any other Obligor to
such Guarantor whether arising hereunder or otherwise are subordinated to the
prior payment in full of the Credit Obligations and are so subordinated as a
claim against such Obligor or any of its assets, whether such claim be in the
ordinary course of business or in the event of voluntary or involuntary
liquidation, dissolution, insolvency or bankruptcy, so that no payment with
respect to any such Indebtedness, claim or liability will be made or received
while any Event of Default exists.
2.9. Future Subsidiaries: Further Assurances. The Company
will from time to time cause (a) any present Wholly Owned Subsidiary that is
not a Guarantor within 30 days after notice from the Managing Agent or (b) any
future Wholly Owned Subsidiary within 30 days after any such Person becomes a
Wholly Owned Subsidiary, to join this Agreement as a Guarantor pursuant to a
joinder agreement in form and substance satisfactory to the Managing Agent;
provided, however, that in the event such a Wholly Owned Subsidiary is
prohibited by any valid law, statute, rule or regulation from guaranteeing the
Credit Obligations, or if such a guarantee by any foreign Subsidiary would
result in a repatriation of a material amount of foreign earnings under the
Code (including the "deemed dividend" provisions of section 956 of the Code),
(i) such guarantee will be limited to the extent necessary to comply with such
prohibition or to prevent such repatriation of foreign earnings or (ii) if such
limitation on the guaranteed amount is not sufficient to avoid such prohibition
or repatriation, the Company and its other Subsidiaries will pledge the stock
of such Wholly Owned Subsidiary (or as much of such stock as may be pledged
without resulting in such a repatriation) to the Managing Agent to secure the
Credit Obligations pursuant to a pledge agreement in form and substance
satisfactory to the Managing Agent. Each Guarantor will, promptly upon the
request of the Managing Agent from time to time, execute, acknowledge and
deliver, and file and record, all such instruments, and take all such action,
as the Managing Agent deems necessary or advisable to carry out the intent and
purpose of this Section 2.
2.10. Contribution Among Guarantors. The Guarantors agree
that, as among themselves in their capacity as guarantors of the Credit
Obligations, the ultimate responsibility for repayment of the Credit
Obligations, in the event that the Company fails to pay when due its Credit
Obligations, shall be equitably apportioned, to the extent consistent with the
credit Documents, among the respective Guarantors (a) in the proportion that
each, in its capacity as a guarantor, has benefited from the extensions of
credit to the Company by the Lenders under
-6-
<PAGE> 9
the Credit Agreement, or (b) if such equitable apportionment cannot reasonably
be determined or agreed upon among the affected Guarantors, in proportion to
their respective net worths determined on or about the date hereof (or such
later date as such Guarantor becomes party hereto). In the event that any
Guarantor, in its capacity as a guarantor, pays an amount with respect to the
Credit Obligations in excess of its proportionate share as set forth in this
Section 2.10, each other Guarantor shall, to the extent consistent with the
Credit Documents, make a contribution payment to such Guarantor in an amount
such that the aggregate amount paid by each Guarantor reflects its
proportionate share of the Credit Obligations. In the event of any default by
any Guarantor under this Section 2.10, each other Guarantor will bear, to the
extent consistent with the Credit Documents, its proportionate share of the
defaulting Guarantor's obligation under this Section 2.10. This Section 2.10
is intended to set forth only the rights and obligations of the Guarantors
among themselves and shall not in any way affect the obligations of any
Guarantor to the Lenders under the Credit Documents (which obligations shall at
all times constitute the joint and several obligations of all the Guarantors).
3. General. Addresses for notices, consent to jurisdiction, jury trial
waiver, defeasance and numerous other provisions applicable to this Agreement
are contained in the Credit Agreement, in the case of the Guarantors other than
the Parent Guarantors, and in the Parent Pledge Agreement in the case of the
Parent Guarantors. All covenants, agreements, representations and warranties
made in this Agreement or any other Credit Document or in certificates
delivered pursuant hereto or thereto shall be deemed to have been relied on by
each Lender, notwithstanding any investigation made by the Managing Agent on
its behalf, and shall survive the execution and delivery to the Lenders hereof
and thereof. The invalidity or unenforceability of any term or provision
hereof shall not affect the validity or enforceability of any other term or
provision hereof. The headings in this Agreement are for convenience of
reference only and shall not limit, alter or otherwise affect the meaning
hereof. This Agreement and the other Credit Documents constitute the entire
understanding of the parties with respect to the subject matter hereof and
thereof and supersede all prior and current understandings and agreements,
whether written or oral. This Agreement is a Credit Document and may be
executed in any number of counterparts, which together shall constitute one
instrument. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS (OTHER THAN THE CONFLICT OF LAWS RULES) OF THE COMMONWEALTH OF
MASSACHUSETTS.
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<PAGE> 10
Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first written above.
AMERICAN TOWER CORPORATION
ATC HOLDINGS CORP.
ATC TOWER CORP.
GRITZ TOWER MAINTENANCE COMPANY
WESTARK TOWERS, INCORPORATED
By /s/ Marty L. Jimmerson
-----------------------------
As Vice President of each of
the foregoing
corporations
ATC - PRIME I, L.L.C.
ATC - PRIME II, L.L.C.
By /s/ Fred R. Lummis
-----------------------------
As President of each of the
foregoing
companies
THE FIRST NATIONAL BANK OF BOSTON,
as Managing Agent under the Credit
Agreement
By /s/ Reginald T. Dawson
-----------------------------
Title: Director
<PAGE> 1
EXHIBIT 10.6
Conformed Copy
================================================================================
ATC HOLDINGS CORP.
PLEDGE AGREEMENT
Dated as of October 11, 1996
THE FIRST NATIONAL BANK OF BOSTON, as Managing Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Credit Agreement; Certain Rules of Construction; Definitions. . . . . . . 1
1.1. "Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. "Credit Security" . . . . . . . . . . . . . . . . . . . . . . . 1
1.3. "Pledged Indebtedness" . . . . . . . . . . . . . . . . . . . . 1
1.4. "Pledged Securities" . . . . . . . . . . . . . . . . . . . . . 1
1.5. "Pledged Stock" . . . . . . . . . . . . . . . . . . . . . . . . 1
1.6. "UCC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1. Credit Security . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1.1. Pledged Stock . . . . . . . . . . . . . . . . . . . . 2
2.1.3. Proceeds and Products . . . . . . . . . . . . . . . . . 2
2.1.4. Excluded Property . . . . . . . . . . . . . . . . . . 2
2.2. Representations, Warranties and Covenants with
Respect to Credit Security . . . . . . . . . . . . . . . . . . 2
2.2.1. Pledged Stock . . . . . . . . . . . . . . . . . . . . 3
2.2.2. Pledged Indebtedness . . . . . . . . . . . . . . . . . 3
2.2.3. No Liens or Restrictions on Transfer or Change of Control 3
2.3. Administration of Credit Security . . . . . . . . . . . . . . . 3
2.3.1. Deposits; Accounts . . . . . . . . . . . . . . . . . . 3
2.3.2. Pledged Stock . . . . . . . . . . . . . . . . . . . . 4
2.4. Right to Realize upon Credit Security . . . . . . . . . . . . . 4
2.4.1. General Authority . . . . . . . . . . . . . . . . . . 4
2.4.2. Marshaling, etc. . . . . . . . . . . . . . . . . . . . 5
2.4.3. Sales of Credit Security . . . . . . . . . . . . . . . 6
2.4.4. Sale without Registration . . . . . . . . . . . . . . 6
2.4.5. Application of Proceeds . . . . . . . . . . . . . . . 7
2.5. Custody of Credit Security . . . . . . . . . . . . . . . . . . 8
3. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . 8
3.1. Organization and Business . . . . . . . . . . . . . . . . . . . 8
3.2. Authorization and Enforceability . . . . . . . . . . . . . . . 8
3.3. No Legal Obstacle to Agreements . . . . . . . . . . . . . . . . 8
4. Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . 9
6. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7. Venue; Service of Process . . . . . . . . . . . . . . . . . . . . . . . . 9
8. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
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<PAGE> 3
ATC HOLDINGS CORP.
PLEDGE AGREEMENT
This Agreement, dated as of October 11, 1996, is between ATC Holdings
Corp., a Delaware corporation ("ATC Holdings" or the "Pledgor") and The First
National Bank of Boston, as managing agent (the "Managing Agent") for itself
and the other Lenders under the Credit Agreement (as defined below). The
parties agree as follows:
1. Credit Agreement; Certain Rules of Construction; Definitions. The
Lenders are providing loans to ATC Tower Corp., a Delaware corporation (the
"Company"), pursuant to a Credit Agreement dated as of the date hereof, as from
time to time in effect (the "Credit Agreement"), among the Company, its
Subsidiaries from time to time party thereto, the Lenders and the Managing
Agent. As a condition to providing the loans under the Credit Agreement, the
Lenders are requiring the Pledgor to pledge the stock and indebtedness
contemplated hereby to secure the payment of the Credit Obligations.
Capitalized terms defined in the Credit Agreement and not otherwise defined
herein are used herein with the meanings so defined. Certain other capitalized
terms are used in this Agreement as specifically defined below in this Section
1. Except as the context otherwise explicitly requires, (a) the capitalized
term "Section" refers to sections of this Agreement, (b) the capitalized term
"Exhibit" refers to exhibits to this Agreement, (c) references to a particular
Section shall include all subsections thereof, (d) the word "including" shall
be construed as "including without limitation", (e) terms defined in the UCC
and not otherwise defined herein have the meaning provided under the UCC, (f)
references to a particular statute or regulation include all rules and
regulations thereunder and any successor statute, regulation or rules, in each
case as from time to time in effect and (g) references to a particular Person
include such Person's successors and assigns to the extent not prohibited by
this Agreement and the other Credit Documents. References to "the date hereof"
mean the date first set forth above.
1.1. "Agreement" means this Pledge Agreement as amended,
modified and from time to time in effect.
1.2. "Credit Security" is defined in Section 2.1.
1.3. "Pledged Indebtedness" is defined in Section 2.1.2.
1.4. "Pledged Securities" is defined in Section 2.1.2.
1.5. "Pledged Stock" is defined in Section 2.1.1.
1.6. "UCC" means the Uniform Commercial Code as in effect in
Massachusetts on the date hereof; provided, however, that with respect to the
perfection of the Managing Agent's
<PAGE> 4
Lien in the Credit Security and the effect of nonperfection thereof, the term
"UCC" means the Uniform Commercial Code as in effect in any jurisdiction the
laws of which are made applicable by section 9-103 of the Uniform Commercial
Code as in effect in Massachusetts.
2. Security.
2.1. Credit Security. As security for the payment and
performance of the Credit Obligations, the Pledgor mortgages, pledges and
collaterally grants and assigns to the Managing Agent for the benefit of the
Lenders and the holders from time to time of any Credit Obligation, and creates
a security interest in favor of the Managing Agent for the benefit of the
Lenders and such holders in, all of the Pledgor's right, title and interest in
and to (but none of its obligations or liabilities with respect to) the items
and types of present and future property described in Sections 2.1.1 through
2.1.3 (subject, however, to Section 2.1.4), whether now owned or hereafter
acquired, all of which shall be included in the term "Credit Security":
2.1.1. Pledged Stock. (a) All shares of capital
stock or other evidence of beneficial interest in any
corporation, business trust or limited liability company, (b) all
limited partnership interests in any limited partnership, (c) all
general partnership interests in any general partnership, (d) all
joint venture interests in any joint venture and (e) all options,
warrants and similar rights to acquire such capital stock or such
interests. All such capital stock, interests, options, warrants
and other rights are collectively referred to as the "Pledged
Stock".
2.1.2. Pledged Indebtedness. All Indebtedness from
time to time owing to the Pledgor from the Company or any of its
Subsidiaries. All such Indebtedness is referred to as the
"Pledged Indebtedness". The Pledged Stock and the Pledged
Indebtedness are collectively referred to as the "Pledged
Securities".
2.1.3. Proceeds and Products. All proceeds, including
insurance proceeds, and products of the items of Credit Security
described or referred to in Section 2.1.1 and 2.1.2, and to the
extent not included in the foregoing, all Distributions with
respect to the Pledged Stock.
2.1.4. Excluded Property. Notwithstanding Sections
2.1.1 through 2.1.3, the payment and performance of the Credit
Obligations shall not be secured by more than 66% of the
outstanding stock or other equity in any Subsidiary organized
under the laws of, and operating solely in, a country other than
the United States of America.
2.2. Representations, Warranties and Covenants with Respect to
Credit Security. The Pledgor represents, warrants and covenants that:
2.2.1. Pledged Stock. All shares of capital stock,
limited partnership interests and similar securities included in
the Pledged Stock are and shall be at all times duly
-2-
<PAGE> 5
authorized, validly issued, fully paid and (in the case of
capital stock and limited partnership interests) nonassessable.
The Pledgor will deliver to the Managing Agent certificates
representing the Pledged Stock, registered, if the Managing Agent
so requests, in the name of the Managing Agent or its nominee, as
pledgee, or accompanied by a stock transfer power executed in
blank and, if the Managing Agent so requests, with the signature
guaranteed, all in form and manner satisfactory to the Managing
Agent. Pledged Stock that is not evidenced by a certificate will
be registered in the Managing Agent's name as pledgee on the
issuer's records, all in form and substance satisfactory to the
Managing Agent. The Managing Agent may at any time transfer into
its name or the name of its nominee, as pledgee, any Pledged
Stock. In the event the Pledged Stock includes any Margin Stock,
the Pledgor will furnish to the Lenders Federal Reserve Form U-1
and take such other action as the Managing Agent may request to
ensure compliance with applicable laws.
2.2.2. Pledged Indebtedness. All Pledged Indebtedness
shall be on open account and shall not be evidenced by any note
or other instrument; provided, however, that all Pledged
Indebtedness shall, if the Managing Agent requests, be evidenced
by a promissory note. The Pledgor will, immediately upon the
receipt thereof, deliver to the Managing Agent any promissory
note or similar instrument representing any Pledged Indebtedness,
after having endorsed such promissory note or instrument in
blank.
2.2.3. No Liens or Restrictions on Transfer or Change
of Control. All Credit Security shall be free and clear of any
Liens and restrictions on the transfer thereof. None of the
Pledged Stock is subject to any option to purchase or similar
rights of any Person. Except with the written consent of the
Managing Agent, the Pledgor is not, nor will be, party to or
bound by any agreement, instrument, deed or lease that restricts
the change of control or ownership, or the creation of a security
interest in the ownership, of the Company or any of its
Subsidiaries.
2.3. Administration of Credit Security. The Credit Security
shall be administered as follows, and if an Event of Default shall have
occurred, Section 2.4 shall also apply.
2.3.1. Deposits; Accounts. To the extent specified by
prior written notice from the Managing Agent after the occurrence
and during the continuance of an Event of Default, all sums
collected or received and all property recovered or possessed by
the Pledgor in connection with any Credit Security shall be
received and held by the Pledgor in trust for and on the Lenders'
behalf, shall be segregated from the assets and funds of the
Pledgor, and shall be delivered to the Managing Agent for the
benefit of the Lenders.
2.3.2. Pledged Stock.
-3-
<PAGE> 6
(a) Distributions. Until an Event of Default
shall occur, the Pledgor shall be entitled to receive all
Distributions on or with respect to the Pledged Stock
(other than Distributions constituting additional Pledged
Stock). All Distributions constituting additional Pledged
Stock will be retained by the Managing Agent (or if
received by the Pledgor shall be held by the Pledgor in
trust and shall be immediately delivered by the Pledgor to
the Managing Agent in the original form received, endorsed
in blank) and held by the Managing Agent as part of the
Credit Security.
(b) If an Event of Default shall have occurred,
all Distributions on or with respect to the Pledged Stock
shall be retained by the Managing Agent (or if received by
the Pledgor shall be held by the Pledgor in trust and
shall be immediately delivered by it to the Managing Agent
in the original form received, endorsed in blank) and held
by the Managing Agent as part of the Credit Security or
applied by the Managing Agent to the payment of the Credit
Obligations in accordance with Section 2.4.6.
2.3.3. Voting.
(a) Until an Event of Default shall occur, the
Pledgor shall be entitled to vote or consent with respect
to the Pledged Stock in any manner not inconsistent with
the terms of any Credit Document, and the Managing Agent
will, if so requested, execute appropriate revocable
proxies therefor.
(b) If an Event of Default shall have occurred,
if and to the extent that the Managing Agent shall so
notify the Pledgor in writing, only the Managing Agent
shall be entitled to vote or consent or take any other
action with respect to the Pledged Stock (and the Pledgor
will, if so requested, execute or cause to be executed
appropriate proxies therefor).
2.4. Right to Realize upon Credit Security. Except to
the extent prohibited by applicable law that cannot be waived, this
Section 2.4 shall govern the Lenders' right to realize upon the Credit
Security if any Event of Default shall have occurred. The provisions of
this Section 2.4 are in addition to any rights and remedies available at
law or in equity and in addition to the provisions of any other Credit
Document. In the case of a conflict between this Section 2.4 and any
other Credit Document, this Section 2.4 shall govern.
2.4.1. General Authority. To the extent
specified in written notice from the Managing Agent to the
Pledgor, the Pledgor grants the Managing Agent full and
exclusive power and authority, subject to the other terms
hereof and applicable law, to take any of the following
actions (for the sole benefit of the Managing Agent on
behalf of the Lenders and the holders from time to time of
any Credit Obligations, but at the Pledgor's expense):
-4-
<PAGE> 7
(a) To ask for, demand, take, collect, sue for
and receive all payments in respect of any Pledged
Securities which the Pledgor could otherwise ask for,
demand, take, collect, sue for and receive for its own
use.
(b) To extend the time of payment of any Pledged
Stock and to make any allowance or other adjustment with
respect thereto.
(c) To settle, compromise, prosecute or defend
any action or proceeding with respect to any Pledged Stock
and to enforce all rights and remedies thereunder which
the Pledgor could otherwise enforce.
(d) To enforce the payment of any Pledged Stock,
either in the name of the Pledgor or in its own name, and
to endorse the name of the Pledgor on all checks, drafts,
money orders and other instruments tendered to or received
in payment of any Credit Security.
(e) To notify the third party payor with respect
to any Pledged Security of the existence of the security
interest created hereby and to cause all payments in
respect thereof thereafter to be made directly to the
Managing Agent; provided, however, that whether or not the
Managing Agent shall have so notified such payor, the
Pledgor will at its expense render all reasonable
assistance to the Managing Agent in collecting such items
and in enforcing claims thereon.
(f) To sell, transfer, assign or otherwise deal
in or with any Credit Security or the proceeds thereof, as
fully as the Pledgor otherwise could do.
2.4.2. Marshaling, etc. Neither the Managing
Agent nor the Lenders shall be required to make any demand
upon, or pursue or exhaust any of their rights or remedies
against, the Pledgor or any other guarantor, pledgor or
any other Person with respect to the payment of the Credit
Obligations or to pursue or exhaust any of their rights or
remedies with respect to any collateral therefor or any
direct or indirect guarantee thereof. Neither the
Managing Agent nor the Lenders shall be required to
marshal the Credit Security or any guarantee of the Credit
Obligations or to resort to the Credit Security or any
such guarantee in any particular order, and all of its and
their rights hereunder or under any other Credit Document
shall be cumulative. To the extent it may lawfully do so,
the Pledgor absolutely and irrevocably waives and
relinquishes the benefit and advantage of, and covenants
not to assert against the Managing Agent or the Lenders,
any valuation, stay, appraisement, extension, redemption
or similar laws now or hereafter existing which, but for
this provision, might be applicable to the sale of any
Credit Security made under the judgment, order or decree
of any court, or privately under the power of sale
conferred by this Agreement, or otherwise. Without
limiting the generality of the foregoing, the Pledgor (a)
agrees that it will not invoke or utilize any law which
might prevent, cause a delay
-5-
<PAGE> 8
in or otherwise impede the enforcement of the rights of
the Managing Agent or any Lender in the Credit Security,
(b) waives all such laws, and (c) agrees that it will not
invoke or raise as a defense to any enforcement by the
Managing Agent or any Lender of any rights and remedies
relating to the Credit Security or the Credit Obligations
any legal or contractual requirement with which the
Managing Agent or any Lender may have in good faith failed
to comply. In addition, the Pledgor waives any right to
prior notice (except to the extent expressly required by
this Agreement) or judicial hearing in connection with
foreclosure on or disposition of any Credit Security,
including any such right which the Pledgor would otherwise
have under the Constitution of the United States of
America, any state or territory thereof or any other
jurisdiction.
2.4.3. Sales of Credit Security. All or any
part of the Credit Security may be sold for cash or other
value in any number of lots at public or private sale,
without demand, advertisement or notice; provided,
however, that unless the Credit Security to be sold
threatens to decline speedily in value or is of a type
customarily sold on a recognized market, the Managing
Agent shall give the Pledgor 10 days' prior written notice
of the time and place of any public sale, or the time
after which a private sale may be made, which notice each
of the Pledgors and the Lenders hereby agree to be
reasonable. At any sale or sales of Credit Security, any
Lender or any of its respective officers acting on its
behalf, or such Lender's assigns, may bid for and purchase
all or any part of the property and rights so sold, may
use all or any portion of the Credit Obligations owed to
such Lender as payment for the property or rights so
purchased, and upon compliance with the terms of such sale
may hold and dispose of such property and rights without
further accountability to the Pledgor, except for the
proceeds of such sale or sales pursuant to Section 2.4.6.
The Pledgor acknowledges that any such sale will be made
by the Managing Agent on an "as is" basis with disclaimers
of all warranties, whether express or implied. The
Pledgor will execute and deliver or cause to be executed
and delivered such instruments, documents, assignments,
waivers, certificates and affidavits, will supply or cause
to be supplied such further information and will take such
further action as the Managing Agent shall request in
connection with any such sale.
2.4.4. Sale without Registration. If, at any
time when the Managing Agent shall determine to exercise
its rights hereunder to sell all or part of the securities
included in the Credit Security, the securities in
question shall not be effectively registered under the
Securities Act (or other applicable law), the Managing
Agent may, in its sole discretion, sell such securities by
private or other sale not requiring such registration in
such manner and in such circumstances as the Managing
Agent may deem necessary or advisable in order that such
sale may be effected in accordance with applicable
securities laws without such registration and the related
delays, uncertainty and expense. Without limiting the
generality of the foregoing, in any event the Managing
Agent may, in its sole discretion, (a) approach and
negotiate with a single purchaser or one or more possible
purchasers to effect such sale, (b) restrict such sale
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<PAGE> 9
to one or more purchasers each of whom will represent and agree
that such purchaser is purchasing for its own account, for
investment and not with a view to the distribution or sale of
such securities and (c) cause to be placed on certificates
representing the securities in question a legend to the effect
that such securities have not been registered under the
Securities Act (or other applicable law) and may not be disposed
of in violation of the provisions thereof. The Pledgor agrees
that such manner of disposition is commercially reasonable, that
it will upon the Managing Agent's request give any such purchaser
access to such information regarding the issuer of the securities
in question as the Managing Agent may reasonably request and that
the Managing Agent and the Lenders shall not incur any
responsibility for selling all or part of the securities included
in the Credit Security at any private or other sale not requiring
such registration, notwithstanding the possibility that a
substantially higher price might be realized if the sale were
deferred until after registration under the Securities Act (or
other applicable law) or until made in compliance with certain
other rules or exemptions from the registration provisions under
the Securities Act (or other applicable law). The Pledgor
acknowledges that no adequate remedy at law exists for breach by
it of this Section 2.4.5 and that such breach would not be
adequately compensable in damages and therefore agrees that this
Section 2.4.5 may be specifically enforced.
2.4.5. Application of Proceeds. The proceeds of all
sales and collections in respect of any Credit Security or other
assets of the Pledgor, all funds collected from the Pledgor and
any cash contained in the Credit Security, the application of
which is not otherwise specifically provided for herein, shall be
applied as follows:
First, to the payment of the costs and expenses of such
sales and collections, the reasonable expenses of the Managing
Agent and the reasonable fees and expenses of its special
counsel;
Second, any surplus then remaining to the payment of the
Credit Obligations in such order and manner as the Managing Agent
may in its sole discretion determine; provided, however, that any
such payment of Credit Obligations owed to all Lenders shall be
pro rata in accordance with the respective Percentage Interests
of the Lenders; and
Third, any surplus then remaining shall be paid to the
Pledgor, subject, however, to the rights of the holder of any
then existing Lien of which the Managing Agent has actual notice.
2.5. Custody of Credit Security. Except as provided by
applicable law that cannot be waived, the Managing Agent will have no duty as
to the custody and protection of the Credit Security, the collection of any
part thereof or of any income thereon or the preservation or exercise of any
rights pertaining thereto, including rights against prior parties, except for
the
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<PAGE> 10
use of reasonable care in the custody and physical preservation of any Credit
Security in its possession. The Lenders will not be liable or responsible for
any loss or damage to any Credit Security, or for any diminution in the value
thereof, by reason of the act or omission of any agent selected by the Managing
Agent acting in good faith.
3. Representations and Warranties. In order to induce the Lenders to extend
credit under the Credit Agreement, the Pledgor represents and warrants that:
3.1. Organization and Business. The Pledgor is a duly
organized and validly existing corporation, in good standing under the laws of
the State of Delaware, with all power and authority, corporate or otherwise,
necessary (a) to enter into and perform this Agreement and each other Credit
Document to which it is a party and (b) to own its properties and carry on the
business now conducted or proposed to be conducted by it. Certified copies of
the Charter and By-laws of the Pledgor have been previously delivered to the
Managing Agent and are correct and complete.
3.2. Authorization and Enforceability. The Pledgor has taken
all corporate action required to execute, deliver and perform this Agreement
and each other Credit Document to which it is a party. Each of this Agreement
and each other Credit Document to which the Pledgor is party constitutes the
legal, valid and binding obligation of the Pledgor, enforceable against the
Pledgor in accordance with its terms.
3.3. No Legal Obstacle to Agreements. Neither the execution,
delivery and performance of this Agreement or any other Credit Document to
which it is party, nor the consummation of any transaction referred to in or
contemplated by this Agreement or any other Credit Document, has constituted or
resulted, or will constitute or result, in:
(a) Any breach or termination of the provisions of any
agreement, instrument, deed or lease to which the Pledgor is a
party or by which either is bound, or of the Charter or By-laws
of the Pledgor; or
(b) The violation of any law, statute, judgment, decree
or governmental order, rule or regulation applicable to the
Pledgor.
No approval, authorization or other action by, or declaration to or filing
with, any governmental or administrative authority or any other Person is
required to be obtained or made by the Pledgor in connection with the
execution, delivery and performance of this Agreement or any other Credit
Document to which either Pledgor is party or the transactions contemplated
hereby or thereby.
4. Defeasance. When all Credit Obligations have been paid, performed and
reasonably determined by the Lenders to have been indefeasibly discharged in
full, and if at the time no Lender continues to be committed to extend any
credit to the Company under the Credit
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<PAGE> 11
Agreement or any other Credit Document, this Agreement shall terminate and, at
the written request of the Pledgor, accompanied by such certificates and other
items as the Managing Agent shall reasonably deem necessary, any Credit
Security pledged by the Pledgor shall revert to the Pledgor and the right,
title and interest of the Lenders therein shall terminate. Thereupon, on
demand of the Pledgor and at its cost and expense, the Managing Agent shall
execute proper instruments, acknowledging satisfaction of and discharging this
Agreement, and shall redeliver to the Pledgor any Credit Security then in its
possession.
5. Successors and Assigns. The provisions of this Agreement shall inure
to the benefit of the Lenders and their successors and assigns and shall be
binding upon the Pledgor and its respective successors and assigns. The
Pledgor may not assign its rights or obligations under this Agreement without
the written consent of the Managing Agent.
6. Notices. Any notice or other communication in connection with this
Agreement shall be deemed to be given if given in writing (including telex,
telecopy or similar teletransmission) addressed as provided below (or to the
addressee at such other address as the addressee shall have specified by notice
actually received by the addressor), and if either (a) actually delivered in
fully legible form to such address (evidenced in the case of a telex by receipt
of the correct answerback) or (b) in the case of a letter, five business days
shall have elapsed after the same shall have been deposited in the United
States mails, with first-class postage prepaid and registered or certified.
If to the Pledgor, to the Company at its address set forth in Exhibit
7.1 to the Credit Agreement (as supplemented pursuant to Sections 6.4.1 and
6.4.2 of the Credit Agreement), to the attention of the chief financial
officer.
If to the Managing Agent, to it at its address specified in or pursuant
to Section 16 of the Credit Agreement.
7. Venue; Service of Process.
(a) The Pledgor irrevocably submits to the nonexclusive
jurisdiction of the state courts of The Commonwealth of Massachusetts
and to the nonexclusive jurisdiction of the United States District Court
for the District of Massachusetts for the purpose of any suit, action or
other proceeding arising out of or based upon this Agreement or any
other Credit Document or the subject matter hereof or thereof; and
(b) The Pledgor waives to the extent not prohibited by
applicable law, and agrees not to assert, by way of motion, as a defense
or otherwise, in any such proceeding brought in any of the above-named
courts, any claim that it is not subject personally to the jurisdiction
of such court, that its property is exempt or immune from attachment or
execution, that such proceeding is brought in an inconvenient forum,
that the venue of any such proceeding is improper, or that this
Agreement or any other
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<PAGE> 12
Credit Document, or the subject matter hereof or thereof, may not be
enforced in or by such court.
The Pledgor consents to service of process in any such proceeding in any manner
permitted by Chapter 223A of the General Laws of The Commonwealth of
Massachusetts and agrees that service of process by registered or certified
mail, return receipt requested, at its address specified in or pursuant to
Section 6 is reasonably calculated to give actual notice.
8. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, EACH OF THE MANAGING AGENT AND THE PLEDGOR WAIVES, AND
COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE,
CLAIM, DEMAND OR ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE CREDIT
AGREEMENT OR ANY OTHER CREDIT DOCUMENT OR THE SUBJECT MATTER HEREOF OR THEREOF
OR ANY CREDIT OBLIGATION OR IN ANY WAY CONNECTED WITH THE DEALINGS OF THE
MANAGING AGENT OR THE PLEDGOR IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR
OTHERWISE. The Pledgor acknowledges that it has been informed by the Managing
Agent that the provisions of this Section 8 constitute a material inducement
upon which each of the Lenders has relied, is relying and will rely in entering
into the Credit Agreement and any other Credit Document, and that it has
reviewed the provisions of this Section 8 with its counsel. The Managing Agent
or the Pledgor may file an original counterpart or a copy of this Section 8
with any court as written evidence of the consent of the Managing Agent and the
Pledgor to the waiver of the right to trial by jury.
9. General. All covenants, agreements, representations and warranties made
in this Agreement or any other Credit Document or in certificates delivered
pursuant hereto or thereto shall be deemed to have been relied on by each
Lender, notwithstanding any investigation made by the Managing Agent on its
behalf, and shall survive the execution and delivery to the Lenders hereof and
thereof. The invalidity or unenforceability of any term or provision hereof
shall not affect the validity or enforceability of any other term or provision
hereof. The headings in this Agreement are for convenience of reference only
and shall not limit, alter or otherwise affect the meaning hereof. This
Agreement and the other Credit Documents constitute the entire understanding of
the parties with respect to the subject matter hereof and thereof and supersede
all prior and current understandings and agreements, whether written or oral.
This Agreement is a Credit Document and may be executed in any number of
counterparts, which together shall constitute one instrument. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS (OTHER THAN THE
CONFLICT OF LAWS RULES) OF THE COMMONWEALTH OF MASSACHUSETTS.
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<PAGE> 13
Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first written above.
ATC HOLDINGS CORP.
By /s/ Fred R. Lummis
-----------------------------------
Title: President
THE FIRST NATIONAL BANK OF BOSTON,
as Managing Agent under the Credit
Agreement
By /s/ Reginald T. Dawson
-----------------------------------
Title: Director
<PAGE> 1
EXHIBIT 10.7
THIS AGREEMENT IS SUBJECT TO THE TERMS OF (i) THAT CERTAIN SUBORDINATION
AGREEMENT, DATED AS OF EVEN DATE HEREWITH, BY AND AMONG THE HOLDERS OF JUNIOR
CLAIMS, NATIONSBANK OF TEXAS, N.A., AS A HOLDER OF A SENIOR CLAIM, FIRST
INTERSTATE BANK OF TEXAS, N.A., AS A HOLDER OF A SENIOR CLAIM, AND FIRST
INTERSTATE BANK OF TEXAS, N.A., AS AGENT FOR THE HOLDER OF THE SENIOR CLAIMS,
(ii) THAT CERTAIN SELLER/BANC ONE SUBORDINATION AGREEMENT, DATED AS OF EVEN
DATE HEREWITH, BY AND AMONG THE HOLDERS OF JUNIOR CLAIMS AND BANC ONE CAPITAL
PARTNERS II, LIMITED PARTNERSHIP, AS A HOLDER OF SENIOR SUBORDINATE CLAIMS, AND
(iii) THAT CERTAIN INTERCREDITOR AGREEMENT, DATED AS OF EVEN DATE HEREWITH BY
AND AMONG MAX BOWEN ENTERPRISES, SUMMIT CAPITAL INC. AND THE BOWEN-SMITH CORP.
INCENTIVE COMPENSATION TRUST.
MANAGEMENT AGREEMENT
This Management Agreement (this ``Agreement'') is made and entered into
as of October 12, 1994, by and between Bowen-Smith Corp., a Delaware
corporation (the ``Company''), and Summit Capital, Inc., a Texas corporation
(``Summit'').
RECITALS
Summit is experienced in providing management services and in providing
strategic planning and financial services to business enterprises including
companies engaged in the communication tower business.
The Company wishes to engage Summit in connection with the Company's
efforts to acquire, own, operate and maintain communication towers and tower
companies from time to time.
NOW, THEREFORE, for and in consideration of the mutual benefits to be
derived herefrom, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Summit agree as
follows:
1. MANAGEMENT SERVICES. For the term hereof, the Company hereby
engages Summit to (a) assist the Company in identifying potential investment
opportunities in or relating to the communication tower business including the
acquisition of towers and tower businesses, (b) advise and assist the Company
in evaluating, structuring, negotiating, documenting and finalizing any such
investments made by the Company, (c) advise the Company on an ongoing basis in
connection with financial matters involving the Company's credit facilities,
(d) advise and assist the Company in connection with the liquidation, sale, or
exchange of any assets or properties, (e) assist the Company in evaluating the
day to day operations and strategic plans for the business, (f) advise the
Company with respect to the maintenance and repair of communication towers, (g)
assist the Company with respect to marketing and sales of communication
services and (h) assist the Company's management in making recommendations to
the Board of Directors of the Company with respect to any of the foregoing.
Summit shall devote such time and effort in providing such services as each
such party
<PAGE> 2
deems reasonably necessary and appropriate in order to adequately assist and
advise the Company with respect to such matters.
2. INVESTMENT SERVICES. In addition to the management services
described in Section 1 above, the Company may engage Summit from time to time
to perform investment banking or similar services with respect to evaluating
the Company's capital structure and capital requirements, raising additional
capital and such other investment banking services as the Company and Summit
may agree upon.
3. MANAGEMENT FEE; INVESTMENT FEE. As compensation for the
management services rendered by Summit pursuant to Section 1 above, the Company
shall, with respect to each year during the term hereof, pay Summit an annual
management fee in the amount of $120,000 (escalating 5% per annum commencing
November 1, 1995 and on each November 1 thereafter), payable quarterly in
advance of first day of each calendar quarter for which such payment relates.
The first quarterly payment shall be due on October 12, 1994 and shall be pro
rated for the calendar quarter ending December 30, 1994. Subsequent quarterly
payments shall be due on each January 1, April 1, July 1 and October 1
commencing January 1, 1995. The final quarterly payment shall be pro rated if
necessary. In addition, if the Company engages Summit to render investment
banking or other services as described in Section 2, the Company shall pay
Summit such customary fees on such terms as the parties may agree upon.
4. RELEASE AND INDEMNIFICATION. To the fullest extent allowed by
applicable law, the Company, on behalf of itself and its successors and
assigns, hereby releases, acquits, and forever discharges Summit, its
affiliates and their respective officers, directors, employees, partners,
representatives and agents from all claims, demands or causes of action of any
character which the Company may have against such persons and entities in
connection with the services to be provided by Summit hereunder; provided,
however, such release shall not apply to actions in breach of this Agreement or
constituting willful malfeasance or gross negligence. To the fullest extent
permitted by applicable law, the Company shall indemnify, defend and hold
harmless Summit, its affiliates and their respective officers, directors,
employees, partners, representatives and agents from and against all losses,
costs, claims, liabilities, damages and expenses (including, without
limitation, costs of suit and attorneys' fees) they may incur in connection
with the performance by Summit of its obligations hereunder, and the Company
shall reimburse each such indemnified party for all reasonable expenses
(including reasonable fees and expenses of counsel) as they are incurred by
such indemnified party in connection with investigating, defending, or
preparing for any such action or claim. THE LOSSES, COSTS, CLAIMS, DAMAGES,
LIABILITIES AND EXPENSES FOR WHICH SUCH INDEMNIFIED PARTIES ARE INDEMNIFIED
HEREUNDER SHALL SPECIFICALLY INCLUDE THOSE WHICH RESULT FROM SUCH PARTY'S SOLE,
CONCURRENT ACTIVE OR PASSIVE NEGLIGENCE BUT NOT THOSE WHICH RESULT FROM SUCH
PARTY'S GROSS NEGLIGENCE OR WILLFUL MALFEASANCE. The provisions of this
Section 4 shall survive the termination of this Agreement.
5. NATURE OF RELATIONSHIP. The parties hereto do not hereby intend
to and do not hereby form a partnership and nothing in this Agreement shall be
construed to imply such intention; the parties intend that at all times that
Summit shall provide services to the Company as an independent contractor.
-2-
<PAGE> 3
6. TERM AND TERMINATION. This Agreement shall commence as of the
date first written above and shall continue until and terminate on October 30,
1999.
7. MISCELLANEOUS. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCLUDING ANY CONFLICTS-OF-
LAW RULE OR PRINCIPLE WHICH WOULD MAKE THE LAWS OF ANY OTHER JURISDICTION
APPLICABLE HERETO. This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof, superseding all prior
negotiations, discussions, agreements and understandings, whether oral or
written, relating to the subject matter hereof. This Agreement may only be
amended in writing signed by all of the parties hereto, and any provision
hereof may be waived only in writing signed by the party to be charged. If any
one or more of the provisions contained in this Agreement shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement or any other document. This Agreement is personal to each of
the Company and Summit and may not be assigned or delegated by any of them
without the express written consent of the other parties. Subject to the
foregoing sentence, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
8. NOTICES. All notices, requests, demands and other communications
provided for hereunder shall be in writing and shall be deemed to have been
duly given if hand-delivered or sent by first class registered or certified
mail (return receipt requested), postage prepaid or, to the extent receipt is
confirmed, telecopy, to the applicable party at the appropriate address set
forth below:
(a) If to the Company, to:
12454 Old Galveston Road
Webster, TX 77598
Attention: President
(b) If to Summit, to:
8 Greenway Plaza, Suite 714
Houston, TX 77046
Attention: Fred R. Lummis
Each party shall have the right, upon giving 10 days' prior notice to the other
parties in the manner hereinabove provided, to change its address for notice
purposes. Notice given in any other fashion shall be deemed to be effective
when and if it is received.
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<PAGE> 4
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
BOWEN-SMITH CORP.
By: /s/ FRED R. LUMMIS
----------------------------------
Name: Fred R. Lummis
Title: Chief Executive Officer
SUMMIT CAPITAL, INC.
By: /s/ GEORGE KELLY
----------------------------------
Name: George Kelly
Title:
-------------------------------
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<PAGE> 1
EXHIBIT 10.8
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (the "Agreement") is made as of October
12, 1994, by and between Max Bowen ("Principal") and American Tower
Corporation, a Delaware corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Assignment dated as of October 12,
1994, the Buyer has succeeded to all rights, title and interest of BSC
Acquisition, Inc. to acquire all of the outstanding capital stock of Bowen-
Smith Holdings, Inc., a Delaware corporation ("BSHI"), pursuant to that certain
Stock Purchase Agreement dated September 2, 1994 (the "Purchase Agreement"), by
and among BSC, BSHI and the stockholders of BSHI (including an affiliate of the
Principal), and assigned by BSC to Buyer and
WHEREAS, the Principal is one of the principal beneficial stockholders
and/or is an executive officer or director of BSHI or a subsidiary of BSHI; and
WHEREAS, the Principal is a primary beneficiary of the consideration to
be paid under the Stock Purchase Agreement; and
WHEREAS, because of, among other matters, Principal's or its affiliates'
intimate knowledge of the business of BSHI and its subsidiaries and his
reputation and relationships with, among others, the clients, customers,
subcontractors, suppliers, employees and other agents of BSHI and its
subsidiaries, Principal and the Buyer recognize and acknowledge (i) the
detrimental effect on the business and the substantially decreased value of
BSHI and its subsidiaries and the business which would result if Principal were
to enter into competition with the business within a reasonable period of time
after the Buyer's purchase of the business of BSHI, (ii) that the agreements
and covenants in this Agreement are essential to protect the business and
goodwill purchased by Buyer, and (iii) that Buyer would not have entered into
the Stock Purchase Agreement but for the covenants and agreements contained in
this Agreement; and
WHEREAS, it is a material condition to Buyer's obligation to consummate
the transactions contemplated by the Stock Purchase Agreement that the
Principal enter into this Agreement.
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants, and obligations contained herein and in the Stock Purchase
Agreement, and as an inducement to Buyer to consummate the purchase of
Principal's beneficial ownership interest in BSHI, Buyer and Principal agree as
follows:
1. Principal agrees that commencing on the date of this Agreement
and continuing for a period of seven years thereafter, Principal will not
directly or indirectly engage in any Competitive Activities (as hereinafter
defined). The term "Competitive Activities" as used herein shall mean:
(a) directly or indirectly engaging in, continuing in or
carrying on the business of renting or leasing space on, or owning or
managing radio or other communications towers or managing communication
facilities on building tops (the "Business"), including owning,
controlling, participating in, joining, operating, or managing or being
a partner or stockholder of any business which competes with or is
engaged in or carries on as a material part of its business operations
any aspect of the Business provided, however, that the Business shall
not be deemed
<PAGE> 2
to include the business of constructing or servicing towers as conducted
on the date hereof by Allied Tower Company, Inc.;
(b) consulting with, advising or assisting in any way, whether
or not for consideration, any corporation, partnership, firm or other
business organization which at the time of such consultation, advice or
assistance is or proposes to become a competitor of the Business,
including, but not limited to, advertising or otherwise endorsing the
products or services of any such competitor; soliciting clients or
customers of BSHI or its subsidiaries (or persons or entities from which
BSHI or its subsidiaries have solicited orders for the sale of any
Business service within the three years immediately preceding the date
of this Agreement) or otherwise serving as an intermediary for any such
competitor; loaning money or rendering any other form of financial
assistance to any such competitor;
(c) offering employment to, or inducing or attempting to
induce any director, officer, employee, agent, or customer, supplier or
lessor of BSHI or its subsidiaries to terminate such position or
relationship with BSHI or its subsidiaries; or
(d) operate any business or offer any goods or services under
the name "Bowen-Smith" or any of the names of the Subsidiaries, or any
variation thereof, unless Buyer has abandoned the name; provided,
however, that Principal shall at all times be entitled to operate any
business or offer any goods or services or make any use whatsoever it
wishes of his personal name;
provided, however, that the term "Competitive Activities" shall not include the
ownership of securities of corporations which are listed on a national
securities exchange or traded in the national over-the-counter market in an
amount which shall not exceed 5% of the outstanding shares of any such
corporation. The parties agree that, since the scope of the Business conducted
by or through BSHI and its subsidiaries, is or will likely be carried out
through-out the Unites States, the geographic scope of this covenant not to
compete shall extend through-out the United States. Notwithstanding anything
to the contrary contained in this Agreement, this Agreement shall terminate
immediately upon the occurrence of either of the following events: (i) Buyer's
failure to pay when due any amount payable to Principal pursuant to Paragraph 2
hereof which failure shall continue for thirty (30) days after such due date or
(ii) Buyer's failure to pay when due any monetary payments owed to Principal or
its affiliates under the terms of the Purchase Agreement or any agreement
executed in connection therewith which failure shall remain uncured for a
period of thirty (30) days after notice thereof from Principal to Buyer.
2. As additional consideration of the agreements of Principal
contained herein, Buyer shall pay to Principal $440,000, $220,000 of which is
payable on July 1, 1995, and the remaining $220,000 of which is payable on
January 1, 1996.
3. If Principal commits a breach, or overtly threatens to commit a
breach, of any of the provisions of this Paragraph 1, Buyer shall have the
right and remedy to have the provisions of Paragraph 1 of this Agreement
specifically enforced by any court having jurisdiction, it being acknowledged
and agreed that any such breach or threatened breach will cause irreparable
injury and continuing damage to Buyer, BSHI and its subsidiaries, and that the
exact amount of which would be difficult to ascertain and that in any event
money damages will not provide an adequate remedy and Buyer shall be entitled
to injunctive relief restraining any violation of Paragraph 1.
The rights and remedies enumerated above shall be independent, and in addition
to, and not in lieu of, any other rights and remedies available to Buyer, at
law or in equity.
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<PAGE> 3
4. The parties hereto intend to and hereby confer jurisdiction to
enforce the covenants contained in Paragraph 1 upon the courts of any state or
foreign jurisdiction within the geographical scope of such covenants. If the
courts of any one or more of such states or jurisdictions shall hold such
covenants wholly enforceable by reason of the breadth of such scope or
otherwise, it is the intention of the parties hereto that such determination
not bar or in any way affect Buyer's right to the relief provided above in the
courts of any other states or jurisdictions within the geographical scope of
such covenants, as to breaches of such covenants as they relate to each state
being, for this purpose, severable into diverse and independent covenants.
5. If any action, suit or other proceedings at law or in equity is
brought to enforce the covenants contained in Paragraph 1, or to obtain money
damages for the breach thereof, and such action results in the award of a
judgment for money damages or in the granting of any injunction in favor of
Buyer, all expenses (including reasonable attorneys' fees and expenses) of
Buyer, in such action, suit or other proceeding shall (on demand of Buyer) be
paid by the Principal; provided, that, if in any such action, suit or
proceeding, the Principal is the prevailing party, then Buyer shall, upon
demand, pay all expenses (including reasonable attorneys' fees) incurred by the
Principal in connection therewith.
6. Principal understands that the foregoing restrictions may limit
his ability to engage in a business similar to the Business, but acknowledges
that he is receiving sufficiently high benefits from Buyer hereunder and under
the Stock Purchase Agreement to justify such restriction.
7. It is expressly understood and agreed that Buyer and Principal
consider the restrictions contained in Paragraph 1 above to be reasonable and
necessary for the purposes of preserving and protecting the Business and good
will purchased by Buyer. Nevertheless, if any of the aforesaid restrictions
are found by a court having jurisdiction to be unreasonable, or over broad as
to geographic area or time, or otherwise unenforceable, the parties intend for
the restrictions therein set forth to be modified by such court so as to be
reasonable and enforceable and, as so modified by the court, to be fully
enforced.
8. No failure by either party hereto at any time to give notice of
any breach by the other party of, or to require compliance with, any condition
or provision of this Agreement shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
9. Neither this Agreement nor any interest herein may be assigned by
the Principal. Buyer may freely assign this Agreement and any and all interest
herein to any "affiliate" thereof or in connection with a transfer, directly or
indirectly, of all or substantially all of its interest in BSHI and its
subsidiaries or the assets or business thereof but may not otherwise assign
this Agreement provided that no such assignment shall relieve Buyer of its
obligations under this Agreement.
10. No modification or amendment of any provisions of this Agreement
shall be effective, unless such modification or amendment shall be in writing
and signed by a duly authorized officer of Buyer and by Principal. This
Agreement may be executed by the parties hereto in one or more counterparts,
each of which shall be an original and all of which shall together constitute
the Agreement. This Agreement constitutes the sole and entire agreement of the
parties hereto with respect to the matters covered hereby and supersedes all
prior negotiations and written, oral or implied representations, warranties,
commitments, offers, contracts and understandings between the parties with
respect to such matters.
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<PAGE> 4
11. All notices, demands, consents or other communications required
or permitted hereunder shall be in writing and shall be deemed to have been
given when personally delivered or sent by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to Buyer:
American Tower Corporation
Eight Greenway Plaza
Suite 714
Houston, Texas 77046
Attention: President
and
Vinson & Elkins L.L.P.
1001 Fannin
2300 First City Tower
Houston, TX 77002-6760
Attention: Mr. Jeffery B. Floyd
If to Principal:
at the address below its name on the signature page of this
Agreement
and with a copy to:
Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza
New York, New York 10112
Attention: Denise M. Tormey
or to such other person and place as a party shall furnish by notice to the
other party hereto if given in the manner required above. Any notice, demand,
consent or other communication given hereunder in the manner required above
shall be deemed to have been effected and received as of the date hand
delivered or, if mailed, three days after the date so mailed.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the date and year first above written.
MAX BOWEN
/s/ MAX BOWEN
-------------------------------------
Address: 12454 Old Galveston Road
Webster, Texas 77598
AMERICAN TOWER CORPORATION
By: /s/ FRED R. LUMMIS
----------------------------------
Fred R. Lummis
President and CEO
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<PAGE> 1
EXHIBIT 10.9
THIS AGREEMENT IS SUBJECT TO THE TERMS OF (i) THAT CERTAIN SUBORDINATION
AGREEMENT, DATED AS OF OCTOBER 12, 1994, BY AND AMONG THE HOLDERS OF JUNIOR
CLAIMS, NATIONSBANK OF TEXAS, N.A., AS A HOLDER OF A SENIOR CLAIM, FIRST
INTERSTATE BANK OF TEXAS, N.A., AS A HOLDER OF A SENIOR CLAIM, AND FIRST
INTERSTATE BANK OF TEXAS, N.A., AS AGENT FOR THE HOLDER OF THE SENIOR CLAIMS,
AS AMENDED, (ii) THAT CERTAIN SELLER/BANC ONE SUBORDINATION AGREEMENT, DATED AS
OF OCTOBER 12, 1994, AS AMENDED, BY AND AMONG THE HOLDERS OF JUNIOR CLAIMS AND
BANC ONE CAPITAL PARTNERS II, LIMITED PARTNERSHIP, AS A HOLDER OF SENIOR
SUBORDINATE CLAIMS, AS AMENDED, AND (iii) THAT CERTAIN INTERCREDITOR AGREEMENT,
DATED AS OF OCTOBER 12, 1994, BY AND AMONG MAX BOWEN ENTERPRISES, MAX BOWEN,
ROMEO LAUREL AND GEORGE M. WEISS, SUMMIT CAPITAL INC. AND THE BOWEN-SMITH CORP.
INCENTIVE COMPENSATION TRUST, AS AMENDED.
CONSULTING AGREEMENT
This Consulting Agreement (this "Agreement") is made as of October 17,
1994, by and between Max Bowen (the "Consultant") and Bowen-Smith Corp. (the
"Company").
W I T N E S S E T H :
WHEREAS, the Company desires to engage the Consultant to assist the
Company in its business ventures and operations thereof, and the Consultant
desires to assist the Company;
WHEREAS, the nature of the services to be provided may involve granting
the Consultant access to certain confidential information belonging to the
Company;
NOW, THEREFORE, in consideration of the premises and the compensation
and other remuneration to be paid by the Company for such consulting services
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:
1. CONSULTING SERVICES. The Company hereby agrees to retain the
Consultant and the Consultant hereby agrees to serve the Company from October
12, 1994, through October 12, 1999, upon the terms and conditions hereinafter
set forth. During the term of this Agreement the Consultant agrees to hold
himself available to consult on a part-time basis and shall provide consulting
services to the Company from time to time, as such services are needed
provided, however, that Consultant shall not be required to provide more than
10 hours per month of consulting services to the Company pursuant to the terms
of this Agreement. The parties to this Agreement specifically acknowledge and
agree that (i) Consultant is not obligated hereunder to devote full-time to the
Company pursuant to this Agreement, (ii) Consultant will have other clients
<PAGE> 2
and businesses that require his services and (iii) the Company will act in
connection with this Agreement with due regard to such other clients and
businesses of Consultant.
2. COMPENSATION. As compensation for the Services to be rendered by
the Consultant hereunder, and without regard to whether the Company actually
avails itself of such services, the Company shall pay to the Consultant
$150,000 per year payable in twelve monthly installments of $12,500 on the
fifth day of each month, commencing on November 5, 1994.
3. DUTIES. The duties of the Consultant shall be to provide the
Company with the benefit of his experience in the tower ownership and
construction business and on various aspects of the business of Bowen-Smith
Holdings, Inc. and its subsidiaries, as such issues should arise provided,
however that the parties agree that such services shall be provided at
Consultant's offices and Consultant shall not be obligated hereunder to travel
or attend meetings other than at Consultant's office. In addition to the
compensation provided in Section 4, if Consultant travels at the request of the
Company, the Company shall reimburse Consultant for all reasonable and
necessary travel expenses incurred.
4. DISCLOSURE OF INFORMATION. The Consultant acknowledges that the
Company's trade secrets and proprietary information and know-how, as they may
exist from time to time, are valuable, special and unique assets of the
Company's business, access to and knowledge of which are essential to the
performance of the Consultant's duties hereunder. The Consultant will not at
any time disclose such secrets, information or know-how to any person or entity
for any reason whatsoever, except as required in connection with the business
of the Company, nor shall the Consultant make use of any such property for his
own purposes or for the benefit of any person or entity (except the Company)
under any circumstances during or after the term of this Agreement, provided
that after the term of this Agreement these restrictions shall not apply to
such secrets, information and know-how which are then in the public domain
(provided that the Consultant was not responsible, directly or indirectly, for
such secrets, information or processes entering the public domain without the
Company's consent). The Consultant agrees to hold, as the Company's property,
all memoranda, books, papers, letters, processes, computer software,
algorithms, structures, source or object codes, records, financial information,
policy and procedure manuals, training and recruiting procedures and other
data, and all copies thereof and therefrom, in any way relating to the
Company's business and affairs, whether made by him or otherwise coming into
his possession, and on termination of this Agreement, or on demand of the
Company, at any time, to deliver the same to the Company.
5. REMEDIES. The Consultant and the Company agree that, because
damages at law for any breach or nonperformance of this Agreement by the
Consultant, while recoverable, are and will be inadequate, this Agreement may
be enforced in equity by specific performance, injunction or otherwise.
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<PAGE> 3
6. INDEPENDENT CONTRACTOR. Consultant's status under this Agreement
shall be that of an independent contractor, and not that of an employee of the
Company. Consultant agrees that he will not make any representation whatsoever
with respect to this affiliation with the Company which is inconsistent with his
status as an independent contractor retained for the limited purposes set forth
in this Agreement.
7. MISCELLANEOUS.
(a) This Agreement is made and entered into as of the date first
above written and the rights and obligations of the parties hereto shall be
binding upon the heirs and legal representatives of the Consultant and the
successors and assigns of the Company. This Agreement may be assigned by the
Company but is personal to the Consultant, and no rights, duties, and
obligations of the consultant hereunder may be assigned, and without limiting
the foregoing, Consultant's right to receive payments hereunder shall not be
assignable or transferable, whether by pledge, creation of a security interest
or otherwise.
(b) The Consultant's obligations under Section 4 of this Agreement
shall survive the termination, for whatever reason, of the Consultant's
engagement by the Company.
(c) This Agreement supersedes, replaces and merges any and all prior
and contemporaneous understandings, representations, agreements and discussions
relating to the same or similar subject matter as that of this Agreement
between the Consultant and the Company and constitutes the sole and entire
agreement between the Consultant and the Company with respect to the subject
matter of this Agreement.
(d) This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without regard to the conflict
of law principles thereof.
(e) This Agreement may not be changed or terminated orally, and no
change, termination or waiver of this Agreement or of any of the provisions
herein contained shall be binding unless made in writing and signed by both
parties.
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<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
BOWEN-SMITH CORP.
By: /s/ FRED R. LUMMIS
-----------------------------
Name: Fred R. Lummis
Title: Chief Executive Officer
MAX BOWEN
/s/ MAX BOWEN
-------------------------------
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<PAGE> 1
EXHIBIT 10.11
LEASE AGREEMENT
THIS LEASE AGREEMENT (herein referred to as the "Lease") is made and
entered into by and between MAX BOWEN (the "Landlord") and BOWEN-SMITH CORP., a
Delaware corporation (the "Tenant"), whereby Landlord leases to Tenant, and
Tenant leases from Landlord that certain commercial building containing
approximately 7,200 square feet of space located at 12454 Old Galveston,
Webster, Texas (hereinafter called the "Leased Premises").
1. TERM.
(a) It is intended hereby that Landlord and Tenant shall each
have vested rights immediately upon execution of this Lease, and that this Lease
shall be fully binding upon the parties hereto and shall be in full force and
effect from and after execution hereof by Landlord and Tenant. The term hereof
shall commence on December 24, 1987, and the term hereof shall end on December
23, 1994 (subject to the renewal option set forth below) unless this Lease is
sooner terminated as hereinafter provided.
(b) The Tenant shall have the option to renew this Lease
Agreement for one additional three (3) year term (the "Option Term") upon the
same terms, covenants and conditions as herein provided, except, that the
rental during said Option Term shall be determined as set forth in Paragraph
5(b) below; provided, further, Tenant shall give Landlord written notice of the
exercise of said option within ninety (90) days of the expiration of the term
set forth above. No further instrument shall be required to be executed, but
the term of this Lease shall, thereupon, be extended, subject to the provisions
contained herein.
2. Taxes. Each year during the term of this Lease, Tenant shall
reimburse Landlord for all real estate taxes assessed against the Leased
Premises. Landlord shall furnish to Tenant a copy of the real estate tax
invoice and proof of payment and Tenant shall reimburse Landlord for such taxes
within ten (10) days after receipt of said invoice. Tenant shall also be
liable for all taxes levied against personal property and trade fixtures placed
by Tenant in the Leased Premises. Nothing herein contained shall require or be
construed to require Tenant to pay any inheritance, estate, succession,
transfer, gift, franchise, income or profit tax that is or may be imposed upon
Landlord, its successors or
<PAGE> 2
assigns, unless such taxes shall be levied upon the rent reserved herein instead
and in lieu of real estate taxes upon the Leased Premises.
3. Utilities. Tenant shall promptly pay all charges for utility
services in, on and in connection with the Leased Premises. Landlord shall
not, in any event, be liable in damages or otherwise for the failure or
interruption of any utility service at the Leased Premises, and no such failure
or interruption of utility services shall entitle Tenant to terminate this
Lease.
4. Holding Over. Failure of Tenant to surrender the Leased
Premises at the expiration of the Lease (including any renewal term)
constitutes a holding over which shall be construed as a tenancy from month to
month at a rental determined in accordance with the provisions of Paragraph
5(b) below.
5. Rent
(a) Tenant agrees to and shall pay to Landlord, at Landlord's
address hereafter set out, as rent for the Leased Premises, for the entire term
hereof, the total sum of Three Hundred Thirty-six Thousand and No/100 Dollars
($336,000.00), which shall be payable, without demand or notice, in monthly
payments of $4,000.00 each, such rental to be due and payable to Landlord in
advance, on or before the first (1st) day of each month during the term hereof,
commencing December _____, 1987, and continuing on the first (1st) day of each
month thereafter for the full term of this Lease until the total rental
provided for above shall be paid. If rent is not received by Landlord by the
fifth (5th) day of each month, Tenant shall pay a late charge to Landlord equal
to One Hundred and No/100 Dollars ($100.00), which the parties hereto agree
represents a fair and reasonable estimate of expenses and costs Landlord will
incur by reason of late payment by Tenant.
(b) In the event the Tenant exercises the renewal option as
set forth in Paragraph 1(b) above, the rent payable during such Option Period
shall be adjusted for any increase in the cost of living between the calendar
year 1986 and the calendar year 1991, which shall be determined based on the
increase, if any, in the Consumer Price Index (1957 - 1959 equals 100, 1964
Revision) for all items in all cities reported, as published by the Bureau of
Labor Statistics of
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<PAGE> 3
the United States Department of Labor. The 1986 rate shall be subtracted from
the 1991 rate and the increase, if any, shall be expressed as a percentage
increase. The percentage increase shall then be multiplied by the monthly
rental during the initial term, $4,000.00, and added to such rental rate, and
the sum of such amount shall be the monthly rental rate payable during each
month of the renewal term. The Landlord shall notify the Tenant of such
increase at least ten (10) days prior to the first day of the month for which
such increase will be effective.
6. Use. Tenant shall use the Leased Premises for general office
use in the operation of a tower leasing business and for any other purpose
related thereto, and for no other purpose without the express prior written
consent of Landlord not to be unreasonably withheld or delayed.
7. Security Deposit. Tenant shall pay to Landlord, to secure
Tenant's faithful performance hereunder, including, but not limited to, payment
of rent, on the date hereof, the sum of Four Thousand and No/100 Dollars
($4,000.00).
8. Insurance. Tenant shall obtain and maintain fire and
extended coverage insurance on the improvements on the Leased Premises in an
amount reasonably satisfactory to Landlord. Tenant shall provide public
liability and property damage insurance for its business operations on the
Leased Premises in the amount of_______________ Dollars ($______) which policy
shall cover the Landlord as well as the Tenant. Said insurance policies
required to be provided by Tenant herein shall name Landlord as an insured and
shall be issued by an insurance company reasonably satisfactory to Landlord and
shall provide that no cancellation or modification of such insurance shall be
effective without ten (10) days prior written notice to Landlord. Tenant shall
provide Landlord with certificates of insurance evidencing the coverage
required herein within three (3) weeks of the date hereof. Tenant shall be
solely responsible for fire and casualty insurance on Tenant's property on or
about the Leased Premises. If Tenant does not maintain such insurance in full
force and effect, Landlord may notify Tenant of such failure and if Tenant does
not deliver to Landlord within ten (10) days after such notice certification
showing all such insurance to be in full force and effect, Landlord may, but
shall not be obligated to, take out the necessary insurance to comply with the
provisions hereof and pay the premiums on the items specified in such notice,
and Tenant covenants thereupon
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<PAGE> 4
on demand to reimburse and pay Landlord, as additional rent hereunder, any
amount so paid or expended in the payment of the insurance premiums required
hereby and specified in the notice, with interest thereon at the rate of ten
percent (10%) per annum from the date of such payment by Landlord until repaid
by Tenant.
9. Quiet Enjoyment. Landlord covenants, represents and warrants
that it and no other person or corporation has the right to lease the Leased
Premises to Tenant. Landlord further covenants, represents and warrants that
Tenant upon paying the rent and performing its obligations under this Lease,
shall peacefully and quietly have, hold and enjoy the Leased Premises
throughout the term hereof and any extension thereto without hindrance,
ejection or molestation by any person claiming by, through or under Landlord.
10. Condition of Premises. Tenant has examined and accepts the
Leased Premises in its present "AS IS" condition as suitable for the purposes
for which the same are leased.
11. Maintenance and Repairs. Landlord shall have no obligation to
make repairs or maintain the Leased Premises, except as herein provided. The
Tenant shall, at Tenant's sole cost and expense, keep the Leased Premises
(including the parking area) in good and clean condition, order and repair, and
shall make all necessary repairs and replacements thereto (including,
but not limited to keeping the foundation, exterior walls and roof in good
repair and the replacement of cracked or broken glass). If any repairs required
to be made by Tenant hereunder are not made within ten (10) days after written
notice delivered to Tenant by Landlord, then Landlord may, but shall not be
obligated to, make such repairs, without liability to Tenant for any loss or
damage which may result by reason of such repairs, and Tenant shall pay to
Landlord, upon demand, as additional rent hereunder, the cost of such repairs
plus interest at the rate of ten percent (10%) per annum. At the termination of
this Lease, Tenant shall deliver the Leased Premises to Landlord, in good order
and condition, reasonable wear and tear alone excepted.
12. Alterations. No structural alterations, additions or
improvements will be made to the Leased Premises without Landlord's prior
written consent, such consent not to be unreasonably withheld or delayed. All
alterations, additions and improvements, except personal property and trade
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<PAGE> 5
fixtures, installed at expense of Tenant, which are consented to by Landlord,
shall become the property of Landlord and shall remain upon and be surrendered
with the Leased Premises as a part thereof on the termination of this Lease.
Landlord agrees that the personal property and trade fixtures of Tenant located
at the Leased Premises will not be deemed "fixtures" and will remain the
personal property of Tenant subject to the security interest of the Secured
Party, as hereinafter defined. If consent is granted for the making of
improvements or alterations to the Leased Premises, such improvements or
alterations shall not commence until Tenant has furnished to Landlord a
certificate of insurance showing coverage in an amount reasonably satisfactory
to Landlord protecting Landlord from liability for injury to any person and
damage to property, on or off the Leased Premises, in connection with the
making of such improvements or alterations. At the termination of this Lease,
Tenant shall deliver the Leased Premises to Landlord, in good order and
condition, reasonable wear and tear alone excepted. Any damage caused by the
installation or removal of trade fixtures shall be repaired at Tenant's expense
prior to the expiration of the lease term or any extension thereof. All
alterations, improvements, additions and repairs made by Tenant shall be made
in good and workmanlike manner. Tenant agrees to discharge within sixty (60)
days after written notice by Landlord, any lien or claim to be asserted,
attached or filed against the Leased Premises or any portion thereof, by reason
of any alteration or repair, addition, and Tenant hereby further agrees to
indemnify and save Landlord harmless from and against any and all costs,
expenses, liabilities, damages, suits, liens, claims and demands (including,
but not limited to reasonable attorney's fees) resulting from any alteration,
repair or addition to the Leased Premises by Tenant, or any lien or claim
asserted against the Leased Premises or Landlord for work done for or on behalf
of Tenant at the Leased Premises.
13. Compliance with Laws and Regulations. Tenant shall, at its own
expense, comply with all laws, orders, rules and requirements of all
governmental entities with reference to the use and occupancy of the Leased
Premises.
14. Assignment and Subletting. Tenant shall not assign this Lease
or sublet the Leased Premises or any interest without first obtaining the
written consent of Landlord, such consent not to be unreasonably withheld or
delayed. However, Landlord's consent shall not be required if the assignment or
subletting is (1) to a parent, subsidiary, affiliate, or controlled corporation
of Tenant; (2) to any
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<PAGE> 6
successor by consolidation or merger; or (3) to a corporation or other business
entity to which Tenant may sell all or substantially all of its assets. An
assignment or subletting without the written consent of Landlord, if required,
shall be void and shall, at the option of Landlord, terminate this Lease. If
consent to an assignment or subletting is given by Landlord, it is agreed and
understood that Tenant shall remain liable hereunder for payment of all rent
and other sums due or to become due hereunder for the full term of this Lease,
and for the carrying out of all of the terms and provisions hereof.
15. Destruction. In the event the Leased Premises is partially
damaged or destroyed or rendered partially unfit for occupancy by fire or other
casualty, Tenant shall give immediate notice to Landlord, and Landlord may at
his option repair the damage and restore the Leased Premises to substantially
the same condition as immediately prior to the occurrence of the casualty. If
the Leased Premises are totally destroyed or deemed by the Landlord to be
rendered unfit for occupancy by fire or other casualty, or if Landlord shall
decide not to repair or rebuild, this Lease shall terminate and the rent shall
be paid to the time of such casualty.
16. Tenant Default. The following events shall be deemed to be
events of default by Tenant under this Lease:
(a) Tenant shall fail to pay any installment of rent (or any
additional rent or any other sums of money provided to be paid
hereunder) when due, and such non-payment shall continue for ten (10)
days after written notice thereof by Landlord;
(b) Tenant shall fail to comply with any other term, provision
or covenant of this Lease, and such non-compliance shall continue for
ten (10) days after written notice thereof by Landlord;
(c) Tenant shall become insolvent, or shall make transfer in
fraud of creditors, or shall make an assignment for the benefit of
creditors;
(d) Tenant shall file a petition (or there shall be commenced
against Tenant proceedings which proceedings are not discharged within
sixty (60) days) under any section or chapter of the Bankruptcy Code,
11 U.S.C. Section 1.01, et. seq., as the same
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<PAGE> 7
may be amended from time to time, or under any similar law or statute
of the United States or any state thereof; or Tenant shall be adjudged
bankrupt or insolvent in proceedings filed against Tenant under the
Bankruptcy Code, which proceedings are not discharged within sixty (60)
days;
(e) A receiver or trustee shall be appointed for all, or
substantially all, of the assets of Tenant and such appointment shall
not be vacated within thirty (30) days after such appointment; or
(f) Tenant shall desert, abandon or vacate the Leased
Premises.
Upon the occurrence of any of the events of default specified
above, or upon the occurrence of any other default hereunder or breach of this
Lease by Tenant and in any such event after the applicable grace period,
Landlord shall have the option to pursue any one or more of the following
remedies without any notice or demand whatsoever (except as otherwise expressly
provided for herein), to-wit:
(a) Terminate this Lease, in which event Tenant shall
immediately surrender the Leased Premises to Landlord; and if Tenant
fails to do so, Landlord may, without prejudice to any other remedy
which it may have for possession or arrearages in rent, enter upon and
take possession of the Leased Premises, and expel or remove Tenant and
any other person or persons who may be occupying said Leased Premises,
or any part thereof, without being liable for prosecution or any claim
for damages therefor, and Tenant agrees to pay to Landlord, on demand,
the amount of all loss and damage which Landlord may suffer by reason
of such termination, whether through inability to relet the Leased
Premises on satisfactory terms, or otherwise;
(b) Declare the entire amount of rent which would have become
due and payable during the remainder of the term hereof to be due and
payable immediately. In such event, Tenant agrees to pay the same at
once, together with all other amounts theretofore due to Landlord,
provided, however, that such payments shall not constitute a penalty,
forfeiture or liquidated damages, but shall merely constitute payment
in advance of the rent due hereunder for the remainder of the term
hereof. The acceptance of such payment by Landlord shall not
constitute a waiver of any failure of Tenant
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<PAGE> 8
thereafter occurring to comply with any term, provision, condition or
covenant of this Lease;
(c) Landlord may terminate Tenant's right of possession (but not the
Lease) and may repossess the Leased Premises by forcible entry or
detainer suit, or otherwise, without terminating this Lease, and
Landlord may relet the Leased Premises, as the agent of the Tenant, and
receive the rent therefor; and in any event, Tenant shall pay Landlord
the cost of renovating, repairing and altering the Leased Premises for a
new tenant or tenants, and any deficiency in rent that may arise by
reason by such reletting shall be payable to Landlord on demand;
provided, however, the failure or refusal of Landlord to relet the
Leased Premises shall not, in any event, release or affect Tenant's
liability for rent or for damages, and any such rent and damages shall
be paid by Tenant on the dates specified herein;
(d) Landlord may enter upon the Leased Premises, as agent of Tenant,
do whatever Tenant is obligated to do by the provisions of this
Lease, and may enter the Leased Premises, by force, if necessary,
without being liable to prosecution or any claim for damages therefor.
Tenant agrees to reimburse Landlord, on demand, for any expenses which
Landlord may incur thus effecting compliance with this Lease on behalf
of Tenant, and Tenant further agrees that Landlord shall not be liable
for any damages resulting to Tenant from such action, whether caused by
the negligence of Landlord, or otherwise; and
(e) Enforce the full and specific performance by Tenant of all of
its obligations under this Lease in any manner or made provided by law
or equity.
In the event of termination of this Lease, or termination of Tenant's
right to possession of the Leased Premises, or repossession of the Leased
Premises by Landlord due to an event of default by Tenant, the Landlord shall
not have any obligation to relet or attempt to relet the Leased Premises, or any
portion thereof, or to collect any rental after reletting; but Landlord shall
have the option to so relet or attempt to relet, and in the event of reletting
Landlord may relet the whole or any portion of the Leased Premises for any
period, to any tenant, and for any use or purpose.
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<PAGE> 9
Pursuit of any of the foregoing remedies shall not preclude pursuit of
any of the other remedies herein provided for, or any other remedies provided by
law, nor shall pursuit of any remedies herein provided constitute a forfeiture
or waiver of any rent or other sums due Landlord hereunder or of any damages
accruing to Landlord by reason of the violation of any of the terms, provisions,
and covenants herein contained. Forbearance by Landlord to enforce one or more
of the remedies herein provided upon an event of default shall not be deemed or
construed to constitute a waiver of such default. In the event of a default by
Tenant hereunder, Tenant covenants and agrees to pay, and to indemnify Landlord
against, all legal costs, charges and expenses, including, but not limited to,
reasonable attorneys' fees incurred by Landlord as a result of a default
hereunder, or incurred by Landlord in obtaining possession of the Leased
Premises after default of Tenant, or in enforcing any covenant or agreement of
Tenant hereunder.
No re-entry or taking of possessions of the Leased Premises, or the
removal of any person or property therefrom, pursuant to the provisions hereof,
shall be deemed as an acceptance or surrender of this Lease or the Leased
Premises, or the liquidation or satisfaction to any extent whatsoever of
Tenant's obligations hereunder, unless any acceptance, liquidation, or
satisfaction is set forth in a written notice, executed by Landlord.
Notwithstanding anything to the contrary contained herein, in the event
that a default by Tenant (other than a default in the payment of rent) cannot
be cured within the grace periods provided in this Paragraph 16, such default
shall be deemed to have been cured if Tenant shall have commenced compliance
within such grace period, and continues to prosecute the same with due
diligence.
17. Lien. Landlord is granted an express contractual lien, in
addition to any lien provided by law, and a security interest in all property
of Tenant found on the Leased Premises to secure the compliance by Tenant with
all terms of this Lease. In the event of default, Landlord or its agents may
peaceable enter the Leased Premises and remove all property and dispose of same
as Landlord shall fee fit. Tenant shall be entitled to grant a lien upon
Tenant's interest in this Lease, to any lender of funds to Tenant, (the
"Secured Party"), including without limitation the right to grant a security
interest in its leasehold interest hereunder, by way of a leasehold mortgage,
deed of trust and/or a collateral assignment to Heller Financial, Inc., at 101
Park
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<PAGE> 10
Avenue, New York, New York 10178 Attn: LFG Portfolio Manager. Landlord shall
give Secured Party notice of any default by Tenant simultaneously with the
giving of such notice to Tenant. Secured Party, if it so elects, may cure any
default of Tenant within the time permitted in the Lease, if no cure period is
provided, 10 days after its receipt of such notice.
18. Subordination. Landlord is hereby irrevocably vested with full
power and authority to subordinate this Lease to any mortgage, deed of trust,
or other lien hereafter placed on the Leased Premises and Tenant agrees on
demand to execute such further instruments subordinating this Lease as Landlord
or Landlord's mortgagee (if any) may request.
19. Indemnity. Landlord and its employees and agents shall not be
liable to Tenant or to Tenant's employees, visitors, invitees, or any other
persons for any injury to any such persons or for any damage to property caused
by any act, omission, or neglect of Tenant or Tenant's agents or employees.
Tenant agrees to indemnify and hold Landlord and its employees and agents
harmless from any and all claims (including but not limited to reasonable
attorneys' fees) for any such injury and/or damages, whether the injury or
damages occur on or off the Leased Premises.
20. Signs. Tenant shall not post or paint any signs at on, or
about the Leased Premises or paint the exterior walls of any building except
with the prior written consent of the Landlord, such consent not to be
unreasonably withheld or delayed.
21. Tenant Bankruptcy. Subject to the rights of Secured Party
hereunder, if this Lease is assigned to any person or entity pursuant to the
provisions of the Bankruptcy Code, 11 U.S.C., Section 101, et seq. (the
"Bankruptcy Code"), any and all moneys or other considerations payable or
otherwise to be delivered in connection with such assignment shall be paid and
delivered to, and shall be and remain the exclusive property of, the Landlord
and shall not constitute property of Tenant, or the estate of Tenant, within
the meaning of the Bankruptcy Code. Any and all moneys or other considerations
constituting Landlord's property under the preceding sentence not paid or
delivered to Landlord shall be held in trust for the benefit of Landlord to be
promptly paid or delivered to Landlord. Any person or entity to which this
Lease is assigned pursuant to the provisions of the Bankruptcy Code shall be
deemed, without further act or deed, to have
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<PAGE> 11
assumed all of the obligations arising under this Lease on and after the date
of such assignment. Any such assignee shall, upon demand, execute and deliver
to Landlord an instrument confirming such assumption.
22. Condemnation. If the whole or any substantial part of the
Leased Premises is taken for any public or quasi-public use under any
governmental law, ordinance or regulation or by right of eminent domain or
should the Leased Premises be sold to a condemning authority under threat of
condemnation, this Lease shall terminate and the rent shall be abated during
the unexpired portion of the Lease effective from the date of the physical
taking of the Leased Premises.
23. Notices. Whenever this Lease provides for notice from Landlord
to Tenant or from Tenant to Landlord, the same shall be deemed delivered if
(and when) actually received, or whether or not actually received, if (and
when) deposited in the United States Mail, by registered or certified mail,
postage prepaid, return receipt requested, addressed to the parties at the
following addresses:
To Landlord: To Tenant:
Max Bowen Bowen-Smith Corp.
12454 Old Galveston c/o Telephone Asset Management Corporation
Webster, Texas 400 Park Avenue
Suite 400
New York, New York 10022
Attention: George Weiss
With copy to: With copy to:
J. Gordon Zuber, Esq. Barry A. Adelman, Esq.
Weycer, Kaplan, Pulaski & Zuber Rubin Baum Levin Constant & Friedman
1414 Summit Tower 30 Rockefeller Plaza
Eleven Greenway Plaza New York, New York 10112
Houston, Texas 77046
24. Default by Landlord. In the event of breach by Landlord of any
covenant, warranty, term or obligation of this Lease, then Landlord's failure
to cure same or commence a good faith effort to cure same within fifteen (15)
days after written notice thereof by Tenant to Landlord shall be considered a
default and shall entitle Tenant either to terminate this Lease or cure the
default and any reasonable expenses incurred by Tenant in curing such default
shall be reimbursed by the Landlord after thirty (30) days notice of
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<PAGE> 12
the repairs and expenses incurred.
25. Signs. During the last ninety (90) days of this Lease, a "For
Sale" sign and/or a "For Lease" sign may be displayed on the Leased Premises by
Landlord, and the Leased Premises may be shown at reasonable times to
prospective purchasers or tenants.
26. Right of Entry. Landlord shall have the right during normal
business hours to enter the Leased Premises (a) to inspect the general condition
and state of repair thereof, (b) to make repairs required or permitted under
this Lease, or (c) for any other reasonable purpose.
27. Waiver of Breach. The waiver by Landlord of any breach of any
provision of this Lease shall not constitute a continuing waiver or a waiver of
any subsequent breach of the same or a different provision of this Lease.
28. Binding of Heirs and Assigns. Subject to the provisions of this
Lease pertaining to assignment of the Tenant's interest, all provisions of this
Lease shall extend to and bind, or inure to the benefit not only of the parties
to this Lease but to each and every one of the heirs, executors,
representatives, successors and assigns of Landlord or Tenant.
29. Rights and Remedies Cumulative. The rights and remedies by this
Lease are cumulative and the use of any one right or remedy by either party
shall not preclude or waive its rights to use any or all other remedies. Said
rights and remedies are given in addition to any other rights the parties may
have by law, statute, ordinance, or otherwise.
30. Texas Law to Apply. This Agreement shall be construed under and
in accordance with the laws of the State of Texas, and in the event of any
dispute hereunder, venue shall lie in Harris County, Texas.
31. Legal Construction. In case any one or more of the provisions
contained in this Lease shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof and this Lease shall be construed
as if such invalid, illegal or unenforceable
-12-
<PAGE> 13
provision had never been contained herein.
32. Prior Agreements Superseded. This Lease constitutes the sole
and only agreement of the parties to this Lease and supersedes any prior
understandings or written or oral agreements between the parties respecting the
subject matter of this Lease.
33. Amendment. No amendment, modification or alteration of the
terms hereof shall be binding unless it is in writing dated subsequent to the
date hereof and duly executed by the parties and countersigned by the Secured
Party.
34. Attorney's Fees. Any signatory to this Lease who is the
prevailing party in any legal proceeding against any other signatory brought
under or with relation to this Lease shall be additionally entitled to recover
court costs, reasonable attorney fees, and all other out-of-pocket costs of
litigation, including deposition, travel and witness costs, from the non
prevailing party.
EXECUTED this [Closing Date] 23rd day of December, 1987
TENANT: BOWEN-SMITH CORP.
By: /s/ JOHN S. HIGGENS
-----------------------------
Its: President
----------------------------
LANDLORD: MAX BOWEN
/s/ MAX BOWEN
----------------------------
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<PAGE> 1
EXHIBIT 10.12
ATC TOWER CORP.
12454 Old Galveston Road
Webster, Texas 77598
(713) 486-7431
January 13, 1997
Max Bowen Enterprises
12450 Old Galveston Road
Webster, TX 77598
Attention: Mr. Max Bowen
Dear Max:
On October 16, 1996 a wholly-owned subsidiary of American Tower
Corporation acquired by merger Prime Communication Sites Holding, L.L.C.
("Prime") and its subsidiary company Prime Communication Sites, L.L.C. ("Prime
Sub"). Prime and Prime Sub collectively own approximately 154 towers including
the tower sites, towers and related assets identified on Exhibit A attached
hereto (the "Subject Assets").
This letter is intended to serve as a binding letter agreement with
respect to purchase by Max Bowen Enterprises (or an affiliate thereof)
("Buyer") of the Subject Assets from Prime and Prime Sub (collectively,
"Seller") on the following terms, which terms will be incorporated into, and
superseded by, the conveyance documents delivered at the closing including
deeds, assignments of leasehold interests, a bill of sale, an assignment of
contract rights and an assumption agreement:
1. Closing; Purchase Price. The purchase will take place on Monday,
March 31, 1997 at Buyer's offices. At the closing, Buyer will pay Seller the
sum of $700,000 either in cash or as a reduction of the next maturing principal
payment owing to Max Bowen Enterprises under the Promissory Note delivered in
October 1994 from ATC Tower Corp. (formerly Bowen-Smith Corp.) to Max Bowen
Enterprises.
2. Assumed Liabilities. At the closing, Buyer will assume all
obligations, liabilities and operating expenses relating to the Subject Assets
including obligations under land leases and customer contracts and obligations
for utility payments and ad valorem taxes; however, ad valorem taxes for the
tax year in which the closing occurs shall be pro rated as of the closing date
and the purchase price shall be reduced by the portion attributable to the
period of time before the closing.
3. Transfer Taxes. Buyer will be responsible for transfer, sales
and use taxes (if any) arising from the transaction.
4. DISCLAIMER OF WARRANTIES. SELLER WILL SELL THE SUBJECT ASSETS TO
BUYER ON AN "AS IS" BASIS WITHOUT WARRANTY OF ANY KIND (ALL OF WHICH SHALL BE
DISCLAIMED IN THE CONVEYANCE INSTRUMENTS) EXCEPT THAT SELLER WILL WARRANT THAT
THE SUBJECT ASSETS WILL BE FREE AND CLEAR OF LIENS CREATED BY, THROUGH OR UNDER
SELLER AFTER OCTOBER 16, 1996.
<PAGE> 2
Mr. Max Bowen
January 13, 1997
Page 2
5. Interim Period. If any of the Subject Assets are affected by
any casualty loss during the period from the Effective Date (defined below) to
the closing date, Seller will, at its election, either (i) repair the damaged
asset to the condition it was in before the loss occurred or (ii) assign to
Buyer all (if any) applicable insurance proceeds (less any deductible,
retention or similar amount that Seller is required to pay). If any of the
Subject Assets is the subject of any condemnation proceeding pending as of the
closing date, Seller will assign to Buyer, without recourse, all of Seller's
rights in such proceeding to the extent related to the affected asset.
6. Miscellaneous. This letter shall be effective on the date Buyer
signs this letter and delivers a counterpart hereof to Seller (the "Effective
Date"). This letter shall be construed in accordance with, and governed by,
the laws of Texas.
If you are in agreement with the foregoing, please indicate so by
signing in the space provided below and returning a copy of this letter to me
at the above address.
Very truly yours,
/s/ FRED R. LUMMIS
Fred R. Lummis
ACCEPTED AND AGREED TO:
MAX BOWEN ENTERPRISES
BY: /s/ MAX BOWEN
------------------------------
Max Bowen
DATE:
----------------------------
<PAGE> 1
EXHIBIT 10.13
AGREEMENT REGARDING EULESS II TOWER
THIS AGREEMENT (this "Agreement"), is entered into as of March 5,
1997, among Ultra Towers, L.L.C. ("Ultra"), and American Tower Corporation, a
Delaware corporation ("Buyer").
1. Purchase and Sale. Ultra currently owns the fee interest more
particularly described on Annex A attached hereto and the communication tower
commonly referred to as the Euless II Tower and all other improvements located
on such fee interest (collectively the "Ultra Tower Assets"). Ultra agrees to
sell, transfer and convey and Buyer or its designee agrees to purchase the
Ultra Tower Assets on or before March 11, 1997 on the terms and conditions set
out herein.
2. Conditions to Closing. The obligations of Buyer to purchase
the Ultra Tower Assets are conditioned on Buyer successfully completing its due
diligence review related to the Ultra Assets and being satisfied in its sole
unfettered discretion as to its findings and the condition of the Ultra Assets.
The obligation of both Buyer and Ultra to consummate the transactions
contemplated hereby is conditioned upon simultaneously with the closing of
such transactions the execution and delivery by all parties thereto, of the
Settlement and Release Agreement in the form attached hereto as Attachment No.
1.
3. Consideration. The total consideration to be paid by Buyer to
Ultra for the sale, transfer, assignment, conveyance and delivery of the Ultra
Tower Assets shall be $1,894,326 (the "Purchase Price"). As payment of the
Purchase Price, Buyer will transfer or deliver (i) $894,326 payable by wire
transfer at the closing to an account designated by Ultra to Buyer and (ii)
shares of Buyer's common stock (the "Transferred Shares"). In the event that
Buyer successfully completes its anticipated initial public offering of its
common stock ("IPO"), the number of Transferred Shares shall equal the quotient
of $1,000,000 divided by the the price to the public of Buyer's common stock in
the IPO as set forth on the cover page of the prospectus related thereto. The
delivery of the Transferred Shares shall occur on the date of the IPO.
Notwithstanding the foregoing, in the event that the IPO does not occur within
six months of the date hereof, the number of Transferred Shares shall equal the
quotient of $1,000,000 divided by $750 and such shares shall be deliverable
upon the expiration of such six-month period. Contemporaneously with receiving
the Transferred Shares, Ultra or its designees will enter into Buyer's then
existing form of Securityholders Agreement.
4. Choice of Law. This Agreement shall be construed and
interpreted and the rights of the parties governed by the internal laws of the
State of Texas.
5. Entire Agreement; Amendments and Waivers. This Agreement,
together with all Exhibits and Schedules hereto, constitute the entire
agreement between the parties pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties. No
amendment, supplement, modification or waiver of this Agreement shall be
binding unless executed in writing by all parties hereto.
6. Multiple Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ULTRA:
ULTRA TOWERS, L.L.C.
By:
-------------------------
Name:
-----------------------
Title:
----------------------
BUYER:
AMERICAN TOWER CORPORATION
By:
-------------------------
Name:
-----------------------
Title:
----------------------
<PAGE> 3
Attachment No.1
SETTLEMENT AND RELEASE AGREEMENT
This Settlement and Release Agreement (this "Agreement") is entered
into as of this ___ day of March, 1997 by and among Carlyle-Prime Investors,
L.P., Carlyle-Prime Partners I, L.P., Bill Kubena, Warren B. Harkins, Dale
Harkins, B.R.A.D. Communication Services, Inc., TCG Towers, L.L.C.,
individually and as Agent, ATC Holdings Corp. and Prime Communication Sites
Holding, L. L. C. (now known as ATC-Prime II, L. L.C.)
W I T N E S S E T H:
WHEREAS, the undersigned are parties to that certain Contribution and
Transfer Agreement (Agreement Plan of Merger) dated as of October 11, 1996 (the
"Contribution Agreement");
WHEREAS, the Company and the Transferors have had certain disputes
regarding certain of the Schedule Contracts; and
WHEREAS, the parties desire to settle such disputes and waive and
forever release pursuant to the terms of this Agreement any further claims that
may exist or arise under the Contribution Agreement for breach of
representation.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
AGREEMENTS
1. Definitions. Capitalized terms used in this Agreement that
are not defined herein shall have the meanings given them in
the Contribution Agreement.
2. Settlement Payment. In the settlement of all disputes
currently pending with respect to the Contribution Agreement
and in consideration of the release contained in this
Agreement, the Transferors agree to make a payment to the
Company in an amount equal to $300,000. Such settlement
payment shall be payable by offsetting the outstanding
principal evidenced by the Contingent Transferor Note in an
amount equal to $300,000. Such $300,000 offset shall be
effective as of the Closing Date for purposes of interest
accruals on such note and shall be applied to reduce the
principal payments under the Contingent Transferor Note in the
order such payments become due and payable. The Company will
cause accrued interest to date (after giving effect to the
$300,000 principal offset applied as of the Closing Date) to
be paid on the Transferor Notes and the Contingent Transferor
Note within 2 business days after the execution of this
Agreement by all parties.
3. Mutual Release. In consideration of the Transferors' payment
of the Settlement Amount by means of offset against the
Contingent Transferor Note and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company hereby releases, discharges and
forever acquits the Transferors, their Affiliates and their
respective officers, directors, shareholders,
<PAGE> 4
partners and employees (the "Transferor Released Parties")
from any and all claims for all matters, obligations or any
breach now existing or hereafter arising, whether known or
unknown, under the Contribution Agreement except for claims
arising from or related to the Transferor Notes the Funding
Instruction Letter or a breach of any of the following:
Sections 2.6, 6.1, 7.1,7.2, 7.3, 7.4, 7.5, 7.7, 7.8, 7.10 and
7.11 of the Contribution Agreement and to the extent necessary
to effect the preceeding sections, Section 10 of the
Contribution Agreement (the claims being released and
intending to be released are referred to as the "Transferor
Released Claims"). In furtherance of the foregoing release,
the Company agrees to indemnify, defend and hold harmless the
Transferor Released Parties from any claim by any person
claiming by, through or under the Company, but not otherwise,
with respect to any Transferor Released Claim. In
consideration of the Company's release set forth above and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Transferors
hereby release, discharge and forever acquit the Company, its
Affiliates and their respective officers, directors,
shareholders, partners and employees (the "Company Parties")
from any and all claims for all matters, obligations or any
breach existing or hereafter arising, whether known or
unknown, under the Contribution Agreement except for claims
arising from or related to the Transferor Notes the Funding
Instruction Letter or a breach of Sections 6.1, 7.1 and 7.4,
(the "Company Released Claims"). In furtherance of the
foregoing release, the Transferors agree to indemnify, defend
and hold harmless the Company Parties from any claim by any
person claiming by, through or under the Company, but not
otherwise, with respect to any Company Released Claim.
4. Miscellaneous. This Agreement shall be governed by the laws
of the State of Texas and may be executed in one or more
multiple counterparts (by telecopy or otherwise), which, when
taken together, shall constitute one instrument. Except for
the settlement and release of the Transferor Released Claims
and the Company Released Claims, all rights and obligations of
the parties to the Contribution Agreement shall remain in full
force and effect and shall be unaffected hereby. This
Agreement shall not be effective until all parties hereto have
executed this Agreement. Each party hereto represents to the
other parties hereto that it has obtained all authorizations
necessary (including from directors, shareholders, partners
and/or members, if so required) to enter into this Agreement.
Each party hereto represents to the other parties that this
Agreement constitutes the legal obligation of such party
enforceable against such party in accordance with the terms
hereof.
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<PAGE> 5
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.
CARLYLE-PRIME INVESTORS, L.P.
By: its
-----------------------,
general partner
By:
-------------------------
Name:
-----------------------
Title:
----------------------
CARLYLE-PRIME PARTNERS I, L.P.
By: , its
---------------------------
general partner
By:
-------------------------
Name:
-----------------------
Title:
----------------------
----------------------------------------
BILL KUBENA
----------------------------------------
WARREN D. HARKINS
----------------------------------------
DALE HARKINS
----------------------------------------
B.R.A.D. COMMUNICATIONS SERVICES, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
TCG TOWERS, L.L.C., individually and as Agent
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
ATC HOLDINGS CORP.
By:
-------------------------------------
Fred R. Lummis
President and CEO
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<PAGE> 6
PRIME COMMUNICATION SITES
HOLDING, L.L.C. (now known as
ATC-Prime II, L.L.C.)
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
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<PAGE> 1
EXHIBIT 23.1
The Board of Directors
American Tower Corporation:
We consent to the use of our reports included herein and to the reference to
our firm under the heading "Experts" in the prospectus.
KPMG PEAT MARWICK LLP
Houston, Texas
March 7, 1997