- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C ---------------- FORM 10-K FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) [X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Fiscal Year Ended December 31, 2000 OR [_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File 001-14195 AMERICAN TOWER CORPORATION (Exact name of registrant as specified in its charter) Delaware 65-0723837 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 116 Huntington Avenue Boston, Massachusetts 02116 (Address of principal executive offices and Zip Code) (617) 375-7500 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: (Name of exchange on (Title of Class) which registered) ---------------- -------------------- Class A Common Stock, $0.01 par value New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: (Title of Class) None Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any amendment to this Form 10-K. [_] The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of February 28, 2001 was approximately $3,212,206,760. As of February 28, 2001, 180,165,054 shares of Class A Common Stock, 8,077,635 shares of Class B Common Stock and 2,267,813 shares of Class C Common Stock were outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the definitive proxy statement (the "Definitive Proxy Statement") to be filed with the Securities and Exchange Commission relative to the Company's 2001 Annual Meeting of Stockholders are incorporated by reference into Part III of this Report. - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
TABLE OF CONTENTS FORM 10-K ANNUAL REPORT FISCAL YEAR ENDED DECEMBER 31, 2000 Page ---- PART I. ITEM 1. Business............................................................................... 1 ITEM 2. Properties............................................................................. 22 ITEM 3. Legal Proceedings...................................................................... 23 ITEM 4. Submission of Matters to a Vote of Security Holders.................................... 23 PART II. ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters.................. 24 ITEM 6. Selected Financial Data................................................................ 26 ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.. 28 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk............................. 40 ITEM 8. Financial Statements and Supplementary Data............................................ 41 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure... 41 PART III. ITEM 10. Directors and Executive Officers of the Registrant..................................... 42 ITEM 11. Executive Compensation................................................................. 43 ITEM 12. Security Ownership of Certain Beneficial Owners and Management......................... 43 ITEM 13. Certain Relationships and Related Transactions......................................... 43 PART IV. ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K....................... 44 This Annual Report on Form 10-K contains forward-looking statements relating to our goals, beliefs, plans or current expectations and other statements that are not of historical facts. For example, when we use words such as "project," "believe," "anticipate," "plan," "expect," "estimate," "intend," "should," "would," "could" or "may," or other words that convey uncertainty of future events or outcome, we are making forward-looking statements. We refer you to the caption entitled "Business--Factors That May Affect Future Results" in Item 1 of Part I for important factors that could cause actual results to differ materially from those indicated by our forward-looking statements made herein and presented elsewhere by management. Such forward-looking statements represent management's current expectations and are inherently uncertain. We do not undertake any obligation to update forward-looking statements made by us. i
PART I ITEM 1. BUSINESS Overview We are a leading wireless and broadcast communications infrastructure company operating in three business segments. . Rental and management. Our primary business is renting antenna space to wireless and broadcast companies on multi-tenant communications towers. We operate the largest network of wireless communications towers in North America and are the largest independent operator of broadcast towers in North America, based on number of towers. Our growth strategy focuses on both the acquisition and construction of towers. We use our own extensive tower network development capabilities, which include site acquisition and tower construction services, to construct our own build- to-suit and other towers. These capabilities enable us to construct towers at costs that are generally lower than the cost of acquiring towers. . Network development services. Through ATC Integrated Services, we provide the full-range of tower-related services necessary to establish, develop and maintain wireless and broadcast tower networks. Theses services include: . radio frequency engineering consulting; . site acquisition and network design; . zoning and other governmental approvals; . tower construction; . antenna installation; . tower component part sales; and . site monitoring and maintenance. We provide these services to a variety of customers and actively market them as part of a turnkey solution to our existing and prospective rental customers. We believe our full service capabilities enhance our core rental and management business by: . making us a more attractive choice for build-to-suit opportunities; . enabling us to construct towers at costs that are generally less than the costs of acquiring towers. This cost-efficiency enables us to reduce our weighted average cost per tower, thereby improving the overall return of our rental and management business; . strengthening our customer relationships; and . increasing recurring revenues and cash flow from our towers. . Satellite and fiber network access services. Our Verestar subsidiary is a leading provider of integrated satellite and fiber network access services, based on the number of our teleport antennae and facilities. We provide these services to telecommunications companies, Internet service providers (ISPs), broadcasters and maritime customers, both domestic and international. Verestar's teleports and other facilities enable its customers to transmit Internet traffic, voice, video and other data through the integration of satellites, high-speed fiber connections and communications switches. Our operating revenues for the year ended December 31, 2000 were $735.3 million. Our three business segments accounted for the following percentages of operating revenues for the year ended December 31, 2000: .Rental and management--38.0%; .Network development services--42.0%; and .Satellite and fiber network access services--20.0%. 1
The relative contributions of each of our segments to our total operating revenues in 2000 may not be indicative of future periods. For more financial information about our business segments and geographic information about our operating revenues and long-lived assets, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" and note 13 to our consolidated financial statements included in this Annual Report on Form 10-K. We have a diversified base of customers. For the year ended December 31, 2000, none of our customers accounted for more than 10% of our operating revenues and our five largest customers accounted for approximately 23% of those revenues. Our customer base includes customers from various sectors within the wireless communications industry, including personal communication services, cellular and paging. Growth Strategy Background. Our growth strategy is to capitalize on the rapid expansion taking place in the wireless communications industry. We believe the increase in demand for wireless communications is attributable to a number of factors, including: . technological advances in communications equipment; . decreasing costs of wireless services; . the development of new applications for wireless services; . the increasing mobility of the U.S. population; . the growing awareness of the benefits of mobile communications; . the auctioning of new communications spectrum; and . business and consumer preferences for higher quality wireless, Internet, voice and data transmission. We believe that as the wireless communications industry grows and becomes more competitive, many carriers seek to preserve capital and speed access to their markets by: . focusing on activities that contribute directly to subscriber growth; . outsourcing infrastructure requirements such as owning, constructing and maintaining towers; and . co-locating transmission facilities, which is likely to accelerate because of environmental and other regulatory restrictions, resulting in the growing tendency of local authorities to slow the proliferation of towers in their communities. We believe we are well positioned to benefit from these trends in wireless communications and to play an increasing role in addressing the needs of the wireless, broadcast and Internet infrastructure industries. Our belief is based on the following reasons: . We operate the largest network of wireless communications towers in North America and are the largest independent operator of broadcast towers in North America, based on number of towers. We believe that national and other large wireless service providers prefer to deal with a company, such as ours, that can meet the majority of their tower needs within a particular market or region. In addition, we offer turnkey solutions to our customers, including a broad range of network development services and related components and equipment. . We are both an experienced builder and acquirer of towers, providing us the flexibility to choose the most cost-effective means to expand our network of towers. . We are involved in a number of build-to-suit projects, which generally reduce the financial risk of building new towers because these projects have anchor tenants which are often located in markets where we would like to expand our existing operations or in new markets where we would like to establish a presence. . Through our Verestar subsidiary, we are addressing the expanding market for satellite and fiber network access services. 2
. We have a strong and experienced management team, led by our Chairman and Chief Executive Officer, Steven B. Dodge. We are seeking to enhance our position as a leader in each of our business segments by: . expanding our leading national footprint of desirable communications towers in most major markets in the United States, creating networks in Mexico and Canada, and creating networks internationally to serve attractive foreign markets that we do not currently serve; . increasing the profitability of our tower operations by reducing average cost per tower through construction and attractive acquisitions, reducing tower operating expenses and actively marketing unused space on our towers; . serving profitably selected infrastructure needs of our customers; and . expanding Verestar as a leading provider of satellite and fiber network access services for telecommunications companies, ISPs, broadcasters and maritime customers. Internal growth through sales, service and capacity utilization. We believe that a substantial opportunity for profitable growth exists by increasing the utilization of our existing towers and towers that we may build or acquire in the future. Because the costs of operating a site are largely fixed, increasing tower utilization significantly improves site operating margins. Many of our towers have significant capacity available for additional antenna space rental that we believe can be utilized at low incremental cost. We intend to continue to use targeted sales and marketing techniques to increase utilization of our towers. We believe that the key to the success of this strategy lies in our ability to develop and consistently deliver a high level of customer service, and to be widely recognized as a company that makes realistic commitments and then delivers on them. Since speed to market and reliable network performance are critical components to the success of wireless service providers, our ability to assist our customers in meeting these goals will ultimately define our marketing success and capacity utilization. We target as customers wireless service providers that are expanding or improving their existing network infrastructure, as well as those deploying new technologies. We also intend to continue actively marketing and selling our network development services and satellite and fiber network access services as related sources of revenue from those earned through our rental and management business. We expect that a significant part of our growth may consist of selling services and components to new customers on our existing towers or towers that we may construct on a build-to-suit or other basis. Growth by build-to-suit/construction. We believe we can achieve attractive investment returns for our company by constructing new tower clusters: . in and around markets in which we already have a presence; . along major highways; and . in targeted new markets, particularly markets that have not been significantly built out by carriers or other communications site companies. We often seek to work with one or more anchor tenants when we construct towers. When we do so, we develop an overall master plan for a particular network by locating new sites in areas identified by our customers as optimal for their network expansion requirements. We generally secure commitments for leasing from the customer prior to commencing construction, thereby reducing the risks associated with the investment. In some cases, however, we may invest in the zoning and permitting of sites, and even the construction of tower build-outs, where we have no anchor tenant. We do this when, based on radio frequency engineering studies, our market knowledge and our awareness of our customers' build-out plans, we believe demand will exist in the near term. 3
We intend to place a strong emphasis on new tower development for the foreseeable future because we believe that this can produce relatively attractive initial returns. In addition, we can design and build towers to specifications that assure ample future capacity and minimize the need for future capital expenditures. We also intend to pursue new tower construction to service the demand for digital television and for tower space for radio antennae displaced by digital television requirements. Growth by acquisitions. We have achieved a leading industry position through acquisitions and construction. We intend to continue to pursue strategic mergers and acquisitions with independent tower operators, consolidators and wireless service providers. Our acquisition strategy is designed to: . achieve enhanced operating efficiencies; . take advantage of divestiture opportunities presented by wireless service providers; . broaden and strengthen our penetration of major markets; . facilitate entry into new geographic markets in the United States and abroad; and . complement our construction program. Among the potential acquisitions are tower networks still owned by major wireless service providers. We have entered into these types of transactions with ALLTEL, AirTouch and AT&T, as described elsewhere in this report. These transactions are usually substantial, involving several thousand towers and purchase prices in the hundreds of millions of dollars. In addition, they often entail build-to-suit contracts involving thousands of towers. We also intend to pursue, on a selective basis, the acquisition of companies to enhance our satellite and fiber network access business. Products and Services We offer our products and services through three business segments: . Rental and management; . Network development services; and . Satellite and fiber network access services provided by Verestar. Rental and Management Segment Leasing of antennae sites. Our primary business is renting antenna space to wireless and broadcast companies on multi-tenant communications towers. We operate the largest network of wireless communications towers in North America and are the largest independent operator of broadcast towers in North America, based on number of towers. Assuming the consummation of our pending transactions, we operate a tower network of approximately 13,600 multi-user sites in the United States, Canada and Mexico, including more than 300 broadcast tower sites. Approximately 12,600 of these towers are owned or leased sites and approximately 1,000 are managed sites or lease/sublease sites under which we hold a position as lessee that is co-terminous with a related sublease. Our networks in the United States, Canada and Mexico are national in scope. Our U.S. network spans 49 states and the District of Columbia, with tower clusters in 43 of the 50 largest U.S. metropolitan statistical areas. Our developing Mexican network includes sites in highly populated areas, including Mexico City, Monterrey, Guadalajara and Acapulco. We plan for our Canadian operations to include sites in major metropolitan areas. We lease antenna space on our towers to tenants in a diverse range of wireless communications and broadcast industries. Wireless industries we serve include: personal communications services, cellular, enhanced specialized mobile radio, specialized mobile radio, paging, fixed microwave and fixed wireless. 4
Our wireless customers include: . ALLTEL . Winstar . AT&T Wireless . Cingular . Mobile Wireless Services Wireless . Sprint PCS . Nextel . PowerTel . VoiceStream . Teligent . Verizon* . Western Wireless Most major radio and television broadcasters rent antenna space on our broadcast towers, including: . ABC . CBS . Clear Channel . Cox . Fox . Infinity . NBC . Paxson . Paramount . Sinclair . Telemedia . Tribune . TV Azteca . Univision Lease Terms. Our leases, like most of those in the industry, generally vary depending upon the region and the industry user. Television and radio broadcasters prefer long-term leases while wireless communications providers favor somewhat shorter lease terms. In both cases, the leases often have multiple renewals at the option of the tenant. Tenants tend to renew their leases because of the complications associated with moving antennae. For example, in the case of cellular, personal communications services and other wireless users, moving one antennae might necessitate moving several others because of the interlocking grid-like nature of wireless systems. Moreover, a move by a television or radio broadcaster would necessitate FCC approval and could entail major dislocations and the uncertainty associated with building antennae in new coverage areas. In addition, the increasing difficulty of obtaining local zoning approvals, the increasing environmental concerns of communities, and the restrictions imposed by the Federal Aviation Administration and FCC tend to reduce the number of choices available to a tower user. Most of our leases have escalator provisions. These automatic increases are based on specified estimated cost measures or on increases in the consumer price index. Annual rental payments vary considerably depending upon: . size of the transmission line and the number and weight of the antennae on the tower; . existing capacity of the tower; . the placement of the customer's antenna on the tower; . the location and height of the tower on which antenna space is rented; and . the competitive environment. Because of the factors listed above, we believe that it is not possible to state with any degree of precision the vacancy or unused capacity of a "typical" tower, group of related towers or all of our towers. Build-to-Suit Projects. Historically, cellular and other wireless service providers have constructed and owned a majority of the towers for their antennae needs, rather than leasing space on towers from a third party. Beginning a few years ago, wireless service providers expressed a growing interest in having independent companies own and operate the towers for their antennae. We believe this trend is the result of a need among such providers to preserve capital and to speed access to their markets by focusing on activities that contribute to subscriber growth and by outsourcing infrastructure requirements. This trend has resulted in our entering into - -------- * Includes the former operations of AirTouch, Bell Atlantic Mobile and GTE Mobilenet. 5
agreements with a number of wireless carriers for build-to-suit projects. In build-to-suit projects, we develop and construct a tower network for a major anchor tenant, after the anchor tenant signs a lease agreement with us. Because we own the constructed towers, we are able to rent space on them to other tenants, as well as to the anchor tenant. These build-to-suit projects constitute a major part of our rental business and have the following benefits for us: . build-to-suit projects generally reduce the financial risk of constructing new towers because they have a pre-established anchor tenant; . build-to-suit projects are often located in markets where we would like to expand our existing operations or in a new market where we would like to establish a presence; and . by utilizing our experienced in-house network development services, build-to-suit projects enable us to construct towers at costs that are generally less than the costs of acquiring towers. This cost-efficiency reduces our weighted average cost per tower, thereby improving the overall return of our rental and management business. We are currently engaged in build-to-suit projects for the following companies: . ALLTEL . AT&T Wireless . Cingular Wireless . Nextel . Omnipoint . Verizon We continue to seek additional major build-to-suit projects, although we may not enter into any of them. Communications site management business. We are a leading manager of communications sites. These sites include rooftop sites and ground towers. A central aspect of this business is the development by us of new sources of revenue for building owners by effectively managing all aspects of rooftop and ground tower telecommunications, including: . two-way radio systems . microwave . fiber optics . wireless cable . paging . rooftop . personal . cellular infrastructure communications construction services services Our management contracts for these sites are generally for a period of five years and contain automatic five-year renewal periods, subject to termination by either party before renewal. Under these contracts, we are responsible for a wide range of activities, including: . marketing antennae sites on the tower; . reviewing existing and negotiating future license agreements with tenant users; . managing and enforcing those agreements; . supervising installation of equipment by tenants to ensure non- interference with other users; . supervising repairs and maintenance to the towers; and . site billing, collections and contract administration. In addition, we handle all service related calls and questions regarding the site so that the building management team or owner is relieved of this responsibility. For such services, we are entitled to a percentage of lease payments, which is higher for new tenants than for existing tenants. Upon termination of a contract, unless it is because of our default, we are generally entitled to our percentage with respect to then existing tenants so long as they remain tenants. 6
Network Development Services Through ATC Integrated Services, we provide comprehensive network development services for both wireless service providers and broadcasters. We offer full turnkey network development solutions to our customers, including: . radio frequency . tower construction . tower component part engineering consulting . network design sales . site acquisition . antennae . tower monitoring . zoning and other installation regulatory approvals We provide network development services to most of the major wireless service providers and have constructed or are constructing towers on a build-to-suit basis for a variety of wireless and broadcast companies. We are increasingly applying our site acquisition and construction capabilities for our own account as we engage in more built-to-suit and other proprietary construction projects. Our ability to provide this full range of services is critical to our business model because these services: . enhance our overall returns as our costs for constructing towers are generally lower than those we acquire; . make us a more attractive choice for built-to-suit projects since we believe wireless carriers prefer to work with a national company, rather than contract with multiple vendors, to address their tower-related needs; . strengthens our existing customer relationships by increasing our knowledge of our customers network needs, which we believe leads to greater customer satisfaction and the opportunity to offer our customers other services; and . increase recurring revenues and cash flow from our towers. For example, throughout a customer's lease with us, we often perform antenna installation-related services and radio frequency engineering services as our customer's needs change and as their network develops, and as part of routine maintenance. Site acquisition services. We engage in site acquisition services for our own account, in connection with build-to-suit projects and other proprietary construction, as well as for third parties. We provided site acquisition services for some of the first personal communications services projects in the United States, including the personal communication services network that at the time of launch had the largest number of sites in the United States. We provide these services nationally through our field offices in several major cities, including Atlanta, Chicago, Charlotte, Cleveland, Jacksonville, New Orleans and Seattle. Our site acquisition services include: . site identification . geographic analysis . custom mapping . market analysis . zoning review . zoning and other governmental approval The site selection and acquisition process begins with the network design. We identify highway corridors, population centers and topographical features within the carrier's existing or proposed network. We then conduct drive tests in the area to monitor all personal communication services, cellular and enhanced specialized mobile radio frequencies to locate any systems then operating in that area. This enables us to identify where any holes in coverage may exist. Based on this data, we and the carrier develop a "search ring," generally of one-mile radius, within which our site acquisition department identifies land available either for purchase or lease. Our personnel select the most suitable sites, based on demographics, traffic patterns and signal characteristics. If the customer approves the site, we then submit it to the local zoning/planning board for approval. If we receive approval, our customer typically engages us to supervise the construction of the towers or to construct the towers ourselves. 7
We have performed site acquisition services for a wide range of customers, including: . ALLTEL . AT&T Wireless . Metricom . Cingular Wireless . MobileComm . Sprint PCS . PowerTel . SkyTel . Western Wireless . Triton PCS . Verizon We will continue to provide site acquisition services to those customers desiring only these services. However, we also intend to continue to actively market these services as part of a turnkey solution, including network design, tower construction, tower site leasing, equipment installation and maintenance, that we offer prospective rental customers. We believe that wireless service providers will select companies that demonstrate the ability to successfully locate, acquire and permit sites and finance and construct towers in a timely manner for their built-to-suit projects. Engineering Consulting Services and Network Design. Through Galaxy Engineering Services, we provide a number of engineering services that enable our customers to plan new tower networks, modify existing tower networks and improve the quality of their networks. These engineering services include: . wireless broadband design and implementation; . wireless data network design and implementation; . radio frequency network design for all mobile and fixed wireless technologies; . drive testing, which consists of measuring the signal strength of an antenna from multiple points in a moving vehicle; . performance engineering, which consists of adjusting variables in a network to establish optimum performance levels; . technical planning for spectrum license holders; . upgrading networks to the next generation of broadcast technology, which is often referred to as "3G" or third-generation technologies; . transport engineering, which consists of improving transmission media and interconnections for wireless service providers; and . interconnection and microwave services Tower Construction and Antennae Installation. We are one of the leading builders of wireless and broadcast towers. Our Specialty Constructors unit has over 30 years of wireless tower construction and equipment installation experience. We also own and operate Kline Iron & Steel, an experienced builder of broadcast towers. The following table shows the approximate number of towers that we constructed during 1999 and 2000, and our projection for 2001 tower construction: Number of Towers Year Constructed ---- ----------- 1999......................................................... 1,000 2000......................................................... 1,600 2001--Projection............................................. 2,000 We construct towers both for our own account in connection with build-to-suit projects and other proprietary construction projects, as well as for third parties. For third party construction, we bill customers on a fixed price or time and materials basis, and we may negotiate fees on individual sites or for groups of sites. 8
The cost of construction of a tower varies both by site location, which will determine, among other things, the required height of the tower, and type of tower. Non-broadcast towers, whether on a rooftop or the ground, generally cost between approximately $185,000 and $225,000. Broadcast towers are generally much taller and are built to bear a greater load. The costs per broadcast tower are significantly greater than non-broadcast towers and vary based on size, location and terrain. As part of our construction service and as a separate service offering, we provide antennae installation services. These services use not only our construction-related skills, but also our technical expertise to ensure that new installations do not cause interference with other tenants. The number of antennae that our towers can accommodate varies depending on whether the tower is broadcast or non-broadcast, and on the tower's location, height and the loaded capacity at certain wind speeds. An antenna's height on a tower and the tower's location determine the line-of-sight of the antenna with the horizon and, consequently, the distance a signal can be transmitted. Some of our customers, including paging companies and specialized mobile radio providers in rural areas, need higher elevations for broader coverage. Other customers, such as personal communications services, enhanced specialized mobile radio and cellular companies in metropolitan areas, usually do not need to place their equipment at the highest tower point. In most cases, well engineered and well located towers built to serve the specifications of an initial anchor tenant in the wireless communications sector will attract three or more additional wireless tenants over time, thereby increasing revenue and enhancing margins. Wireless Components. Through MTS Wireless Components, we sell tower related parts and equipment to wireless and broadcast companies, including: . antennae fasteners and other mounting components; . waveguide bridge products; . square support rail; . tower lighting systems; . tower safety products; and . other hardware products. We also manufacture wireless components for several large wireless communications equipment vendors who market these products under their own brand names. Satellite and Fiber Network Access Services Our Verestar subsidiary is a leading provider of integrated satellite and fiber network access services for telecommunications companies, ISPs, broadcasters and maritime customers, both domestic and international. We own and operate more than 175 satellite antennae at ten satellite network access points, which we refer to as SNAPs, in Arizona, California, Massachusetts, New Jersey, Texas, Washington state, and Washington, D.C. and one in Switzerland. Our acquisition in 2001 of the satellite business assets of Swisscom provides us with strategically located antennae in Switzerland and direct fiber links to New York and London. Our satellite network access points in the U.S. and in Switzerland enable us to access the majority of commercial satellites around the world. Our customers include: . ABC . British Telecom . Cable and Wireless . CBS . CNN . Deutsche Telekom . Fox Entertainment . MCI Worldcom . TCI . Telefonica . UUNET 9
Our maritime customers include a number of major cruise lines. Verestar transmits Internet traffic and voice, video and other data through the integration of the following services: . Teleport Services. Verestar operates 11 SNAPs. These SNAPs consist of over 175 satellite antennae, transmitting and receiving electronics and connectivity to major terrestrial fiber routes and the Internet. These SNAPs are capable of uplinking and downlinking data, voice and video (both analog and digital) to satellites in the Atlantic, Pacific and Indian Ocean regions. Some of our SNAPs also provide telemetry, tracking and control and communication systems for the launch and maintenance of satellites in orbit. Each SNAP is operated 24 hours a day, 365 days a year. . Satellite Services. Verestar is one of the largest independent lessees of satellite capacity for the transmission of Internet and other data around the world. Verestar sells capacity through contracts with a minimum term of one year and also offers spot market capacity on an as- needed basis to news networks in the United States. . Network Access Services. Verestar offers customers connections to their choice of leading Internet services and high-speed fiber backbone providers. Verestar also offers services that allow customers to select the fastest available Internet connection on a per packet basis. Verestar also offers long-haul fiber connectivity between select markets in the United States and internationally. . Switching Services. Verestar operates carrier-class voice switches in New York, Miami, and Los Angeles, which enable international telephone companies to connect their voice traffic to the U.S. public telephone network and to exchange their traffic with other international long distance carriers. These switches are connected to satellite and fiber networks, which provide customers with end-to-end solutions from the call origination to termination on the U.S. telephone network. Significant Agreements We are a party to three agreements that we consider to be material to our business: ALLTEL transaction. In December 2000, we entered into an agreement to acquire the rights from ALLTEL to up to 2,193 communications towers through a 15-year sublease agreement. Under the agreement, we will sublease these towers for consideration of up to $657.9 million in cash. ALLTEL also granted us the option to acquire the rights, through sublease agreements, to approximately 200 additional towers to be selected by us on a site-by-site basis for cash consideration of up to $300,000 per tower. We expect the transaction to close incrementally beginning in the second quarter of 2001. Under our agreement with ALLTEL, we are entitled to all income generated from leasing space on the towers and are responsible for all expenses, including ground rent. ALLTEL has reserved space on the towers for its antennae, for which it will pay a site maintenance fee of $1,200 per tower per month, escalating at a rate equal to the lower of 5% per annum or the increase in Consumer Price Index plus 4% per annum. Under our agreement with ALLTEL, we will have the option to purchase the towers at the end of the 15-year sublease term. For approximately 1,900 of the towers, the purchase price per tower will be $27,500 plus interest accrued at 3% per annum. At ALLTEL's option, this price will be payable by us in cash or with 769 shares of our Class A common stock. For approximately 300 other towers and any of the 200 additional towers that we sublease, the per tower purchase arrangement at the end of the sublease term is subject to adjustment based on the cash consideration paid by us for the sublease and our Class A common stock price on the date we agree to the tower sublease terms. As part of the transaction, we entered into an exclusive build-to-suit agreement with ALLTEL, that is expected to result in the construction of approximately 500 sites. 10
AT&T transaction. In September 1999, we agreed to purchase 1,942 towers from AT&T. As of December 31, 2000, we had purchased 1,929 towers. The purchase price for these towers was approximately $258.1 million in cash. We expect to close on any remaining towers in the first and second quarters of 2001. These towers are located throughout the United States and were constructed by AT&T for its microwave operations. AT&T entered into a master lease agreement covering 468 of these towers on which it currently conducts microwave operations. The lease has an initial term of ten years and AT&T has five five-year renewal options. The annual base rent payment is approximately $1.0 million, payable in January of each lease year. The master lease agreements provides that we will adjust, but not below the base rent, the rent payable by AT&T based on AT&T's actual usage of the towers. As part of this transaction, we entered into a build-to-suit agreement with AT&T Wireless Services. This agreement requires AT&T Wireless Services to present 1,200 sites nationwide from which we will select and be required to build 1,000 towers. We entered into a separate master lease with AT&T Wireless Services for the build-to-suit towers. The initial term is ten years, and AT&T Wireless Services has three five-year renewal options. The rent for lease supplements entered into pursuant to the master lease agreement in the initial year is $1,350 per month, per antenna site, increasing annually by $50.00 per year for lease supplements entered into in subsequent years. All rents will be subject to 4% annual increases. AirTouch transaction. In August 1999, we agreed to lease on a long-term basis up to 2,100 towers located throughout the United States from AirTouch Communications, which is now a part of Verizon Wireless. Our cumulative lease payments, based on 2,100 towers, aggregate $800.0 million in cash payable in part upon each closing and five-year warrants to purchase 3.0 million shares of our Class A common stock at $22.00 per share. As of December 31, 2000, we had closed on 1,801 towers, paid AirTouch $686.1 million in cash and issued warrants for 3.0 million shares of our Class A common stock. We expect that we will not close on approximately 150 of the towers included in the initial agreement. We expect the remaining closings to occur in the first and second quarters of 2001. These towers are located in all of AirTouch's major markets, other than Los Angeles and San Diego, including Albuquerque, Atlanta, Cleveland, Denver, Detroit, Minneapolis, Omaha, Phoenix, Portland, Sacramento and Seattle. Under our agreement with AirTouch, we are entitled to all income generated from leasing space on the towers and are responsible for all tower expenses, including ground rent. AirTouch has reserved space on the towers for its antennae, for which it has agreed to pay us a site maintenance charge equal to $1,500 per month for each non-microwave reserved space and $385 per month for each microwave reserved space, with 3% annual increases. We have also entered into an exclusive three-year build-to-suit agreement with AirTouch. Under that agreement, we have the right to construct and own all of AirTouch's towers in all markets covered by the agreement. AirTouch entered into a separate master lease covering all towers to be constructed pursuant to the build-to-suit agreement. AirTouch will lease space for a period of ten years and has the option to extend for five five-year periods. The rent is $1,500 per month for each non-microwave antenna site and $385 per month for each microwave antenna site, with 3% annual increases. We expect this build-to- suit agreement will result in our constructing 400 to 500 towers. 11
Year 2000 Transactions Completed transactions in 2000 During 2000, we consummated more than 60 transactions involving the acquisition of approximately 4,600 communications sites and related businesses and several satellite and fiber network access services and related businesses for an aggregate purchase price of approximately $1.8 billion. This purchase price includes $1.4 billion in cash, 4.5 million shares of our Class A common stock and options, warrants to purchase 3.0 million shares of our Class A common stock and $59.2 million of assumed debt. The most significant of these transactions, other than the AT&T and AirTouch transaction described above, were the following: Tower and services transactions UNIsite transaction. In January 2000, we consummated a merger with UNIsite, an owner and operator of wireless communications sites in the United States. The purchase price was approximately $196.4 million, which included a payment of $147.7 million in cash and the assumption of $48.7 million of debt. In February 2000, we repaid the debt assumed in connection with the UNIsite transaction. Galaxy transaction. In January 2000, we acquired Galaxy Engineering Services, a global turnkey provider of engineering consulting services based in Atlanta, Georgia. At the time of the merger, we owned one-third of Galaxy, which we had acquired in December 1999 for $0.5 million. In the merger, the other Galaxy stockholders received 523,113 shares of our Class A common stock and $0.3 million in cash. Galaxy provides a complete array of radio frequency engineering and network design services, including drive testing, voice quality analysis and transport engineering, interconnect and microwave services. Foreign transactions TV Azteca transaction. In December 1999, we signed definitive agreements to loan up to $120.0 million to TV Azteca S.A. de C.V., the owner of a major national television broadcast network in Mexico. During 2000, we advanced this loan and assumed marketing responsibility for approximately 190 broadcasting towers owned by TV Azteca. Under the terms of the marketing agreement, we are entitled to receive 100% of the revenues generated by third party leases and are responsible for any incremental operating expenses associated with those leases during the term of the loan. The 70-year loan may be prepaid by TV Azteca without penalty during the last 50 years of the agreement. Iusacell transaction. In December 1999, we entered into a management agreement for approximately 350 existing towers and a build-to-suit agreement for approximately 200 towers with Grupo Iusacell, the second largest wireless telecommunications provider in Mexico. The existing towers are located in urban and rural areas such as Mexico City, Guadalajara, Veracruz and Acapulco. We expect to construct the build-to-suit towers over the next 18 months in key metropolitan areas. In February 2001, we purchased 170 of the 350 towers that are currently under the management agreement. Unefon transaction. In early 2000, we entered into an agreement with Unefon S.A. de C.V., a wireless service provider, in Mexico, to form a strategic alliance to build and operate towers throughout Mexico. In December 2000, we revised the initial agreement and paid Unefon approximately $15.0 million in cash for its agreement to terminate the strategic alliance. In connection with this termination, we modified our build-to-suit agreement with Unefon, which now provides for us to construct for it up to 1,000 sites on a build-to-suit basis. Canadian joint venture. In March 2000, we entered into a joint venture with Telemedia, a privately held Canadian telecommunications company, to form Canadian Tower L.P. Canadian Tower, which is Canadian controlled and operated, will develop and acquire wireless and broadcast towers throughout Canada. We have committed to invest $18.0 million (Canadian) in exchange for which we will own 45.0% of Canadian Tower. The joint venture's initial assets will include more than 20 broadcast towers to be contributed by Telemedia. We plan for our Canadian operations to include sites in major metropolitan areas. 12
Verestar transactions USEI transaction. In June 2000, we acquired U.S. Electrodynamics for approximately 1.1 million shares of Class A common stock and $33.2 million in cash. We also issued options to purchase 0.4 million shares of Class A common stock. At the time of closing, U.S. Electrodynamics operated around-the-clock teleport facilities in the Pacific Northwest, the Southwest and the Northeast with a total of 52 antennae that access satellites covering the continental United States and the Pacific Ocean region. General Telecom transaction. In June 2000, we acquired General Telecom for $28.8 million in cash. Our acquisition of General Telecom provided us with independent partition voice switching capabilities and network management services at three major voice communications gateways in New York, Miami and Los Angeles. Publicom transaction. In October 2000, we acquired Publicom and its affiliates for approximately 0.4 million shares of Class A common stock and $14.5 million in cash. Publicom and its affiliates distribute satellite and telecommunications equipment via strategic vendor relationships with established equipment providers. Publicom also provides wholesale ISP services in select markets. InterPacket Networks transaction. In December 2000, we acquired InterPacket Networks for approximately 1.1 million shares of Class A common stock and $21.4 million in cash. InterPacket is a leader in providing international ISPs, low cost Internet access via a global satellite overlay network. InterPacket's customer base includes companies primarily in Africa, the Middle East, Latin America and Asia. Pending transactions as of December 31, 2000 As of December 31, 2000, we were a party to various pending transactions involving the acquisition of more than 2,500 communications sites and related businesses with an aggregate purchase price of approximately $870.0 million. These transactions remain subject to regulatory approvals in certain cases and other closing conditions, which we may not meet. The most significant of these pending transactions is our agreement with ALLTEL, which is described under "Significant Agreements" above. Management Organization Our corporate headquarters is in Boston, Massachusetts. We are organized on a regional basis, with each region being headed by a vice president who reports to our chief operating officer. Our current regional centers are based in Boston, Atlanta, Chicago, Houston, the San Francisco Bay area and Mexico City. We may establish additional regional centers over time, including in Canada. Our regional centers are further subdivided into 20 area operations centers. Our regional centers are responsible for legal and accounting functions, and our area operations centers are responsible for service, sales and marketing. We believe our regional and area operations centers are capable of responding effectively to the opportunities and customer needs of their defined geographic areas. Our area operations centers are staffed with skilled engineering, construction management and marketing personnel. We believe that over time we can achieve enhanced customer service and greater operating efficiencies by further centralizing certain operating functions, including accounting and lease administration. We are designing this centralization of functions to enable key information about each site, tower lease and customer to become part of a centralized database linked to regional and area operations centers. Through our various acquisitions and organic growth, we believe we have obtained the services of key personnel with skills in areas such as: . site acquisition; . zoning and other governmental approvals; . radio frequency engineering; 13
. construction management; . tower operations; . engineering; . component manufacturing; . marketing; . information technology; . lease administration; and . finance. As we seek to expand our size and improve on the quality and consistency of our services, we believe we may need to supplement our current workforce in certain areas, develop new regional centers and intensify our dedication to customer service. Accordingly, we are actively recruiting key personnel to complete the staffing of our regional operations centers and to strengthen and deepen our corporate group. We focus our efforts on recruiting people from the industry sectors we serve. In addition, in some instances we recruit skilled engineering, marketing and other personnel from outside the communications site, wireless communications and broadcasting industries. History In early 1995, Steven B. Dodge, the then chairman of the board, president and chief executive officer of American Radio Systems Corporation (American Radio), and other members of its management, recognized the opportunity in the communications site industry as a consequence of its ownership and operation of broadcast towers. American Radio formed our company to capitalize on this opportunity. American Radio distributed its stock in our company to its securityholders in connection with its merger with CBS in June 1998. Regulatory Matters Towers. Both the FCC and the FAA regulate towers used for wireless communications and radio and television antennae. These regulations control the siting, lighting, marking and maintenance of towers. Depending on factors such as height and proximity to public airfields, the construction of new antenna structures or modifications to existing antenna structures must be reviewed by the FAA prior to initiation to ensure that the structure will not present a hazard to aircraft navigation. After the FAA issues a "No Hazard" determination, the tower owner must register the antenna structure with the FCC and paint and light the structure in accordance with the FAA determination. The FAA review and the FCC registration processes are prerequisites to FCC authorization of communications devices placed on the antenna structure. The FCC separately regulates and licenses wireless communications devices operating on towers based upon the particular frequency used. In addition, the FCC separately licenses and regulates television and radio stations broadcasting from towers. Tower owners bear the responsibility for notifying the FAA of any tower lighting failures and the repair of those lighting failures. Tower owners also must notify the FCC when the ownership of a tower changes. We generally indemnify our customers against any failure to comply with applicable standards. Failure to comply with applicable tower-related requirements may lead to monetary penalties. In January 2001, the FCC concluded investigations of several operators of communications towers, including us. The FCC sent us a Notice of Apparent Liability for Forfeiture preliminarily determining that we had failed to file certain informational forms, had failed to properly post certain information at various tower sites, and on one occasion had failed to properly light a tower. The FCC has proposed a fine of $212,000 and intends to undertake an additional review of our overall procedures for and degree of compliance with the FCC's regulations. The proposed fine represents a significant increase from the amount that otherwise might be 14
imposed in similar situations because of the number of violations and the FCC's negative perception of our compliance. Depending on the outcome of the further investigation, the FCC could take additional adverse action against us. We are conducting our own internal investigation into our regulatory compliance policies. As permitted by the FCC's regulations, on March 1, 2001, we filed a response to the Notice of Apparent Liability for Forfeiture requesting that the forfeiture be reduced. We intend to cooperate further with the FCC in any additional investigation to resolve these matters. The introduction and development of digital television may affect us and some of our broadcast customers. The need to install additional antennae required to deliver digital television service may necessitate the relocation of many currently co-located FM antennae. The need to secure state and local regulatory approvals for the construction and reconstruction of this substantial number of antennae and the structures on which they are mounted presents a potentially significant regulatory obstacle to the communications site industry. As a result, the FCC solicited comments on whether, and in what circumstances, the FCC should preempt state and local zoning and land use laws and ordinances regulating the placement and construction of communications sites. Federal preemptive regulations may never be promulgated. If adopted, they may be more or less restrictive than existing state and local regulations. In addition, those regulations, if challenged on constitutional grounds, may not be upheld. Local regulations include city and other local ordinances, zoning restrictions and restrictive covenants imposed by local authorities. These regulations vary greatly, but typically require tower owners to obtain approval from local officials or community standards organizations prior to tower construction. Local regulations can delay or prevent new tower construction or site upgrade projects, thereby limiting our ability to respond to customer demand. In addition, those regulations increase costs associated with new tower construction. Existing regulatory policies may adversely affect the timing or cost of new tower construction and additional regulations may be adopted which increase delays or result in additional costs to us. These factors could materially adversely affect our financial condition, results of operations or liquidity. Our tower operations in Mexico are also subject to regulation. As we pursue additional international opportunities, we will be subject to regulations in additional foreign jurisdictions. In addition, our customers, both domestic and foreign, also may be subject to new regulatory policies that may adversely affect the demand for communications sites. Verestar. We are required to obtain authorization from the FCC for our use of radio frequencies to provide satellite and wireless services in the United States. We are also required to obtain authorizations from foreign regulatory agencies in connection with our provision of these services abroad. We hold a number of point-to-point microwave radio licenses that are used to provide telecommunications services. Additionally, we hold a number of satellite earth station licenses in connection with our operation of satellite-based networks. We are required to obtain consent from the FCC prior to assigning these licenses or transferring control of any of our companies holding an FCC license. We also provide maritime communications services pursuant to an experimental license and a grant of Special Temporary Authority. We also filed 32 applications for permanent full-term FCC licenses to operate shipboard earth stations in fixed ports. Those applications are pending. We may not be granted permanent licenses, and the experimental license and Special Temporary Authority currently being used may not be renewed for future terms. Any license granted by the FCC may require substantial payments by us. Environmental Matters Our operations are subject to federal, state and local and foreign laws, ordinances and regulations relating to the management, use, storage, disposal, emission and remediation of, and exposure to, hazardous and non-hazardous substances, materials, and waste. As the owner and/or operator of real property and facilities, these laws, ordinances and regulations may impose liability on us for the costs of investigation, removal or remediation of soil and groundwater contaminated by hazardous substances or wastes. Certain of these laws impose cleanup responsibility and liability without regard to whether the owner or operator of the real estate or 15
facility 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 our former and current ownership or operation of our properties, we may be potentially liable for those types of environmental costs. We believe we are in compliance in all material respects with applicable environmental laws. We have not received any written notice from any governmental authority or third party asserting, and we are not otherwise aware of, any material environmental non-compliance, liability or claim. However, we might be liable in the future for existing environmental conditions. We also may incur costs for future regulatory action, as well as compliance with existing and future environmental laws. The foregoing could have a material adverse affect on our financial condition, results of operations or liquidity. Competition and New Technologies Rental and Management Segment Competition. We compete for antennae site customers with other national independent tower companies, wireless carriers that own and operate their own tower networks and lease tower space to other carriers, site development companies that acquire space on existing towers for wireless service providers and manage new tower construction, and traditional local independent tower operators. We believe that tower location and capacity, price, quality of service and density within a geographic market historically have been and will continue to be the most significant competitive factors affecting owners, operators and managers of communications sites. We face strong competition for build-to-suit opportunities, particularly those with the remaining wireless service providers seeking to divest their tower ownership, principally from other independent tower companies and site developers. We compete for tower and site acquisitions principally with other independent tower owners and operators. Competition may intensify and result in substantially higher prices, particularly for towers being divested by wireless service providers. We may not, therefore, be able to complete acquisitions on as favorable terms as in the past. Under certain circumstances, we may also be required to pay higher prices or agree to less favorable terms than we would otherwise have desired. We may also be impeded in our future acquisition activities by antitrust constraints, either in local markets or on a regional or national basis. Network Development Services Segment Competition. We compete as to network development services with a variety of companies offering individual, or combinations of, competing services. The field of competitors includes site acquisition consultants, zoning consultants, real estate firms, right-of-way consulting firms, construction companies, tower owners/managers, radio frequency engineering consultants, telecommunications equipment vendors, which provide turnkey site development services through multiple subcontractors, and carriers' internal staffs. We believe that carriers base their decisions on network development services on various criteria, including a company's experience, track record, local reputation, price and time for completion of a project. Various elements of our components business compete with numerous other companies. Satellite and Fiber Network Access Services Segment Competition. In the delivery of domestic and international satellite services, we compete with other full service teleports in the United States and satellite communications companies. The bases of competition are primarily reliability, price and transmission quality. Competition is expected principally from a number of domestic and foreign telecommunications carriers and satellite owners, many of which have substantially greater financial and other resources than we do. In the maritime telecommunications market, we compete primarily with several other companies that provide similar telecommunications services. Several of these companies have FCC licenses that are similar to ours and own their own satellites. 16
We believe that we compete favorably as to the key competitive factors relating to each of our business segments. New Technologies. The emergence of new technologies could reduce the need for tower-based transmission and reception and may, thereby, have a negative impact on our operations. For example, the FCC has granted license applications for several low-earth orbiting satellite systems that are intended to provide mobile voice and/or data services. In addition, the emergence of new technologies could reduce the need for tower-based transmission and reception and have an adverse effect on our operations. Additionally, the growth in delivery of video services by direct broadcast satellites and the development and implementation of signal combining technologies, which permit one antenna to service two different frequencies of transmission and, thereby, two customers, may reduce the need for tower-based broadcast transmission and hence demand for tower space. Finally, any increase in the use of roaming or resale arrangements by wireless service providers would adversely affect the demand for tower space. These arrangements enable a provider to serve customers outside its license area, to give licensed providers the right to enter into arrangements to serve overlapping license areas and to permit non-licensed providers to enter the wireless marketplace. Wireless service providers might consider such roaming and resale arrangements as superior to constructing their own facilities or leasing antenna space from us. Construction, Manufacturing and Raw Materials We build, maintain and install land based wireless communications and broadcast transmitting and receiving facilities by obtaining sheet metal and other raw material parts and components from a variety of vendors. We also engage third party contract manufacturers to construct certain of these wireless transmitting and receiving and broadcast facilities. We have historically obtained the majority of our sheet metal and other raw materials parts and components, including for our components business, from a limited number of suppliers. However, substantially all of these items are available from numerous other suppliers. We have not, to date, experienced any significant difficulties in obtaining the needed quantities of materials from suppliers in a timely manner. Employees As of December 31, 2000, we employed approximately 3,300 full time individuals and consider our employee relations to be satisfactory. Factors That May Affect Future Results We operate in a rapidly changing environment that involves a number of risks, some of which are beyond our control. The following discussion highlights some of the risks that may affect future operating results. DECREASE IN DEMAND FOR TOWER SPACE WOULD MATERIALLY AND ADVERSELY AFFECT OUR OPERATING RESULTS AND WE CANNOT CONTROL THAT DEMAND. Many of the factors affecting the demand for tower space, and to a lesser extent our services business, affect our operating results. Those factors include: . consumer demand for wireless services; . the financial condition of wireless service providers and their preference for owning rather than leasing antenna sites; . the growth rate of wireless communications or of a particular wireless segment; . the number of wireless service providers in a particular segment, nationally or locally; 17
. governmental licensing of broadcast rights; . increased use of roaming and resale arrangements by wireless service providers. These arrangements enable a provider to serve customers outside its license area, to give licensed providers the right to enter into arrangements to serve overlapping license areas and to permit nonlicensed providers to enter the wireless marketplace. Wireless service providers might consider such roaming and resale arrangements as superior to constructing their own facilities or leasing antenna space from us; . zoning, environmental and other government regulations; and . technological changes. The demand for antenna space is dependent, to a significantly lesser extent, on the needs of television and radio broadcasters. Among other things, technological advances, including the development of satellite-delivered radio, may reduce the need for tower-based broadcast transmission. We could also be affected adversely should the development of digital television be delayed or impaired, or if demand for it were to be less than anticipated because of delays, disappointing technical performance or cost to the consumer. A significant general slow down in the economy in 2001 or beyond could negatively affect the foregoing factors influencing demand for tower space and tower related services. For example, such a slow down could reduce consumer demand for wireless services, thereby causing providers to delay implementation of new systems, and the introduction of new technologies. We also believe that the economic slow down in 2001 has already harmed, and may continue to harm, the financial condition of some wireless service providers. OUR SUBSTANTIAL LEVERAGE AND DEBT SERVICE OBLIGATIONS MAY ADVERSELY AFFECT OUR CASH FLOW AND OUR ABILITY TO MAKE PAYMENTS ON OUR SENIOR NOTES. We have a substantial amount of outstanding indebtedness. After giving effect to our sale of 10.0 million shares of Class A common stock in January 2001, our sale of $1.0 billion of 9 3/8% senior notes due 2009 in January 2001 and borrowings that we assume we would have made to close acquisitions that were pending as of December 31, 2000, we would have had at December 31, 2000 approximately $3.4 billion of consolidated debt. Our substantial level of indebtedness increases the possibility that we may be unable to generate cash sufficient to pay when due the principal of, interest on or other amounts due in respect of our indebtedness. We may also obtain additional long-term debt and working capital lines of credit to meet future financing needs. This would have the effect of increasing our total leverage. Our substantial leverage could have significant negative consequences, including: . increasing our vulnerability to general adverse economic and industry conditions; . limiting our ability to obtain additional financing; . requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, thereby reducing the amount of our cash flow available for other purposes, including capital expenditures; . requiring us to sell debt or equity securities or to sell some of our core assets, possibly on unfavorable terms, to meet payment obligations; . limiting our flexibility in planning for, or reacting to, changes in our business and the industries in which we compete; and . placing us at a possible competitive disadvantage with less leveraged competitors and competitors that may have better access to capital resources. A significant portion of our outstanding indebtedness bears interest at floating rates. As a result, our interest payment obligations on such indebtedness will increase if interest rates increase. RESTRICTIVE COVENANTS IN OUR CREDIT FACILITIES AND OUR SENIOR NOTES COULD ADVERSELY AFFECT OUR BUSINESS BY LIMITING FLEXIBILITY. 18
The indenture for our senior notes due 2009 and our credit facilities contain restrictive covenants that limit our ability to take various actions and engage in various types of transactions. These restrictions include: . paying dividends and making distributions or other restricted payments; . incurring more debt, guaranteeing indebtedness and issuing preferred stock; . issuing stock of certain subsidiaries; . making certain investments; . creating liens; . entering into transactions with affiliates; . entering into sale-leaseback transactions; and . merging, consolidating or selling assets. These covenants could have an adverse effect on our business by limiting our ability to take advantage of financing, merger and acquisition or other corporate opportunities. BUILD-TO-SUIT CONSTRUCTION PROJECTS AND MAJOR ACQUISITIONS FROM WIRELESS SERVICE PROVIDERS INCREASE OUR DEPENDENCE ON A LIMITED NUMBER OF CUSTOMERS, THE LOSS OF WHICH COULD MATERIALLY DECREASE REVENUES, AND MAY ALSO INVOLVE LESS FAVORABLE TERMS. Our focus on major build-to-suit projects for wireless service providers and related acquisitions entail several unique risks. First is our greater dependence on a limited number of customers and the risk that customer losses could materially decrease revenues. Another risk is that our agreements with these wireless service providers have lease and control terms that are more favorable to them than the terms we give our tenants generally. In addition, although we have the benefit of an anchor tenant in build-to-suit projects, we may not be able to find a sufficient number of additional tenants. In fact, one reason wireless service providers may prefer build-to-suit arrangements is to share or escape the costs of an undesirable site. A site may be undesirable because it has high construction costs or may be considered a poor location by other providers. OUR EXPANDED CONSTRUCTION PROGRAM INCREASES OUR EXPOSURE TO RISKS THAT COULD INCREASE COSTS AND ADVERSELY AFFECT OUR EARNINGS AND GROWTH. Our expanded construction activities involve substantial risks. These risks include: . increasing our debt and the amount of payments on that debt; . increasing competition for construction sites and experienced tower construction companies, resulting in significantly higher costs and failure to meet time schedules; . failing to meet time schedules, which could result in our paying significant penalties to prospective tenants, particularly in build-to- suit situations; and . possible lack of sufficient experienced personnel to manage an expanded construction program. IF WE ARE UNABLE TO CONSTRUCT OR ACQUIRE NEW TOWERS AT THE PACE, IN THE LOCATIONS AND AT THE COSTS THAT WE DESIRE, OUR BUSINESS WOULD BE ADVERSELY AFFECTED. Our growth strategy depends in part on our ability to construct and acquire towers in locations and on a time schedule that meets the requirements of our customers. If our tower construction and acquisition projects fail to meet the requirements of our customers, or fail to meet their requirements at our projected costs, our business would be adversely affected. If we are unable to build new towers where and when our customers require them, or where and when we believe the best opportunity to add tenants exists, we could fail to meet our contractual obligations under build-to-suit agreements, and we could lose opportunities to lease space on our towers. Our ability to construct a tower at a location, on a schedule and at a cost we project can be affected by a number of factors beyond our control, including: . zoning, and local permitting requirements and national regulatory approvals; . environmental opposition; 19
. availability of skilled construction personnel and construction equipment; . adverse weather conditions; and . increased competition for tower sites, construction materials and labor. INCREASING COMPETITION IN THE SATELLITE AND FIBER NETWORK ACCESS SERVICES MARKET MAY SLOW VERESTAR'S GROWTH AND ADVERSELY AFFECT ITS BUSINESS. In the satellite and fiber network access services market, Verestar competes with other satellite communications companies that provide similar services, as well as other communications service providers. Some of Verestar's existing and potential competitors consist of companies from whom Verestar currently leases satellite and fiber network access in connection with the provision of Verestar's services to its customers. Increased competition could result in Verestar being forced to reduce the fees it charges for its services and may limit Verestar's ability to obtain, on economical terms, services that are critical to its business. We anticipate that Verestar's competitors may develop or acquire services that provide functionality that is similar to that provided by Verestar's services and that those competitive services may be offered at significantly lower prices or bundled with other services. Many of the existing and potential competitors have financial and other resources significantly greater than those available to Verestar. IF WE CANNOT KEEP RAISING CAPITAL, OUR GROWTH WILL BE IMPEDED. Without additional capital, we would need to curtail our acquisition and construction programs that are essential for our long-term success. We expect to use borrowed funds to satisfy a substantial portion of our capital needs. However, we must continue to satisfy financial ratios and to comply with financial and other covenants in order to do so. If our revenues and cash flow do not meet expectations, we may lose our ability to borrow money or to do so on terms we consider to be favorable. Conditions in the capital markets also will affect our ability to borrow, as well as the terms of those borrowings. All of these factors could also make it difficult or impossible for us otherwise to raise capital, particularly on terms we would consider favorable. IF WE CANNOT SUCCESSFULLY INTEGRATE ACQUIRED SITES OR BUSINESSES OR MANAGE OUR OPERATIONS AS WE GROW, OUR BUSINESS WILL BE ADVERSELY AFFECTED AND OUR GROWTH MAY SLOW OR STOP. A significant part of our growth strategy is the continued pursuit of strategic acquisitions of independent tower operators and consolidators, wireless service providers and service and satellite and fiber network access services businesses. We cannot assure you, however, that we will be able to integrate successfully acquired businesses and assets into our existing business. During 2000, we have consummated more than 60 transactions involving the acquisition of more than 4,600 communications sites and related businesses and several satellite and fiber network access services businesses and related businesses. Our growth has placed, and will continue to place, a significant strain on our management and operating and financial systems. Successful integration of these and any future acquisitions will depend primarily on our ability to manage these assets and combined operations and, with respect to the services and satellite and fiber network access services businesses, to integrate new management and employees into our existing operations. IF OUR CHIEF EXECUTIVE OFFICER LEFT, WE WOULD BE ADVERSELY AFFECTED BECAUSE WE RELY ON HIS REPUTATION AND EXPERTISE, AND BECAUSE OF OUR RELATIVELY SMALL SENIOR MANAGEMENT TEAM. The loss of our chief executive officer, Steven B. Dodge, has a greater likelihood of having a material adverse effect upon us than it would on most other companies of our size because of our comparatively smaller executive group and our reliance on Mr. Dodge's expertise. Our growth strategy is highly dependent on the efforts of Mr. Dodge. Our ability to raise capital also depends significantly on the reputation of Mr. Dodge. You should be aware that we have not entered into an employment agreement with Mr. Dodge. The tower industry is relatively new and does not have a large group of seasoned executives from which we could recruit a replacement for Mr. Dodge. 20
EXPANDING OPERATIONS INTO FOREIGN COUNTRIES COULD CREATE EXPROPRIATION, GOVERNMENTAL REGULATION, FUNDS INACCESSIBILITY, FOREIGN EXCHANGE EXPOSURE AND MANAGEMENT PROBLEMS. Our recent expansion into Canada and Mexico, and other possible foreign operations in the future, could result in adverse financial consequences and operational problems not experienced in the United States. We have made a substantial loan to a Mexican company and are committed to construct a sizable number of towers in that country. We have also invested in a Canadian joint venture that intends to acquire and construct towers in that country. We may also engage in comparable transactions in other countries in the future. Among the risks of foreign operations are governmental expropriation and regulation, inability to repatriate earnings or other funds, currency fluctuations, difficulty in recruiting trained personnel, and language and cultural differences, all of which could adversely affect operations. NEW TECHNOLOGIES COULD MAKE OUR TOWER ANTENNA LEASING SERVICES LESS DESIRABLE TO POTENTIAL TENANTS AND RESULT IN DECREASING REVENUES The development and implementation of signal combining technologies, which permit one antenna to service two different transmission frequencies and, thereby, two customers, may reduce the need for tower-based broadcast transmission and hence demand for our antenna space. Mobile satellite systems and other new technologies could compete with land- based wireless communications systems, thereby reducing the demand for tower lease space and other services we provide. The Federal Communication Commission has granted license applications for several low-earth orbiting satellite systems that are intended to provide mobile voice or data services. In addition, the emergence of new technologies could reduce the need for tower- based transmission and reception and have an adverse effect on our operations. The growth in delivery of video services by direct broadcast satellites could also adversely affect demand for our antenna space. WE COULD HAVE LIABILITY UNDER ENVIRONMENTAL LAWS. Under various federal, state and local environmental laws, we, as an owner, lessee or operator of more than 13,600 real estate sites, after giving effect to our pending transactions, may be liable for the substantial costs of remediating soil and groundwater contaminated by hazardous wastes. For a discussion of our risks relating to environmental matters, see "Environmental Matters" above. OUR BUSINESS IS SUBJECT TO GOVERNMENT REGULATIONS AND CHANGES IN CURRENT OR FUTURE LAWS OR REGULATIONS COULD RESTRICT OUR ABILITY TO OPERATE OUR BUSINESS AS WE CURRENTLY DO. We are subject to federal, state and local and foreign regulation of our business. Both the FCC and the FAA regulate towers used for wireless communications and radio and television antennae. In addition, the FCC separately regulates wireless communication devices operating on towers and licenses and regulates television and radio stations broadcasting from towers. Similar regulations exist in Mexico, Canada and other foreign countries regarding wireless communications and the operation of communications towers. Failure to comply with applicable requirements may lead to monetary penalties and may require us to indemnify our customers against any such failure to comply. New regulations may impose additional costly burdens on us, which may affect our revenues and cause delays in our growth. On January 16, 2001, the FCC issued a Notice of Apparent Liability for Forfeiture against us for apparent violations of some FCC rules regarding the registration of communication towers and, in one instance, the lighting requirements for communication towers. This action involves a proposed fine of $212,000. In addition, the FCC has ordered its Enforcement Division to conduct a further investigation of our administrative compliance. At this time we are unable to predict the outcome of the Notice of Apparent Liability for Forfeiture or any further investigation. For a more complete discussion of the regulatory risks affecting the various aspects of our business, and a recent FCC investigation of our towers, see "Regulatory Matters" above. 21
OUR COSTS COULD INCREASE AND OUR REVENUES COULD DECREASE DUE TO PERCEIVED HEALTH RISKS FROM RADIO EMISSIONS, ESPECIALLY IF THESE PERCEIVED RISKS ARE SUBSTANTIATED. Public perception of possible health risks associated with cellular and other wireless communications media could slow the growth of wireless companies, which could in turn slow our growth. In particular, negative public perception of, and regulations regarding, these perceived health risks could slow the market acceptance of wireless communications services. If a connection between radio emissions and possible negative health effects, including cancer, were established, our operations, costs and revenues would be materially and adversely affected. We do not maintain any significant insurance with respect to these matters. CONTROL BY OUR PRINCIPAL STOCKHOLDERS COULD DETER MERGERS WHERE YOU COULD GET MORE THAN CURRENT MARKET PRICE FOR YOUR STOCK. Steven B. Dodge, together with his affiliates, owned approximately 26.0% of our total voting power as of February 28, 2001. Control by Mr. Dodge and others may discourage a merger or other takeover of our company in which holders of common stock may be paid a premium for their shares over then-current market prices. Mr. Dodge, together with a limited number of our directors, may be able to control or block the vote on mergers and other matters submitted to the common stockholders. ITEM 2. PROPERTIES Our corporate headquarters are at 116 Huntington Avenue, Boston, Massachusetts, where we occupy approximately 40,000 square feet of office space in a building that we own. A description of the principal properties of each of our business segments is as follows: . our rental and management segment leases an aggregate of approximately 82,000 square feet of office space in Atlanta, the Chicago metropolitan area, Houston, the San Francisco Bay area and Mexico City; . our network development services segment owns approximately 817,000 square feet and leases approximately 220,000 square feet of commercial property in several cities around the United States. These properties include an aggregate of approximately 476,000 square feet of space at five locations that we use in our component part business to manufacture and store inventory, and a 240,000 square foot steel fabrication facility; . The primary properties of our satellite and fiber network access services segment are the parcels of land on which the satellite dishes and related facilities of our 11 SNAPs are located. In the aggregate, our SNAPs occupy over 180 acres of land, including 164 acres that we own and 19 acres that we lease. All but one of these properties are located throughout the United States and range in size from two- to seventy-acre parcels. We also own one property in Switzerland. Our interests in communications sites are comprised of a variety of fee and leasehold interests created by long-term lease agreements, private easements and easements, licenses or rights-of-way granted by government entities. In rural areas, a communications site typically consists of a three-to-five-acre tract, which supports towers, equipment shelters and guy wires to stabilize the structure. Less than 2,500 square feet are required for a monopole or self- supporting tower structure of the kind typically used in metropolitan areas. Land leases generally have 20 to 25-year terms, with three five-year renewals, or are for five-year terms with automatic renewals unless we otherwise specify. Pursuant to our credit facilities, the lenders have liens on, among other things, all tenant leases, contracts relating to the management of towers for others, cash, accounts receivable, the stock and other equity interests of virtually all of our subsidiaries and all inter-company debt, inventory and other personal property, fixtures, including towers, intellectual property, as well as certain fee and leasehold interests, and the proceeds of the foregoing. 22
We believe that our owned and leased facilities are suitable and adequate to meet our anticipated needs. ITEM 3. LEGAL PROCEEDINGS We periodically become involved in various claims and lawsuits that are incidental to our business. We believe that no matters currently pending would, in the event of an adverse outcome, have a material impact on our consolidated financial position, results of operations or liquidity. For information regarding a recent FCC investigation of our towers, see "Business-Regulatory Matters-Towers". ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of our security holders in the fourth quarter of 2000. 23
PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Our Class A common stock commenced trading on the New York Stock Exchange (NYSE) on June 5, 1998 (the day after we separated from American Radio). The following table presents reported high and low sale prices of our Class A common stock on the Composite Tape of the NYSE for the years 1999 and 2000. 1999 High Low ---- ------ ------ Quarter ended March 31........................................ $30.25 $20.50 Quarter ended June 30......................................... 26.88 20.50 Quarter ended September 30.................................... 26.00 19.50 Quarter ended December 31..................................... 33.25 17.13 2000 ---- Quarter ended March 31........................................ $55.50 $28.56 Quarter ended June 30......................................... 50.44 36.31 Quarter ended September 30.................................... 47.63 27.63 Quarter ended December 31..................................... 42.44 28.75 On March 26, 2001, the closing price of our Class A common stock was $20.25 as reported on the NYSE. The outstanding shares of common stock and number of registered holders as of December 31, 2000 were as follows: Class ------------------------------- A B C ----------- --------- --------- Outstanding shares........................... 170,035,952 8,095,005 2,267,813 Registered holders........................... 662 64 1 Dividends We have never paid a dividend on any class of common stock. We anticipate that we will retain future earnings, if any, to fund the development and growth of our business. We do not anticipate paying cash dividends on shares of common stock in the foreseeable future. Our credit facilities and the indenture for our senior notes restrict the payment of cash dividends by us and our subsidiaries. Recent Sales of Unregistered Securities In connection with acquisitions completed in 2000, we issued shares of our Class A common stock in transactions exempt from the registration requirements of the Securities Act of 1933 for the number of shares indicated on the following dates: 523,113 shares on January 13, 2000; 766,666 shares on March 29, 2000; 1,115,151 shares and options to purchase 400,000 shares on June 7, 2000; 388,661 shares on October 2, 2000; 346,413 shares on October 26, 2000; 258,213 shares on November 15, 2000; and 1,124,475 shares on December 29, 2000. The security holders of the acquired companies were the purchasers in each of the foregoing instances. On February 15, 2000, we completed a private placement of $450.0 million of 5.0% convertible notes to certain qualified institutional buyers. The notes are convertible at any time on or before February 15, 2010 into shares of Class A common stock at a conversion price of $51.50 per share. Upon conversion, we are obligated to deliver 19.4175 shares of Class A common stock for each $1,000 principal amount of 5.0% notes. During 2000, we also issued an aggregate of 3,576,145 shares of Class A common stock pursuant to the exercise of conversion rights of holders of our 6.25% convertible notes. We originally issued these notes as a 24
private placement to qualified institutional buyers in October 1999. The 6.25% notes are convertible at any time on or before October 15, 2009 at a conversion price of $24.40 per share. Upon conversion, we are obligated to deliver 40.9836 shares of Class A common stock for each $1,000 principal amount of 6.25% notes. During 2000, we also issued an aggregate of 2,148,035 shares of Class A common stock pursuant to the exercise of conversion rights of holders of our 2.25% convertible notes. We originally issued these notes as a private placement to qualified institutional buyers in October 1999. The 2.25% notes are convertible at any time on or before October 15, 2009 at a conversion price of $24.00 per share. Upon conversion, we are obligated to deliver 29.3833 shares of Class A common stock for each $1,000 principal amount of 2.25% notes. As an inducement for the foregoing note conversions, we issued an aggregate of 402,414 shares of Class A common stock to the holders of the notes in addition to the number of shares of Class A common stock that they were entitled to receive upon conversion. We issued the securities referred to in the foregoing paragraphs in reliance on the exemption from registration provided by Section 4(2) of the Securities Act, or in the case of the conversions of convertible notes, Section 3(a)(9) of the Securities Act. As a basis for doing so, we relied, in part, on the following factors: (i) in each instance, we offered our securities to a limited number of offerees without any general solicitation, (ii) we obtained representations from the respective purchasers regarding their financial suitability and investment intent, (iii) with respect to the exemption under Section 3(a)(9), the converted securities were exchanged solely for Class A common stock and no commission or remuneration (other than shares of Class A common stock) was paid or given directly or indirectly for soliciting such exchange and (iv) we issued all of the foregoing securities with restrictive legends on the certificates to limit resales. 25
ITEM 6. SELECTED FINANCIAL DATA The financial data set forth below has been derived from our audited consolidated financial statements, certain of which are included in this Annual Report on Form 10-K. The data should be read in conjunction with our audited consolidated financial statements and with "Management's Discussion and Analysis of Financial Condition and Results of Operations." Prior to the ATC Separation on June 4, 1998, we operated as a subsidiary of American Radio Systems (American Radio) and not as an independent public company. Therefore, the results of operations and the financial conditions shown below for such periods may be different from what they might have been had we operated as a separate, independent public company. We do not consider divisional cash flow and EBITDA as a substitute for other measures of operating results or cash flow from operating activities or as a measure of our profitability or liquidity. Divisional cash flow and EBITDA are not calculated in accordance with generally accepted accounting principles. However, we have included them because they are generally used in the communications site industry as a measure of a company's operating performance. More specifically, we believe they can assist in comparing company performances on a consistent basis without regard to depreciation and amortization. Our concern is that depreciation and amortization can vary significantly among companies depending on accounting methods, particularly where acquisitions are involved, or non-operating factors such as historical cost bases. We believe divisional cash flow is useful because it enables you to compare divisional performance before the effect of tower separation, development and corporate general and administrative expenses that do not relate directly to such performance. Year Ended December 31, ----------------------------------------------- 2000 1999 1998 1997 1996 --------- -------- -------- ------- ------- (in thousands, except per share data) Statements of Operations Data: Operating revenues........... $ 735,275 $258,081 $103,544 $17,508 $ 2,897 --------- -------- -------- ------- ------- Operating expenses: Operating expenses (1)....... 524,074 155,857 61,751 8,713 1,362 Depreciation and amortization................ 283,360 132,539 52,064 6,326 990 Tower separation expense (2)......................... 12,772 Development expense (3)...... 14,517 1,607 Corporate general and administrative expense...... 14,958 9,136 5,099 1,536 830 --------- -------- -------- ------- ------- Total operating expenses................ 836,909 299,139 131,686 16,575 3,182 --------- -------- -------- ------- ------- (Loss) income from operations.................. (101,634) (41,058) (28,142) 933 (285) Interest expense............. (156,839) (27,492) (23,229) (3,040) Interest income and other, net......................... 13,018 17,695 9,217 251 36 Interest income--TV Azteca, net (4)..................... 12,679 1,856 Premium on note conversion (5)......................... (16,968) Minority interest in net earnings of subsidiaries (6)......................... (202) (142) (287) (193) (185) --------- -------- -------- ------- ------- Loss before income taxes and extraordinary losses........ (249,946) (49,141) (42,441) (2,049) (434) Benefit (provision) for income taxes................ 59,656 (214) 4,491 473 (45) --------- -------- -------- ------- ------- Loss before extraordinary losses...................... $(190,290) $(49,355) $(37,950) $(1,576) $ (479) ========= ======== ======== ======= ======= Basic and diluted loss per common share before extraordinary losses (7).... $ (1.13) $ (0.33) $ (0.48) $ (0.03) $ (0.01) ========= ======== ======== ======= ======= Weighted average common shares outstanding (7)...... 168,715 149,749 79,786 48,732 48,732 ========= ======== ======== ======= ======= Other Operating Data: Divisional cash flow (8)..... $ 223,880 $102,224 $ 41,793 $ 8,795 $ 1,535 EBITDA (9)................... 194,405 91,481 36,694 7,259 705 EBITDA margin (9)............ 26.4% 35.4% 35.4% 41.5% 24.3% 26
December 31, ------------------------------------------------- 2000 1999 1998 1997 1996 ---------- ---------- ---------- -------- ------- (in thousands) Balance Sheet Data: Cash and cash equivalents........... $ 82,038 $ 25,212 $ 186,175 $ 4,596 $ 2,373 Property and equipment, net................... 2,296,670 1,092,346 449,476 117,618 19,710 Total assets........... 5,660,679 3,018,866 1,502,343 255,357 37,118 Long-term obligations, including current portion............... 2,468,223 740,822 281,129 90,176 4,535 Total stockholders' equity................ 2,877,030 2,145,083 1,091,746 153,208 29,728 - -------- (1) Consists of operating expenses other than depreciation and amortization, and tower separation, development and corporate general and administrative expenses. (2) Tower separation expense refers to the one-time expense incurred as a result of our separation from American Radio. (3) Development expense includes uncapitalized acquisition costs, costs to integrate acquisitions, costs associated with new business initiatives, abandoned acquisition costs and costs associated with tower site inspections and related data gathering. Development expenses prior to 1999 were not material. (4) Interest income--TV Azteca, net of interest expense of $1.0 million in 2000. (5) Premium on note conversion represents the fair value of incremental stock issued to noteholders to induce them to convert their holdings prior to the first scheduled redemption date. (6) Represents the minority interest in net earnings of our non-wholly-owned subsidiaries. (7) We computed basic and diluted loss per common share before extraordinary losses using the weighted average number of shares outstanding during each period presented. Shares outstanding following the separation from American Radio are assumed to be outstanding for all periods presented prior to June 4, 1998. We have excluded shares issuable upon exercise of options and other common stock equivalents from the computations as their effect is anti-dilutive. (8) Divisional cash flow means (loss) income from operations before depreciation and amortization, and tower separation, development and corporate general and administrative expenses, plus interest income--TV Azteca, net for the year ended December 31, 2000. (9) EBITDA means (loss) income from operations before depreciation and amortization and tower separation expense, plus interest income--TV Azteca, net for the year ended December 31, 2000. EBITDA margin, as used above, means EBITDA divided by operating revenues. 27
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General In early 1995, Steven B. Dodge, the then chairman of the board, president and chief executive officer of American Radio, and other members of American Radio's management, recognized the opportunity in the communications site industry as a consequence of American Radio's ownership and operation of broadcast towers. Our company was formed to capitalize on this opportunity. American Radio distributed its stock in our company to its securityholders in connection with its merger with CBS in June 1998. As a result, our consolidated financial statements may not reflect our results of operations or financial position had we been an independent public company during the period prior to June 1998. We are a leading wireless and broadcast communications infrastructure company operating in three business segments. . Rental and management. We operate the largest network of wireless communications towers in North America and are the largest independent operator of broadcast towers in North America, based on number of towers. . Network development services. We provide comprehensive network development services and components for wireless service providers and broadcasters. . Satellite and fiber network access services. Our Verestar subsidiary is a leading provider of integrated satellite and fiber network access services based upon the number of teleport antennae and facilities. We provide these services to telecommunications companies, ISPs, broadcasters and maritime customers, both domestic and international. We previously referred to our satellite and fiber network access services segment as "Internet, voice, data and video transmission" or "IVDV". During the years ended December 31, 2000, 1999, and 1998, we acquired various communications sites, service businesses and satellite and fiber network access related businesses for aggregate purchase prices of approximately $1.8 billion, $1.2 billion and $853.8 million, respectively. We expect that acquisitions consummated to date will have a material impact on future revenues, expenses and income from operations. In addition, certain historical financial information presented below and elsewhere in this document does not reflect the impact of our construction program to any significant extent because most of that activity is of a more recent origin and is expected to continue during 2001 and thereafter. 28
Results of Operations Years Ended December 31, 2000 and 1999 As of December 31, 2000, we owned or operated approximately 11,000 communications sites, as compared to approximately 5,100 communications sites as of December 31, 1999. The acquisitions and construction completed in 2000 and 1999 have significantly affected operations for the year ended December 31, 2000, as compared to the year ended December 31, 1999. Year Ended December 31, Amount of Percent ------------------------- Increase Increase 2000 1999 (Decrease) (Decrease) ------------ ----------- --------- --------- (in thousands) Revenues: Rental and management......... $ 278,153 $ 135,303 $142,850 106% Network development services.. 311,921 90,416 221,505 245 Satellite and fiber network access services.............. 145,201 32,362 112,839 349 ------------ ----------- -------- Total operating revenues..... 735,275 258,081 477,194 185 ------------ ----------- -------- Operating Expenses: Rental and management......... 139,240 62,441 76,799 123 Network development services.. 274,769 69,318 205,451 296 Satellite and fiber network access services.............. 110,065 24,098 85,967 357 ------------ ----------- -------- Total operating expenses excluding depreciation and amortization, development and corporate general and administrative expenses...... 524,074 155,857 368,217 236 ------------ ----------- -------- Depreciation and amortization................. 283,360 132,539 150,821 114 Development expense........... 14,517 1,607 12,910 803 Corporate general and administrative expense....... 14,958 9,136 5,822 64 Interest expense.............. 156,839 27,492 129,347 470 Interest income and other, net.......................... 13,018 17,695 (4,677) (26) Interest income--TV Azteca, net of interest expense of $1,047 in 2000............... 12,679 1,856 10,823 583 Premium on note conversion.... 16,968 16,968 N/A Minority interest in net earnings of subsidiaries..... 202 142 60 42 Income tax benefit (provision).................. 59,656 (214) 59,870 N/A Extraordinary losses on extinguishment of debt, net.. 4,338 1,372 2,966 216 ------------ ----------- -------- Net loss...................... $ (194,628) $ (50,727) $143,901 284% ============ =========== ======== Rental and Management Revenue Rental and management revenue for the year ended December 31, 2000 was $278.2 million, an increase of $142.9 million from the year ended December 31, 1999. The increase can be primarily attributed to two factors: the acquisition and construction of towers in 2000 and the latter part of 1999 and increased lease- ups (utilization) of new and existing towers. During 2000, we continued to implement our growth strategy by aggressively acquiring and building new towers. With the consummation of the AirTouch, AT&T and other transactions, we acquired more than 4,600 towers in 2000. This coupled with the construction of over 1,600 towers in 2000, increased the scope, depth and strength of our national and international tower footprint providing us with a much larger base of towers generating revenue in 2000 as compared to 1999. In the long-term, we believe that our leasing revenues are likely to grow at a more rapid rate than revenues from other segments of our business because of increasing utilization of existing tower capacity, recent and pending acquisitions and build-to-suit and other construction activities. 29
Additionally, during 2000, we also focused on implementing an area management structure that enhances sales and marketing, enabling us to increase the utilization of both previously existing (prior to January 2000) and newly acquired/constructed towers. Increased utilization resulted in increases in revenue in 2000 for towers that were in our portfolio as of January 1, 2000. Network Development Services Revenue Network development services revenue for the year ended December 31, 2000 was $311.9 million, an increase of $221.5 million from revenue for the year ended December 31, 1999. The significant growth in revenues during 2000 resulted from strategic acquisitions and increased demand for installation work and component parts from major wireless carriers. During 2000, we acquired several key services companies that added additional revenue and expanded our in-house services capabilities. Among the acquisitions were Galaxy Engineering Services, which enables us to perform an array of radio frequency engineering and network design services, such as drive testing, voice quality analysis and transport engineering and Kline Iron & Steel Co., a steel fabrication company with expertise in broadcast towers. In addition, increased demand for some of our network development services, such as equipment installation, maintenance and sales of component parts, also created additional revenue in 2000. Much of this increased demand was a result of aggressive network expansion programs initiated by major wireless communications carriers during the year. In contrast, our revenues from site acquisition and construction work for others, which are also part of our network development services segment, have declined, and we believe will continue to decline, as a percentage of our total revenues. This decline is attributable to the trend in the wireless communications industry to outsource tower infrastructure needs. This trend means we are increasingly applying our site acquisition and construction capabilities to our build-to-suit projects and for other construction for our own account. Satellite and Fiber Network Access Services Revenue Satellite and fiber network access services revenue for the year ended December 31, 2000 was $145.2 million, an increase of $112.8 million from revenue for the year ended December 31, 1999. The majority of the increase can be attributed to the consummation of several key acquisitions that occurred in 2000 and the fourth quarter of 1999 including: ICG Satellite Services, General Telecom, U.S. Electrodynamics, and Publicom. These acquisitions significantly increased our service capabilities, revenue base, and geographical scope of our customers as well as providing significant incremental revenues in 2000. We also experienced an increase in demand of the internet and data requirements of our internet service provider customers in 2000. Rental and Management Expense Rental and management expense for the year ended December 31, 2000 was $139.2 million, an increase of $76.8 million from the year ended December 31, 1999. A significant portion of the increase is attributable to incremental operating expenses incurred in 2000 for towers that were acquired or constructed during 2000 and the latter part of 1999 as discussed above. The remaining component of the increase is primarily related to additional expenses incurred by us in 2000 to implement our area management structure together with, to a lesser extent, increases in operating expenses on certain towers that existed in 1999. Network Development Services Expense Network development services expense for the year ended December 31, 2000 was $274.8 million, an increase of $205.5 million from the year ended December 31, 1999. The significant increase in expense is primarily due to the strategic acquisitions consummated in 2000 as discussed above. In addition, we incurred expenses in 2000 to transition a portion of our Specialty Constructors unit from tower construction work to equipment installation and other services. In part, this transition is related to an ongoing process to decentralize some of our tower construction capabilities and develop some of those capabilities at our regional and area 30
locations. Remaining increases in expense are directly related to a charge for a bad debt reserve of approximately $7.0 million recorded in the fourth quarter and overall increases in the amount of services and component sales to customers. Satellite and Fiber Network Access Services Expense Satellite and fiber network access services expense for the year ended December 31, 2000 was $110.1 million, an increase of $86.0 million from the year ended December 31, 1999. Substantially all of the increase can be attributed to the strategic acquisitions discussed above, together with additional expenses related to integrating those acquisitions. Remaining increases are related to the building of infrastructure to help manage the growth of this segment and overall increases in volume. Depreciation and Amortization Depreciation and amortization for the year ended December 31, 2000 was $283.4 million, an increase of $150.8 million from the year ended December 31, 1999. A component of the increase is attributable to an increase in depreciation expense of $74.8 million. This is a direct result of our purchase, construction and acquisition of approximately $1.3 billion of property and equipment during 2000. The remaining component of the increase is an increase in amortization of $76.0 million, resulting from our recording and amortizing approximately $1.3 billion of goodwill and other intangible assets related to acquisitions consummated during 2000. Development Expense Development expense for the year ended December 31, 2000 was $14.5 million, an increase of $12.9 million from the year ended December 31, 1999. The majority of the increase represents costs related to tower site inspections, related data gathering and certain integration expenses related to acquisitions consummated in 2000. The remaining component of the increase, represents expenses incurred in connection with abandoned acquisitions and other acquisition related costs which are not capitalized in accordance with generally accepted accounting principles. Corporate General and Administrative Expense Corporate general and administrative expense for the year ended December 31, 2000 was $15.0 million, an increase of $5.8 million from the year ended December 31, 1999. The majority of the increase is a result of higher personnel, marketing, professional services and information technology costs associated with supporting our increasing number of towers, the growth of our other businesses, our expanding revenue base and our growth strategy. Interest Expense Interest expense for the year ended December 31, 2000 was $156.8 million, an increase of $129.3 million from the year ended December 31, 1999. This increase is primarily related to increased borrowings to finance acquisitions and construction. The net change, specifically, is attributable to increases in interest incurred on our outstanding debt obligations of $131.7 million and deferred financing amortization of $5.6 million. These interest increases were offset by an increase in capitalized interest related to construction projects of $8.0 million. Interest Income and Other, Net Interest income and other, net for the year ended December 31, 2000 was $13.0 million, a decrease of $4.7 million from the year ended December 31, 1999. The decrease is primarily attributable to a decrease in interest earned on invested cash on hand of $4.6 million as a consequence of such cash being used to finance acquisitions and construction. 31
Interest Income--TV Azteca, Net Interest income--TV Azteca, net for the year ended December 31, 2000 was $12.7 million, an increase of $10.8 million for the year ended December 31, 1999. Amounts included within this caption at December 31, 2000 represent interest earned on our note receivable from TV Azteca of $13.7 million offset by interest expense of $1.0 million. Premium on Note Conversion During the year ended December 31, 2000, we acquired a portion of our 6.25% and 2.25% convertible notes in exchange for shares of our Class A common stock. As a consequence of those negotiated exchanges with certain of our noteholders, we recorded an expense related to the premium on note conversion of approximately $17.0 million during the second quarter of 2000, which represents the fair value of incremental stock issued to noteholders to induce them to convert their holdings prior to the first scheduled redemption date. Income Taxes The income tax benefit for the year ended December 31, 2000 was $59.7 million, an increase of $59.9 million from the year ended December 31, 1999. The primary reason for the increase is a result of an increase in our loss before income taxes and extraordinary losses, partially offset by an increase in amortization of non-deductible intangible assets arising from stock acquisitions consummated in the years ended December 31, 2000 and 1999. The effective tax rate differs in both periods from the statutory rate due to the effect of non-deductible items, principally the amortization of goodwill on certain stock acquisitions and, for the year ended December 31, 2000, the non- deductible note conversion expense on which we have recorded no tax benefit. In assessing the realizability of the deferred tax asset, we analyzed our forecast of future taxable income and concluded that, after recording a valuation allowance of $6.0 million related to a portion of our state net operating loss carry-forwards, recoverability of the remaining net deferred tax asset is more likely than not. The realization of the deferred tax asset is not dependent upon significant changes in the current relationship between income reported for financial and tax purposes, or material asset sales or other transactions not in the ordinary course of business. Extraordinary Losses on Extinguishment of Debt We have incurred extraordinary losses on the extinguishment of debt in 2000 of $4.3 million. The losses were incurred as a result of an amendment and restatement of our primary credit facilities ($3.0 million, net of a tax benefit of $2.0 million) and our early retirement of debt assumed in the UNISite, Inc. merger ($1.3 million, net of a tax benefit of $0.9 million). 32
Years Ended December 31, 1999 and 1998 As of December 31, 1999, we operated approximately 5,100 communications sites, as compared to approximately 2,300 communications sites as of December 31, 1998. The acquisitions consummated in 1999 and 1998 significantly affected operations for the year ended December 31, 1999 as compared to the year ended December 31, 1998. Year Ended December 31, Amount of Percent ------------------------ Increase Increase 1999 1998 (Decrease) (Decrease) ----------- ----------- --------- --------- (in thousands) Revenues: Rental and management.......... $ 135,303 $ 60,505 $74,798 124% Network development services... 90,416 23,315 67,101 288 Satellite and fiber network access services............... 32,362 19,724 12,638 64 ----------- ----------- -------- Total operating revenues...... 258,081 103,544 154,537 149 ----------- ----------- -------- Operating Expenses: Rental and management.......... 62,441 29,455 32,986 112 Network development services... 69,318 19,479 49,839 256 Satellite and fiber network access services............... 24,098 12,817 11,281 88 ----------- ----------- -------- Total operating expenses excluding depreciation and amortization, tower separation, development and corporate general and administrative expenses....... 155,857 61,751 94,106 152 ----------- ----------- -------- Depreciation and amortization.. 132,539 52,064 80,475 155 Tower separation expense....... 12,772 (12,772) N/A Development expense............ 1,607 1,607 N/A Corporate general and administrative expense........ 9,136 5,099 4,037 79 Interest expense............... 27,492 23,229 4,263 18 Interest income and other, net........................... 17,695 9,217 8,478 92 Interest income--TV Azteca..... 1,856 1,856 N/A Minority interest in net earnings of subsidiaries...... 142 287 (145) (51) Income tax (provision) benefit....................... (214) 4,491 (4,705) N/A Extraordinary loss on extinguishment of debt, net... 1,372 1,382 (10) (1) Extraordinary loss on redemption of preferred stock, net........................... 7,510 (7,510) N/A ----------- ----------- -------- Net loss....................... $(50,727) $(46,842) $ 3,885 8% =========== =========== ======== Rental and Management Revenue Rental and management revenue for the year ended December 31, 1999 was $135.3 million, an increase of $74.8 million from the year ended December 31, 1998. The majority of the increase, $56.4 million, is attributable to revenue generated from acquisitions consummated and/or towers constructed subsequent to December 31, 1998. The remaining factor contributing to the additional revenue is an increase in comparable tower revenue of $18.4 million during 1999 for towers that existed during 1998. Network Development Services Revenue Network development services revenue for the year ended December 31, 1999 was $90.4 million, an increase of $67.1 million from the year ended December 31, 1998. The primary reason for the increase is due to the $66.7 million of revenue earned after the merger with OmniAmerica, Inc. The remaining component of the increase is attributable to revenue generated from our existing services business of approximately $0.4 million. 33
Satellite and Fiber Network Access Services Revenue Satellite and fiber network access services revenue for the year ended December 31, 1999 was $32.4 million, an increase of $12.6 million from the year ended December 31, 1998. The primary reason for the increase is the approximately $9.9 million of revenue earned during 1999 as a result of acquisitions consummated in 1999. The remaining component of the increase, $2.7 million, is an increase in revenue from the satellite and fiber network access services business that existed at December 31, 1998. Rental and Management, Network Development Services and Satellite and Fiber Network Access Services Expenses Rental and management, network development services and satellite and fiber network access services expenses for the year ended December 31, 1999 were $62.4 million, $69.3 million and $24.1 million, respectively, an increase of $33.0 million, $49.8 million and $11.3 million, respectively, from the year ended December 31, 1998. The primary reasons for the increase in these expenses are essentially the same as those discussed above under each respective revenue segment. Depreciation and Amortization Depreciation and amortization for the year ended December 31, 1999 was $132.5 million, an increase of $80.5 million from the year ended December 31, 1998. A component of the increase is attributable to an increase in depreciation expense of $30.5 million resulting from our purchase, construction and/or acquisition of approximately $693.4 million of property and equipment during 1999. The remaining component of the increase is an increase in amortization expense of $50.0 million, resulting from our amortization of approximately $751.7 million of goodwill and other intangible assets related to acquisitions consummated during 1999. Tower Separation Expense We completed our separation from American Radio in 1998. No additional expenses related to the separation were incurred in 1999, nor are any expected to occur in the future. See note 1 of the consolidated financial statements for a description of tower separation expense. Corporate General and Administrative Expense Corporate general and administrative expense for the year ended December 31, 1999 was $9.1 million, an increase of $4.0 million from the year ended December 31, 1998. The majority of this increase resulted from higher personnel and marketing costs associated with our growing revenue base and market position. The remaining component of the increase is the overall increases in other administrative expenses incurred in supporting our growth. Development Expense Development expense for the year ended December 31, 1999 was $1.6 million. These expenses include abandoned acquisition costs, costs to integrate acquisitions and costs associated with new business initiatives. Interest Expense Interest expense for the year ended December 31, 1999 was $27.5 million, an increase of $4.3 million from the year ended December 31, 1998. The increase is primarily attributable to an increase of interest on our outstanding debt obligations ($9.4 million) and amortization of deferred financing costs ($0.7 million). These interest increases were offset by a decrease of $3.1 million in interest incurred during 1998 on our outstanding redeemable preferred stock (which was redeemed in July 1998), as well as an increase in interest capitalized during the year ended December 31, 1999. 34
Interest Income and Other, Net Interest income and other, net for the year ended December 31, 1999 was $17.7 million, an increase of $8.5 million from the year ended December 31, 1998. The increase is primarily related to an increase in interest earned on invested cash on hand ($4.9 million), interest earned on notes receivable ($1.4 million) and interest earned on security/escrow deposits ($2.2 million). Interest Income--TV Azteca Interest income--TV Azteca for the year ended December 31, 1999 was $1.9 million. Amounts included within this caption represent interest earned on our notes receivable from TV Azteca. Income Taxes The income tax provision for the year ended December 31, 1999 was $0.2 million, a decrease of $4.7 million from the income tax benefit recorded for the year ended December 31, 1998. The decrease in the tax benefit is due to an increase in nondeductible permanent items (principally goodwill amortization). The increase in nondeductible permanent items occurred as a result of the consummation of several mergers and acquisitions in 1999. As of December 31, 1999, we had a net deferred tax asset of $116.0 million. In assessing the realizability of the deferred tax asset, we analyzed our forecast of future taxable income and concluded that recoverability of the net deferred tax asset is more likely than not. The realization of the deferred tax asset is not dependent upon significant changes in the current relationship between income reported for financial and tax purposes, or material asset sales or other transactions not in the ordinary course of business. Extraordinary Losses We incurred an extraordinary loss on the extinguishment of debt in 1999 of $1.4 million due to the early repayment of one of our term loans. We recorded an extraordinary loss of $1.4 million in 1998 due to the refinancing of our then existing credit facility. We also recorded an extraordinary loss of $7.5 million in 1998 due to the redemption of our interim preferred stock. Liquidity and Capital Resources Our liquidity needs arise from our acquisition-related activities, debt service, working capital and capital expenditures associated principally with our construction program. As of December 31, 2000, we had approximately $82.0 million in cash and cash equivalents, working capital of approximately $173.4 million, and had approximately $300.0 million of available borrowings under our credit facilities. Historically, we have met our operational liquidity needs primarily with internally generated funds and have financed our acquisitions and our construction program, including related working capital needs, with a combination of capital funds from sales of our equity and debt securities and bank borrowings. We expect that this trend will continue in 2001. Our 2001 capital budget provides for expenditures of approximately $600.0 million, which includes towers to be built under existing build-to-suit agreements. In addition, based on the transactions executed to date, we expect to close on pending transactions of approximately $800.0 million in 2001. Lastly, we believe that debt service requirements will be significant in 2001. We believe our current cash and cash equivalents (which include proceeds from our equity and senior note offerings in 2001) and existing borrowing capacity under our credit facilities will be sufficient to meet these above cash requirements. If we were to effect more than one or possibly two major new acquisitions in the next twelve months, we would likely require additional funds from external sources. 35
For the year ended December 31, 2000, cash flows used for operating activities were $25.0 million, as compared to cash flows provided by operating activities of $97.0 million for the year ended December 31, 1999. The primary reasons for the decrease are increased interest payments, the paydown of current liabilities assumed through acquisitions and an increase in current assets. For the year ended December 31, 2000, cash flows used for investing activities were $2.0 billion, as compared to $1.1 billion for the year ended December 31, 1999. The increase in 2000 is primarily due to a net increase in cash expended for mergers and acquisitions, coupled with an increase in property and equipment expenditures. For the year ended December 31, 2000, cash flows provided by financing activities were $2.1 billion, as compared to $879.7 million for the year ended December 31, 1999. The increase is primarily related to increased net borrowings under our credit facilities, offset by a decrease in proceeds from the issuance of debt and equity securities. As of December 31, 2000, we had outstanding the indebtedness as described below (under "Credit Facilities" and "Equity Offerings and Note Placements"). In addition, as of December 31, 2000, we had outstanding $212.7 million principal amount of our 6.25% convertible notes due October 15, 2009 and $258.2 million principal amount of our 2.25% convertible notes due October 15, 2009, and other debt of approximately $197.3 million. See note 6 to our consolidated financial statements. We may need to raise cash from external sources to meet our debt service obligations and to pay the principal amounts of our indebtedness when due. Credit Facilities. Our credit facilities provide us with a borrowing capacity of up to $2.0 billion, with the option to increase the capacity up to an additional $500.0 million, subject to lender approval. Borrowings under the credit facilities are subject to certain borrowing base restrictions, such as operating cash flow and construction cost levels. Our credit facilities currently include a $650.0 million revolving credit facility which was fully available (subject to the borrowing base restrictions) on December 31, 2000, maturing on June 30, 2007, an $850.0 million multi-draw Term Loan A, which was fully drawn on December 31, 2000, maturing on June 30, 2007, and a $500.0 million Term Loan B, which was fully drawn on December 31, 2000, maturing on December 31, 2007. The credit facilities are scheduled to amortize quarterly commencing in March, 2003. Our credit facilities contain certain financial and operational covenants and other restrictions with which the borrower subsidiaries and the restricted subsidiaries must comply, whether or not there are any borrowings outstanding. We and the restricted subsidiaries have guaranteed all of the loans. We have secured the loans by liens on substantially all assets of the borrower subsidiaries and the restricted subsidiaries and substantially all outstanding capital stock and other debt and equity interests of all of our direct and indirect subsidiaries. Under our credit facilities, we are also required to maintain an interest reserve for our convertible notes and our senior notes. These funds can only be used to make scheduled interest payments on our outstanding convertible notes and senior notes. As of December 31, 2000 we had approximately $46.0 million of restricted cash related to such interest reserve. ATC Mexico Loan Agreement. In February 2001, our Mexican subsidiary, American Tower Corporation de Mexico, S. de R.L. de C.V., which we refer to as ATC Mexico, and two of its subsidiaries consummated a loan agreement with a group of banks providing a credit facility of an initial aggregate amount of $95.0 million. If additional lenders are made party to the agreement, the size of the facility may increase to $140.0 million. We have committed to ATC Mexico to loan up to $45.0 million if additional lenders are not made party to the agreement. Our committment will be reduced on a dollar-for-dollar basis if additional lenders join the ATC Mexico loan agreement. This credit facility requires maintenance of various financial covenants and ratios and is guaranteed and collateralized by substantially all of the assets of ATC Mexico and the assets of its subsidiaries. All amounts borrowed under this loan agreement are due on September 30, 2003. The lenders' commitment to make loans under the loan agreement expires on March 31, 2002. As of March 2001, an aggregate of $95.0 million was outstanding under this loan agreement. 36
Equity Offerings and Note Placements. During 2000, we consummated a public offering of 12.5 million shares of our Class A common stock for total net proceeds of approximately $513.9 million. In addition, we consummated a private placement of $450.0 million of 5.0% convertible notes, issued at 100% of their face amount. The convertible notes mature in February 2010 and require interest payments semi-annually. We used the proceeds from these two transactions to reduce borrowings under our credit facilities, to finance acquisitions and tower construction and for general working capital purposes. In January 2001, we completed a public offering of 10.0 million shares of our Class A common stock for total net proceeds of approximately $360.8 million. We also completed a private placement of $1.0 billion of 9 3/8% senior notes that mature in February 2009 for total net proceeds of $969.0 million. These notes require interest payments semi-annually and contain certain financial and operational covenants and other restrictions similar to those in our credit facilities. We expect to use the proceeds from these two transactions to finance the construction of towers, fund pending and future acquisitions and for general corporate purposes. ATC Separation. We continue to be obligated under the ATC Separation agreement for certain tax liabilities to CBS and American Radio. As of December 31, 2000, no material matters covered under this indemnification have been brought to our attention. Acquisitions and Construction. We expect that the consummated acquisitions and current and future construction activities will have a material impact on liquidity. We believe that the acquisitions, once integrated, will have a favorable impact on liquidity and will offset the initial effects of the funding requirements. We also believe that the construction activities may initially have an adverse effect on our future liquidity as newly constructed towers will initially decrease overall liquidity. However, as such sites become fully operational and achieve higher utilization, we expect that they will generate tower cash flow and, in the long-term, increase liquidity. As of December 31, 2000, we were a party to various agreements relating to acquisitions of assets or businesses from various third parties and were involved in the construction of numerous towers, pursuant to build-to-suit agreements and for other purposes. Economic conditions. A significant general slow down in the economy in 2001 or beyond could reduce consumer demand for wireless services, thereby causing providers to delay implementation of new systems and technologies, and has harmed, and may continue to harm, the financial condition of some wireless service providers, as referred to elsewhere herein. Recent Accounting Pronouncements On January 1, 2001, we adopted the provisions of SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities." This statement establishes accounting and reporting standards for derivative instruments. Specifically, it requires that an entity recognize all derivatives as either assets or liabilities on the balance sheet at fair value. The accounting for changes in the fair value of a derivative (that is unrealized gains or losses) will be recorded as a component of an entity's net income or other comprehensive income, depending upon designation (as defined in the statement). As a result of adopting SFAS No. 133, we expect to record a pre-tax non-cash loss from a cumulative effect of change in accounting principle of approximately $12.0 million to $14.0 million in the first quarter of 2001. During 2000, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition," which provides the SEC staff's views in applying generally accepted accounting principles to revenue recognition. SAB No. 101 was effective for the Company on October 1, 2000. The adoption of SAB No. 101 was not material to our consolidated financial statements. In March 2000, the Financial Accounting Standards Board issued Interpretation No. 44 (FIN 44), "Accounting for Certain Transactions involving Stock Compensation", an interpretation of APB No. 25. FIN 44 was effective July 1, 2000. The adoption of FIN 44 was not material to our consolidated financial statements. 37
Information Presented Pursuant to the Indenture for Our 9 3/8% Senior Notes The following table sets forth information that is presented solely to address certain reporting requirements contained in the indenture for our 9 3/8% senior notes issued in January 2001. This information presents certain financial data for us on a consolidated basis and on a restricted group basis, which means only for American Tower and its subsidiaries that comprise the restricted group under the indenture governing those senior notes. All of our subsidiaries are part of this restricted group, except Verestar and its subsidiaries, whose operations constitute all of our satellite and fiber network access services business segment. This restricted group data is not intended to represent an alternative measure of operating results, financial position or cash flow from operations, as determined in accordance with generally accepted accounting principles. Consolidated Restricted Group(1) ------------------------- -------------------- Year Ended Year Ended December 31, December 31, ------------------------- -------------------- 2000 1999 2000 1999 ------------ ----------- ---------- -------- (in thousands) Statement of Operations Data: Operating revenues........... $ 735,275 $ 258,081 $ 590,074 $225,719 ------------ ----------- ---------- -------- Operating expenses: Operating expenses(2)........ 524,074 155,857 414,009 131,759 Depreciation and amortization................. 283,360 132,539 256,286 125,275 Development expense(3)....... 14,517 1,607 14,433 1,406 Corporate general and administrative expense...... 14,958 9,136 14,958 9,136 ------------ ----------- ---------- -------- Total operating expenses.. 836,909 299,139 699,686 267,576 ------------ ----------- ---------- -------- Loss from operations......... (101,634) (41,058) (109,612) (41,857) Interest expense............. (156,839) (27,492) (155,006) (27,487) Interest income and other, net......................... 13,018 17,695 12,661 17,632 Interest income--TV Azteca, net(4)...................... 12,679 1,856 12,679 1,856 Premium on note conversion(5)............... (16,968) (16,968) Minority interest in net earnings of subsidiaries(6)............. (202) (142) (202) (142) ------------ ----------- ---------- -------- Loss before income taxes and extraordinary losses........ $ (249,946) $ (49,141) $(256,448) $(49,998) ============ =========== ========== ======== December 31, 2000 ----------------------------- Consolidated Restricted Group ------------ ---------------- Balance Sheet Data: Cash and cash equivalents....................... $ 82,038 $ 66,547 Property and equipment, net..................... 2,296,670 2,013,270 Total assets.................................... 5,660,679 5,019,766 Long-term obligations, including current portion........................................ 2,468,223 2,355,911 Net debt(7)..................................... 2,386,185 2,289,364 Total stockholders' equity...................... 2,877,030 2,877,030 - -------- (1) Corporate overhead allocable to Verestar and interest expense related to intercompany borrowings to Verestar (unrestricted subsidiary) have not been excluded from results shown for the restricted group. (2) Consists of operating expenses other than depreciation and amortization, and development and corporate general and administrative expenses. (3) Development expense includes uncapitalized acquisition costs, costs to integrate acquisitions, costs associated with new business initiatives, abandoned acquisition costs and costs associated with tower site inspections and related data gathering. (4) Interest income--TV Azteca, net of interest expense of $1.0 million in 2000. (5) Premium on note conversion represents the fair value of incremental stock issued to noteholders to induce them to convert their holdings prior to the first scheduled redemption date. (6) Represents the minority interest in net earnings of our non-wholly-owned subsidiaries. (7) Net debt represents long-term obligations, including current portion, less cash and cash equivalents. 38
Tower Cash Flow, Adjusted Consolidated Cash Flow and Non-Tower Cash Flow for the Company and its restricted subsidiaries, as defined in the indenture for our 9 3/8% senior notes, are as follows: Tower Cash Flow, for the three months ended December 31, 2000..... $47,164 ======== Consolidated Cash Flow, for the twelve months ended December 31, 2000............................................................. $173,786 Less: Tower Cash Flow, for the twelve months ended December 31, 2000........................................................... (151,592) Plus: four times Tower Cash Flow, for the three months ended December 31, 2000.............................................. 188,656 -------- Adjusted Consolidated Cash Flow, for the twelve months ended December 31, 2000................................................ $210,850 ======== Non-Tower Cash Flow, for the twelve months ended December 31, 2000............................................................. $7,761 ======== 39
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As of and for the years ended December 31, 2000 and 1999, we were exposed to market risk from changes in interest rates on long-term debt obligations. We attempted to reduce those risks by utilizing derivative financial instruments, namely interest rate caps, swaps, collars and swaptions. All derivative financial instruments are for purposes other than trading. During 2000, we increased our borrowings under our credit facilities by approximately $1.26 billion. In addition, we completed a private placement of $450.0 million of 5.0% convertible notes issued at 100% of their face amount. We also entered into several interest rate cap, swap, collar and swaption agreements to reduce our risk with respect to the variable rate debt under our credit facilities. Lastly, during 2000 we had interest rate caps with a total notional amount of $66.9 million expire. The following tables provide information as of December 31, 2000 and 1999 about our market risk exposure associated with changing interest rates. For long-term debt obligations, the tables present principal cash flows by maturity date and average interest rates related to outstanding obligations. For interest rate caps, swaps, collars and swaptions, the tables present notional principal amounts and weighted-average interest rates by contractual maturity dates. As of December 31, 2000 Principal Payments and Interest Rate Detail by Contractual Maturity Dates (In thousands) Long-Term Debt 2001 2002 2003 2004 2005 Thereafter Total Fair Value - -------------- ---------- ---------- ---------- -------- -------- ---------- ---------- ---------- Fixed Rate Debt(a)...... $495 $591 $641 $696 $37,107 $936,582 $976,112 $1,243,860 Average Interest Rate(a)................ 5.79% 5.79% 5.80% 5.80% 5.71% 5.71% Variable Rate Debt (a).. $56,000 $192,000 $243,000 $859,000 $1,350,000 $1,350,000 Average Interest Rate (a).................... Aggregate Notional Amounts Associated with Interest Rate Caps, Swaps, Collars and Swaptions in Place As of December 31, 2000 and Interest Rate Detail by Contractual Maturity Dates (In thousands) Interest Rate CAPS 2001 2002 2003 2004 2005 Thereafter Total Fair Value - ------------------ ---------- ---------- ---------- -------- -------- ---------- ---------- ---------- Notional Amount......... $364,980 $364,980(c) Cap Rate................ 9.00% 9.00% Interest Rate SWAPS - ------------------- Notional Amount......... $395,000 $395,000(d) $365,000(e) $ (7,680) Weighted-Average Fixed Rate Payable (b)....... 6.69% 6.69% 6.67% Interest Rate COLLARS - --------------------- Notional Amount......... $465,000 $465,000(f) $185,000(g) $ (6,107) Weighted-Average Below Floor Rate Payable, Above Cap Rate Receivable (b)......... 6.35%,8.90% 6.35%,8.90% 6.46%,9.00% Interest Rate SWAPTIONS - ----------------------- Notional Amount......... $290,000(h) $ 1,707 Weighted-Average Swaption Rate(b)....... 6.56% As of December 31, 1999 Principal Payments and Interest Rate Detail by Contractual Maturity Dates (In thousands) Long-Term Debt 2000 2001 2002 2003 2004 Thereafter Total Fair Value - -------------- ---------- ---------- ---------- -------- -------- ---------- ---------- ---------- Fixed Rate Debt(a)...... $270 $319 $347 $378 $411 $639,034 $640,759 $640,759 Average Interest Rate(a)................ 6.38% 6.38% 6.37% 6.37% 6.37% 6.37% Variable Rate Debt(a)... $6,750 $11,250 $13,500 $18,000 $40,500 $90,000 $90,000 Average Interest Rate(a)................ Aggregate Notional Amounts Associated with Interest Rate Caps in Place As of December 31, 1999 and Interest Rate Detail by Contractual Maturity Dates (In thousands) Interest Rate CAPS 2000 2001 2002 2003 2004 Thereafter Total Fair Value - ------------------ ---------- ---------- ---------- -------- -------- ---------- ---------- ---------- Notional Amount......... $66,860(i) Weighted-Average Cap Rate(b)................ 8.82% 40
- -------- (a) December 31, 2000 variable rate debt consists of our credit facilities ($1.35 billion) and fixed rate debt consists of the 2.25% and 6.25% convertible notes ($470.9 million), the 5.0% convertible notes ($450.0 million) and mortgage payables ($55.2 million). Interest on the credit facilities is payable in accordance with the applicable London Interbank Offering Rate (LIBOR) agreement or quarterly and accrues at the Company's option either at LIBOR plus margin (as defined) or the Base Rate plus margin (as defined). The average interest rate in effect at December 31, 2000 for the credit facilities was 9.65%. For the year ended December 31, 2000, the weighted average interest rate under the credit facilities was 9.56%. The 2.25% and 6.25% convertible notes each bear interest (after giving effect to the accretion of the original discount on the 2.25% convertible notes) at 6.25%, which is payable semiannually on April 15 and October 15 of each year beginning April 15, 2000. The 5.0% convertible notes bear interest at 5.0% which is payable semiannually on February 15 and August 15 of each year. The mortgage payables bear interest at rates ranging from 7.93% to 8.42% and are payable on a monthly basis. December 31, 1999 variable rate debt consists of our credit facilities existing at December 31, 1999 ($90.0 million) and fixed rate debt consists of the 2.25% and 6.25% convertible notes ($602.3 million) and a mortgage payable ($38.5 million). The interest rate in effect at December 31, 1999 for the then existing credit facilities was 9.25%. For the year ended December 31, 1999, the weighted average interest rate under the credit facilities was 7.94%. The mortgage payable bears interest at 8.42% and is payable on a monthly basis. (b) Represents the weighted-average fixed rate or range of interest based on contract notional amount as a percentage of total notional amounts in a given year. (c) Includes notional amounts of $364,980 that will expire in February 2002. (d) Includes notional amounts of $30,000 that will expire in March 2002. (e) Includes notional amounts of $75,000 and $290,000 that will expire in January and February 2003, respectively. (f) Includes notional amounts of $185,000 and $95,000 that will expire in May and July 2002, respectively. (g) Includes notional amounts of $185,000 that will expire in May 2003. (h) Includes notional amounts of $290,000 that will expire in August 2001. (i) Includes notional amounts of $21,500, $23,750 and $21,610 that expired in January, April and July 2000, respectively. We maintain a portion of our cash and cash equivalents in short-term financial instruments which are subject to interest rate risks. Due to the relatively short duration of such instruments, we believe fluctuations in interest rates with respect to such investments will not materially affect our financial condition or results of operations. Our foreign operations have not been significant to date. Accordingly, foreign currency risk has not been material for the years ended December 31, 2000 and 1999. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See Item 14(a). ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. 41
PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Our executive officers, and their respective ages and positions as of February 29, 2001 are set forth below: Name Age Position ---- --- -------- Steven B. Dodge.................. 55 Chairman of the Board, President and Chief Executive Officer Justin D. Benincasa.............. 39 Senior Vice President and Corporate Controller Norman A. Bikales................ 65 Executive Vice President--Special Counsel Alan L. Box...................... 49 Executive Vice President and Director James S. Eisenstein.............. 42 Executive Vice President--Corporate Development David W. Garrison................ 45 Director, Chairman and Chief Executive Officer of Verestar, Inc. J. Michael Gearon, Jr. .......... 36 Executive Vice President, Director and President of American Tower International Steven J. Moskowitz.............. 37 Executive Vice President--Marketing and Vice President and General Manager Northeast Region Bradley E. Singer................ 34 Executive Vice President--Strategy and Vice President and General Manager, Southeast Region Douglas C. Wiest................. 48 Chief Operating Officer Joseph L. Winn................... 49 Chief Financial Officer and Treasurer Steven B. Dodge has served as our Chairman of the Board, President and Chief Executive Officer since our separation from American Radio in June 1998 (the "ATC Separation"). Mr. Dodge was the Chairman of the Board of Directors, President and Chief Executive Officer of American Radio from its founding in November 1993 until the ATC Separation. In 1988, Mr. Dodge founded Atlantic Radio, one of the predecessor entities of American Radio. Mr. Dodge currently serves on the boards of Citizens Financial Group, Inc., Nextel Partners, Inc., Sothebys Holdings, Inc. and TD Waterhouse Group, Inc. Justin D. Benincasa is Senior Vice President and Corporate Controller. Mr. Benincasa was a Vice President and Corporate Controller of American Radio from its founding in 1993 until the ATC Separation. Norman A. Bikales is Executive Vice President--Special Counsel. Mr. Bikales joined us in February 2000. Previously, he was a senior partner at the Boston law firm of Sullivan & Worcester LLP acting as our outside legal counsel. Alan L. Box has served as an Executive Vice President since March 1998 and has been a director since our organization. Mr. Box served as Chief Operating Officer from June 1997 to March 1998, at which time he assumed his present role as the Executive Vice President responsible for our satellite and fiber network access services business. Mr. Box also was an Executive Vice President and a director of American Radio from April 1997 when EZ Communications ("EZ"), merged into American Radio, until the ATC Separation. Prior to April 1997, Mr. Box had been the Chief Executive Officer of EZ, a company he joined in 1974. James S. Eisenstein is Executive Vice President--Corporate Development. Mr. Eisenstein has overall responsibility for seeking out acquisition and development opportunities. Mr. Eisenstein helped form our company in the summer of 1995. From 1990 to 1995, he was Chief Operating Officer for Amaturo Group Ltd., a broadcast company operating 11 radio stations and four broadcasting towers, several of which were purchased by American Radio. Mr. Eisenstein is a director of U.S. Wireless, Inc. David W. Garrison is Chairman and Chief Executive Officer of Verestar, one of our wholly owned subsidiaries, and a director. From February 1995 to July 1998, Mr. Garrison served as Chairman, Chief Executive Officer, President and Chief Operating Officer of NETCOM OnLine Communications Services, Inc., a pioneer independent provider of internet services in four countries. Prior to that, Mr. Garrison was President of Skytel 42
Communications, Inc., a leading provider of wireless mobile data services, and Chairman and Chief Executive Officer of Dial Page, Inc., a regional paging carrier based in the Southeast United States, which became part of Nextel Communications, Inc. ("Nextel"). Mr. Garrison is currently a director of Ameritrade Holding Corporation. J. Michael Gearon, Jr. is Executive Vice President and the President of American Tower International, and has been a director since our acquisition of Gearon Communications in January 1998. In addition, he has served as an Executive Vice President since January 1998. Prior to joining us, Mr. Gearon had been the founder and Chief Executive Officer of Gearon Communications since September 1991, which he developed into one of the fastest growing private companies in the United States. Steven J. Moskowitz is Executive Vice President--Marketing and Vice President and General Manager of our Northeast Region. Mr. Moskowitz joined us in January 1998, initially as a Vice President and General Manager of our Northeast Region, and assumed his current position in March 1999. From 1989 until 1998, Mr. Moskowitz served as a Vice President of The Katz Media Group, the largest broadcast media representation firm in the United States. Bradley E. Singer is Executive Vice President--Strategy and Vice President and General Manager, Southeast Region. Mr. Singer joined us in September 2000 as Executive Vice President--Strategy, and was appointed Vice President and General Manager of the Southeast region in November 2000. Prior to joining us, Mr. Singer was an investment banker with Goldman, Sachs & Co. focusing on the telecommunications industry. Douglas C. Wiest is our Chief Operating Officer. Mr. Wiest joined us in February 1998, initially as the Chief Operating Officer of Gearon Communications, and assumed his current position in March 1998. Prior to joining us, Mr. Wiest had been Regional Vice President of Engineering and Operations for Nextel's Southern Region since 1993. Joseph L. Winn is our Chief Financial Officer and Treasurer. Mr. Winn was Treasurer, Chief Financial Officer and a director of American Radio from its founding in 1993 until the ATC Separation. The information under "Election of Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance" from the Definitive Proxy Statement is hereby incorporated by reference herein. ITEM 11. EXECUTIVE COMPENSATION The information under "Compensation and Other Information Concerning Directors and Officers" from the Definitive Proxy Statement is hereby incorporated by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information under "Securities Ownership of Certain Beneficial Owners and Management" from the Definitive Proxy Statement is hereby incorporated by reference herein. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information under "Certain Relationships and Related Transactions" from the Definitive Proxy Statement is hereby incorporated by reference herein. 43
PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8- K (a) Financial Statements and Schedules. See index to Financial Statements, which appears on page F-1 hereof. (b) Reports on Form 8-K. Form 8-K (Items 5, 7 and 9) filed on December 20, 2000. Form 8-K (Items 2 and 7) filed on December 15, 2000. Form 8-K (Item 7) filed on November 13, 2000. Form 8-K (Item 7) filed on October 30, 2000. (c) Exhibits. The exhibits listed on the Exhibit Index hereof are filed herewith in response to this Item. 44
SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 26th day of March 2001. American Tower Corporation (Registrant) /s/ Steven B. Dodge By: _________________________________ Steven B. Dodge Chief Executive Officer, President and Chairman Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been duly signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date --------- ----- ---- /s/ Steven B. Dodge Chief Executive Officer, March 26, 2001 ______________________________________ President and Chairman Steven B. Dodge (Principal Executive Officer) /s/ Joseph L. Winn Chief Financial Officer March 26, 2001 ______________________________________ and Treasurer Joseph L. Winn (Principal Financial Officer) /s/ Justin D. Benincasa Senior Vice President and March 26, 2001 ______________________________________ Corporate Controller Justin D. Benincasa (Principal Accounting Officer) /s/ Alan L. Box Director March 26, 2001 ______________________________________ Alan L. Box /s/ Arnold L. Chavkin Director March 26, 2001 ______________________________________ Arnold L. Chavkin /s/ David W. Garrison Director March 26, 2001 ______________________________________ David W. Garrison /s/ J. Michael Gearon, Jr. Director March 26, 2001 ______________________________________ J. Michael Gearon, Jr. /s/ Fred R. Lummis Director March 26, 2001 ______________________________________ Fred R. Lummis 45
Signature Title Date --------- ----- ---- /s/ Thomas H. Stoner Director March 26, 2001 ______________________________________ Thomas H. Stoner /s/ Maggie Wilderotter Director March 26, 2001 ______________________________________ Maggie Wilderotter 46
AMERICAN TOWER INDEX TO FINANCIAL STATEMENTS Page ---- Independent Auditors' Report............................................. F-2 Consolidated Balance Sheets as of December 31, 2000 and 1999............. F-3 Consolidated Statements of Operations for the Years Ended December 31, 2000, 1999, and 1998.................................................... F-4 Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2000, 1999 and 1998........................................ F-5 Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998 .................................................... F-6 Notes to Consolidated Financial Statements............................... F-7 F-1
INDEPENDENT AUDITORS' REPORT To the Board of Directors of American Tower Corporation: We have audited the accompanying consolidated balance sheets of American Tower Corporation and subsidiaries (the "Company") as of December 31, 2000 and 1999, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2000 and 1999, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche LLP Boston, Massachusetts February 27, 2001 (March 26, 2001 as to the first full paragraph in note 6) F-2
AMERICAN TOWER CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2000 and 1999 (In thousands, except share data) 2000 1999 ---------- ---------- ASSETS CURRENT ASSETS: Cash and cash equivalents............................. $ 82,038 $ 25,212 Restricted cash....................................... 46,036 Accounts receivable, net.............................. 194,011 58,482 Prepaid and other current assets...................... 42,377 19,570 Inventories........................................... 47,872 11,262 Costs and earnings in excess of billings on uncompleted contracts and unbilled receivables....... 43,652 13,363 Deferred income taxes................................. 15,166 1,718 ---------- ---------- Total current assets................................ 471,152 129,607 ---------- ---------- PROPERTY AND EQUIPMENT, net............................ 2,296,670 1,092,346 GOODWILL AND OTHER INTANGIBLE ASSETS, net.............. 2,505,681 1,403,897 NOTES RECEIVABLE....................................... 123,945 118,802 DEPOSITS AND OTHER LONG-TERM ASSETS.................... 73,298 144,368 INVESTMENTS............................................ 49,538 15,594 DEFERRED INCOME TAXES.................................. 140,395 114,252 ---------- ---------- TOTAL.................................................. $5,660,679 $3,018,866 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term obligations.............. $ 11,178 $ 4,736 Accounts payable...................................... 74,046 25,564 Accrued expenses...................................... 87,291 32,732 Accrued tower construction costs...................... 45,315 37,671 Accrued interest...................................... 31,708 6,769 Billings in excess of costs and earnings on uncompleted contracts and unearned revenue........... 48,248 17,515 ---------- ---------- Total current liabilities........................... 297,786 124,987 ---------- ---------- LONG-TERM OBLIGATIONS.................................. 2,457,045 736,086 OTHER LONG-TERM LIABILITIES............................ 12,472 4,057 ---------- ---------- Total liabilities................................... 2,767,303 865,130 ---------- ---------- COMMITMENTS AND CONTINGENCIES (Notes 7 and 14) MINORITY INTEREST IN SUBSIDIARIES...................... 16,346 8,653 ---------- ---------- STOCKHOLDERS' EQUITY: Preferred Stock; $0.01 par value; 20,000,000 shares authorized; no shares issued or outstanding.......... Class A Common Stock; $.01 par value; 500,000,000 shares authorized; 170,180,549 and 144,965,623 shares issued, 170,035,952 and 144,889,220 shares outstanding, respectively............................ 1,701 1,450 Class B Common Stock; $.01 par value; 50,000,000 shares authorized; 8,095,005 shares and 8,387,910 shares issued and outstanding, respectively.......... 81 84 Class C Common Stock; $.01 par value; 10,000,000 shares authorized; 2,267,813 shares and 2,422,804 shares issued and outstanding, respectively.......... 23 24 Additional paid-in capital............................ 3,174,622 2,245,482 Accumulated deficit................................... (295,057) (100,429) Less: treasury stock (144,597 and 76,403 shares at cost).............................................. (4,340) (1,528) ---------- ---------- Total stockholders' equity.......................... 2,877,030 2,145,083 ---------- ---------- TOTAL.................................................. $5,660,679 $3,018,866 ========== ========== See notes to consolidated financial statements. F-3
AMERICAN TOWER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Years Ended December 31, 2000, 1999, and 1998 (In thousands, except per share data) 2000 1999 1998 --------- -------- -------- REVENUES: Rental and management.......................... $ 278,153 $135,303 $ 60,505 Network development services................... 311,921 90,416 23,315 Satellite and fiber network access services.... 145,201 32,362 19,724 --------- -------- -------- Total operating revenues...................... 735,275 258,081 103,544 --------- -------- -------- OPERATING EXPENSES: Operating expenses excluding depreciation and amortization, tower separation, development and corporate general and administrative expenses: Rental and management.......................... 139,240 62,441 29,455 Network development services................... 274,769 69,318 19,479 Satellite and fiber network access services.... 110,065 24,098 12,817 Depreciation and amortization.................. 283,360 132,539 52,064 Tower separation expense....................... 12,772 Development expense............................ 14,517 1,607 Corporate general and administrative expense... 14,958 9,136 5,099 --------- -------- -------- Total operating expenses...................... 836,909 299,139 131,686 --------- -------- -------- LOSS FROM OPERATIONS............................ (101,634) (41,058) (28,142) --------- -------- -------- OTHER INCOME (EXPENSE): Interest expense............................... (156,839) (27,492) (23,229) Interest income and other, net................. 13,018 17,695 9,217 Interest income--TV Azteca, net of interest expense of $1,047 in 2000 .................... 12,679 1,856 Premium on note conversion..................... (16,968) Minority interest in net earnings of subsidiaries.................................. (202) (142) (287) --------- -------- -------- TOTAL OTHER EXPENSE............................. (148,312) (8,083) (14,299) --------- -------- -------- LOSS BEFORE INCOME TAXES AND EXTRAORDINARY LOSSES......................................... (249,946) (49,141) (42,441) BENEFIT (PROVISION) FOR INCOME TAXES............ 59,656 (214) 4,491 --------- -------- -------- LOSS BEFORE EXTRAORDINARY LOSSES................ (190,290) (49,355) (37,950) EXTRAORDINARY LOSSES ON EXTINGUISHMENT OF DEBT, NET OF INCOME TAX BENEFIT OF $2,892 IN 2000, $914 IN 1999 AND $921 IN 1998.................. (4,338) (1,372) (1,382) EXTRAORDINARY LOSS ON REDEMPTION OF INTERIM PREFERRED STOCK, NET OF INCOME TAX BENEFIT OF $5,000......................................... (7,510) --------- -------- -------- NET LOSS........................................ $(194,628) $(50,727) $(46,842) ========= ======== ======== BASIC AND DILUTED LOSS PER COMMON SHARE AMOUNTS: Loss before extraordinary losses............... $ (1.13) $ (0.33) $ (0.48) Extraordinary losses........................... (0.02) (0.01) (0.11) --------- -------- -------- Net loss....................................... $ (1.15) $ (0.34) $ (0.59) ========= ======== ======== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING...... 168,715 149,749 79,786 ========= ======== ======== See notes to consolidated financial statements. F-4
AMERICAN TOWER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Years Ended December 31, 2000, 1999 and 1998 (In thousands, except share data) Common Stock Common Stock Common Stock Treasury Stock ------------------- ----------------- ----------------- ----------------- Class A Class B Class C ------------------- ----------------- ----------------- Additional Issued Issued Issued Notes Paid-in Shares Amount Shares Amount Shares Amount Shares Amount Receivable Capital ----------- ------- --------- ------ --------- ------ -------- ------- ---------- ----------- BALANCE, JANUARY 1, 1998......... 29,667,883 $ 297 4,670,626 $ 47 1,295,518 $ 13 $ 155,711 Contributions from ARS: Cash............ 56,918 Non-cash........ 6,489 Transfers to ARS: Cash............ (51,858) Issuance of common stock under stock purchase agreement, net of issuance costs of $630... 1,350,050 14 4,649,950 46 2,000,000 20 $(49,375) 79,290 Issuance of common stock and options- mergers......... 35,546,600 354 373,742 Reduction of common stock redemption obligation...... 383,750 4 9,740 Exercise of options......... 899,504 9 203,709 2 2,727 Repayment stock purchase agreement notes........... 49,375 ATC Separation tax liability... (61,715) ATC Separation working capital adjustment...... (50,000) ATC Separation share conversion...... 111,761 1 (347,159) (3) 2 Issuance of common stock-- July offering, net of issuance costs of $29,806......... 27,861,987 279 624,672 Share class exchanges....... 469,576 5 (176,066) (2) (293,510) (3) Accretion of redeemable stock........... (1,555) Tax liability from conversion of CBS securities...... (5,021) Tax benefit of stock options... 1,223 Net loss........ ----------- ------- --------- ----- --------- ---- -------- ----------- BALANCE, DECEMBER 31, 1998............ 96,291,111 $ 963 9,001,060 $ 90 3,002,008 $ 30 $ $ 1,140,365 ----------- ------- --------- ----- --------- ---- -------- ----------- Cash contributions from ARS........ 507 Adjustment to ATC separation tax liability... 12,003 Transfers/payments to ARS/CBS...... (1,070) Issuance of common stock and options- mergers......... 20,691,428 207 446,035 Wauka escrow release-- treasury stock.. (76,403) $(1,528) Issuance of common stock February offerings, net of issuance costs of $24,501......... 26,200,000 262 630,889 Expiration of redeemable common stock.... 336,250 3 9,937 Issuance of options-- acquisition..... 1,794 Exercise of options......... 254,480 3 3,573 Share class exchanges....... 1,192,354 12 (613,150) (6) (579,204) (6) Tax benefit of stock options... 1,449 Net loss........ ----------- ------- --------- ----- --------- ---- -------- ------- ----------- BALANCE, DECEMBER 31, 1999............ 144,965,623 $ 1,450 8,387,910 $ 84 2,422,804 $ 24 (76,403) $(1,528) $ 2,245,482 ----------- ------- --------- ----- --------- ---- -------- ------- ----------- 6.25% and 2.25% convertible notes exchanged for common stock........... 6,126,594 61 153,306 Issuance of common stock-- June offering... 12,500,000 125 513,780 Issuance of common stock, options and warrants-- mergers......... 4,522,692 45 227,462 Issuance of common stock-- Employee Stock Purchase Plan... 33,794 865 Exercise of options......... 1,418,560 14 165,390 2 23,461 Share class exchanges....... 613,286 6 (458,295) (5) (154,991) (1) Treasury stock.. (68,194) (2,812) Tax benefit of stock options... 10,266 Net loss........ ----------- ------- --------- ----- --------- ---- -------- ------- ----------- BALANCE, DECEMBER 31, 2000............ 170,180,549 $ 1,701 8,095,005 $ 81 2,267,813 $ 23 (144,597) $(4,340) $ 3,174,622 =========== ======= ========= ===== ========= ==== ======== ======= =========== Accumulated Deficit Total ----------- ------------ BALANCE, JANUARY 1, 1998......... $ (2,860) $ 153,208 Contributions from ARS: Cash............ 56,918 Non-cash........ 6,489 Transfers to ARS: Cash............ (51,858) Issuance of common stock under stock purchase agreement, net of issuance costs of $630... 29,995 Issuance of common stock and options- mergers......... 374,096 Reduction of common stock redemption obligation...... 9,744 Exercise of options......... 2,738 Repayment stock purchase agreement notes........... 49,375 ATC Separation tax liability... (61,715) ATC Separation working capital adjustment...... (50,000) ATC Separation share conversion...... Issuance of common stock-- July offering, net of issuance costs of $29,806......... 624,951 Share class exchanges....... Accretion of redeemable stock........... (1,555) Tax liability from conversion of CBS securities...... (5,021) Tax benefit of stock options... 1,223 Net loss........ (46,842) (46,842) ----------- ------------ BALANCE, DECEMBER 31, 1998............ $ (49,702) $ 1,091,746 ----------- ------------ Cash contributions from ARS........ 507 Adjustment to ATC separation tax liability... 12,003 Transfers/payments to ARS/CBS...... (1,070) Issuance of common stock and options- mergers......... 446,242 Wauka escrow release-- treasury stock.. (1,528) Issuance of common stock February offerings, net of issuance costs of $24,501......... 631,151 Expiration of redeemable common stock.... 9,940 Issuance of options-- acquisition..... 1,794 Exercise of options......... 3,576 Share class exchanges....... Tax benefit of stock options... 1,449 Net loss........ (50,727) (50,727) ----------- ------------ BALANCE, DECEMBER 31, 1999............ $(100,429) $ 2,145,083 ----------- ------------ 6.25% and 2.25% convertible notes exchanged for common stock........... 153,367 Issuance of common stock-- June offering... 513,905 Issuance of common stock, options and warrants-- mergers......... 227,507 Issuance of common stock-- Employee Stock Purchase Plan... 865 Exercise of options......... 23,477 Share class exchanges....... Treasury stock.. (2,812) Tax benefit of stock options... 10,266 Net loss........ (194,628) (194,628) ----------- ------------ BALANCE, DECEMBER 31, 2000............ $(295,057) $ 2,877,030 =========== ============ See notes to consolidated financial statements. F-5
AMERICAN TOWER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2000, 1999 and 1998 (In thousands) 2000 1999 1998 ----------- ----------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss................................. $ (194,628) $ (50,727) $ (46,842) Adjustments to reconcile net loss to cash provided by operating activities: Depreciation and amortization........... 283,360 132,539 52,064 Minority interest in net earnings of subsidiaries........................... 202 142 287 Premium on note conversion.............. 16,968 Amortization of deferred financing costs.................................. 6,945 1,466 1,629 Provision for losses on accounts receivable............................. 16,423 2,639 1,136 Extraordinary losses, net............... 4,338 1,372 8,892 Amortization of debt discount........... 8,712 2,642 261 Dividends on preferred stock............ 3,117 Deferred income taxes................... (60,876) (1,140) (4,491) Changes in assets and liabilities, net of acquisitions: Accounts receivable..................... (108,159) (17,368) (11,042) Costs and earnings in excess of billings on uncompleted contracts and unbilled receivables............................ (26,153) (5,919) (1,185) Prepaid and other current assets........ (23,990) (5,503) (1,553) Inventories............................. (18,643) (6,210) Accounts payable, accrued expenses and accrued construction costs............. 31,281 31,516 13,577 Accrued interest........................ 24,631 5,436 (47) Billings in excess of costs and earnings on uncompleted contracts and unearned revenue................................ 9,135 3,981 1,311 Other long-term liabilities............. 5,413 2,145 1,315 ----------- ----------- --------- Cash (used for) provided by operating activities............................... (25,041) 97,011 18,429 ----------- ----------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Payments for purchase of property and equipment and construction activities... (548,991) (294,242) (126,455) Payments for acquisitions, (net of cash acquired)............................... (1,368,024) (588,384) (208,717) Advances of notes receivable............. (76,116) (119,282) (12,140) Proceeds from notes receivable........... 2,749 1,587 2,001 Deposits, investments and other long-term assets.................................. (20,298) (137,379) (5,066) ----------- ----------- --------- Cash used for investing activities........ (2,010,680) (1,137,700) (350,377) ----------- ----------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under notes payable and credit facilities.............................. 1,777,000 224,779 205,500 Repayments of notes payable and credit facilities.............................. (584,155) (512,856) (156,667) Proceeds from issuance of debt securities.............................. 450,000 600,063 Net proceeds from equity offerings and stock options........................... 535,435 634,727 707,059 Restricted cash.......................... (46,036) Cash payments from (to) CBS.............. 5,735 (48,752) (221,665) Net proceeds from preferred stock........ 300,000 Redemption of preferred stock............ (303,117) Contributions from ARS................... 507 5,060 Distributions to minority interest....... (667) (396) (393) Deferred financing costs................. (44,765) (18,346) (22,250) ----------- ----------- --------- Cash provided by financing activities..... 2,092,547 879,726 513,527 ----------- ----------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.............................. 56,826 (160,963) 181,579 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR..................................... 25,212 186,175 4,596 ----------- ----------- --------- CASH AND CASH EQUIVALENTS, END OF YEAR.... $ 82,038 $ 25,212 $ 186,175 =========== =========== ========= See notes to consolidated financial statements. F-6
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business and Corporate Structure--American Tower Corporation and subsidiaries (collectively, ATC or the Company), is an independent owner, operator and developer of broadcast and wireless communications sites in North America and Mexico. The Company's primary businesses are the leasing of antenna space to a diverse range of wireless communications and broadcast industries, providing network development services and components to wireless service providers and broadcasters and providing satellite and fiber network access services to telecommunication companies, internet service providers, broadcasters and maritime customers worldwide. The Company was a wholly-owned subsidiary of American Radio Systems Corporation (ARS, American Radio or the Former Parent) until consummation of the spin-off of the Company from American Radio on June 4, 1998 (the ATC Separation). ATC Separation--On June 4, 1998, the merger of American Radio and a subsidiary of CBS Corporation (CBS) was consummated. As a result of the merger, all of the outstanding shares of the Company's common stock owned by American Radio were distributed to American Radio common stockholders, and the Company ceased to be a subsidiary of, or to be otherwise affiliated with, American Radio. Furthermore, from that day forward the Company began operating as an independent publicly traded company. As part of the ATC Separation, the Company was required to reimburse CBS for certain tax liabilities incurred by American Radio as a result of the transaction. Upon completion of the final American Radio tax filings, a calculation of the total tax payments due to CBS was performed and approved by both the Company and CBS. The Company continues to be obligated to indemnify CBS and American Radio for certain tax matters affecting American Radio prior to the ATC Separation. As of December 31, 2000, no material matters covered under this indemnification have been brought to the Company's attention. Principles of Consolidation and Basis of Presentation--The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. Investments in those entities where the Company owns less than twenty percent of the voting stock of the individual entity and does not exercise significant influence over operating and financial policies of the entity are accounted for using the cost method. Investments in entities where the Company owns less than twenty percent but has the ability to exercise significant influence over operating and financial policies of the entity or where the Company owns more than twenty percent of the voting stock of the individual entity, but not in excess of fifty percent, are accounted for using the equity method. The Company consolidates those entities in which it owns greater than fifty percent of the entity's voting stock. For the period from January 1, 1998 to June 4, 1998, the Company effectively operated as a stand-alone entity, with its own corporate staff and headquarters, and received minimal assistance from personnel of American Radio. Accordingly, the accompanying consolidated financial statements for the period discussed above do not include any corporate general and administrative cost allocations from American Radio. The consolidated financial statements may not reflect the results of operations or financial position of the Company had it been an independent public company during the periods presented prior to June 4, 1998. Use of Estimates--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates, and such differences could be material to the accompanying consolidated financial statements. Revenue Recognition--Rental and management revenues are recognized on a monthly basis under lease or management agreements when earned. Escalation clauses, excluding those tied to the Consumer Price Index (CPI), and other incentives present in lease agreements with the Company's customers are recognized on a straight-line basis over the term of the lease. Amounts billed or received prior to being earned are deferred until such time as the earnings process is complete. F-7
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Network development service revenues are derived under service contracts or arrangements with customers that provide for billings on a time and materials, cost plus profit or fixed price basis. Revenues are recognized as services are performed with respect to the time and materials and cost plus profit contracts. Revenues are recognized using the percentage-of-completion method for fixed price contracts. Under the percentage-of-completion methodology, revenues are recognized in accordance with the percentage of contract costs incurred to date compared to estimated total contract costs. Costs and earnings in excess of billings on uncompleted contracts represent revenues recognized in excess of amounts billed. Billings in excess of costs and earnings on uncompleted contracts represent billings in excess of revenues recognized. Changes to total estimated contract costs or losses, if any, are recognized in the period in which they are determined. Revenue from the sale of component parts is reflected within network development service revenue in the accompanying consolidated statements of operations. Revenue from the sale of these components is recognized when products are shipped. Provisions are recorded for estimated sales returns and allowances at the time of shipment. Satellite and fiber network access service revenues are recognized as such services are provided. Amounts billed or received prior to services being performed are deferred until such time as the earnings process is complete. Development Expense--Development expense consists of uncapitalized acquisition costs, costs to integrate acquisitions, costs associated with new business initiatives, abandoned acquisition costs and costs associated with tower site inspections and related data gathering. Such costs are expensed as incurred. Tower Separation Expense--Tower separation expense consists of one-time costs incurred in connection with the separation of the Company from its former parent. Specifically, it includes legal, accounting, financial advisory and consent solicitation fees. Such costs were expensed as incurred. Corporate General and Administrative Expense--Corporate general and administrative expense consists of corporate overhead costs not specifically allocable to any of the Company's individual business segments. Premium on Note Conversion--Premium on note conversion represents the fair value of incremental stock issued to induce convertible noteholders to convert their holdings prior to the first scheduled redemption date. Such amounts were expensed as incurred in accordance with Statement of Financial Accounting Standard (SFAS) No. 84 "Induced Conversions of Convertible Debt." Concentrations of Credit Risk--Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents, restricted cash, notes receivable and trade receivables. The Company mitigates its risk with respect to cash and cash equivalents and restricted cash by maintaining its deposits at high quality credit financial institutions and monitoring the credit ratings of those institutions. The Company mitigates its concentrations of credit risk with respect to notes and trade receivables by actively monitoring the creditworthiness of its borrowers and customers. Accounts receivable are reported net of allowances for doubtful accounts of $19,809,000, $3,386,000 and $1,230,000 as of December 31, 2000, 1999 and 1998, respectively. Amounts charged against the allowance for doubtful accounts for the years ended December 31, 2000, 1999 and 1998 approximated $3,112,000, $721,000 and $206,000, respectively. Bad debt recoveries have not been significant in the three year period ended December 31, 2000. Discount on Convertible Notes--The Company amortizes the discount on its convertible notes using the effective interest method over the term of the obligation. Such amortization is recorded as interest expense in the accompanying consolidated statements of operations. Derivative Financial Instruments--During the years ended December 31, 2000, 1999 and 1998, the Company used derivative financial instruments as a means of hedging cash flow exposure related to variable interest rates on its credit facilities. The Company's derivative instruments generally consist of interest rate swaps, interest rate collars and interest rate cap agreements. These instruments are matched with variable rate debt, and F-8
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) payments thereon are recorded on a settlement basis as an adjustment to interest expense. Premiums paid to purchase interest rate cap agreements are amortized as an adjustment to interest expense over the life of the contract. The Company does not hold derivative financial instruments for trading purposes. See "Recent Accounting Pronouncements" below. Foreign Currency Translation--The Company's foreign subsidiary in Mexico has designated the U.S. dollar as its functional currency. Monetary peso-based assets and liabilities related to the Company's Mexican operations are translated from the local currency into U.S. dollars at the approximate rate of currency exchange at the end of the applicable fiscal period. Non monetary peso-based assets and liabilities are translated at historical exchange rates. Revenues and expenses, if peso-based, are translated at average monthly exchange rates. All translation gains and losses are included in the Company's consolidated statement of operations within the caption interest income and other, net. Such amounts were not material for the years ended December 31, 2000 and 1999. There were no international operations during the year ended December 31, 1998. Cash, Cash Equivalents--Cash and cash equivalents include cash on hand, demand deposits and short-term investments with remaining maturities (when purchased) of three months or less. Restricted Cash--Represents amounts required to be held in escrow under the Company's Amended Credit Facilities to pay interest on its convertible note obligations. Inventories--Inventories, which consist primarily of finished goods and raw material component parts, are stated at the lower of cost or market, with cost being determined on the first-in, first-out (FIFO) basis. The components of inventories as of December 31, 2000 and 1999 are as follows (in thousands): 2000 1999 ------- -------- Finished goods............................................... $25,947 $ 10,100 Raw materials................................................ 20,887 859 Work in process.............................................. 1,038 303 ------- -------- Total $47,872 $ 11,262 ======= ======== Property and Equipment--Property and equipment are recorded at cost or at estimated fair value (in the case of acquired properties). Cost for self- constructed towers includes direct materials and labor, indirect costs associated with construction and capitalized interest. Approximately $11,365,000, $3,379,000 and $1,403,000 of interest was capitalized for the years ended December 31, 2000, 1999 and 1998, respectively. Depreciation is provided using the straight-line method over the assets' estimated useful lives. Property and equipment acquired through capitalized leases are amortized using the straight-line method over the shorter of the lease term or the estimated useful life of the asset. Asset useful lives are as follows: Equipment......................................................... 3-15 years Towers............................................................ 15 years Buildings and land improvements................................... 15-32 years Goodwill and Other Intangible Assets--The consolidated financial statements reflect the preliminary allocation of purchase prices for certain transactions consummated in fiscal 2000, as certain appraisals for these acquisitions have not been finalized. Goodwill represents the excess of purchase price over the estimated fair value of net assets acquired. The Company amortizes goodwill over an estimated useful life of fifteen years. Other intangible assets primarily represent acquired customer base, workforce, network locations, licenses, non-competition agreements and certain deferred financing costs. The Company amortizes these other intangible assets over periods ranging from two to fifteen years. (See note 4). F-9
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Income Taxes--The consolidated financial statements reflect provisions for federal, state, local and foreign income taxes. However, the tax costs of repatriating foreign subsidiary business earnings to the Company's domestic subsidiaries have not been reflected in the tax provision, as the Company intends to permanently reinvest the profits of its foreign subsidiaries within those entities. The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as operating loss and tax credit carryforwards. The Company measures deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carryforwards 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. The Company provides valuation allowances if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. (See note 9). Loss Per Common Share--Basic and diluted income or loss per common share has been computed by dividing the Company's net loss by the weighted average number of common shares outstanding during the period. Diluted per share amounts are computed by adjusting the weighted average number of common shares for dilutive potential common shares during the period, if any. In computing diluted per share amounts, the Company uses the treasury stock method, whereby unexercised options and warrants are assumed to be exercised at the beginning of the period or at issuance, (if later). The assumed proceeds are then used to purchase common shares at the average market price during the period. For the years ended December 31, 2000, 1999 and 1998, dilutive potential common shares, including options, warrants and shares issuable upon conversion of the Company's convertible notes, have been excluded from the computation of diluted loss per common share, as the effect is anti-dilutive. Had these dilutive potential common shares been included in the computation, shares for the diluted computation would have increased by approximately 39.8 million, 11.5 million and 3.9 million for the years ended December 31, 2000, 1999 and 1998, respectively. For purposes of calculating earnings per share for the year ended December 31, 1998, shares outstanding upon consummation of the ATC Separation are assumed to be outstanding for the entire period prior to June 4, 1998. Impairment of Long-Lived Assets--The Company reviews long-term assets, including identifiable intangibles, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company assesses recoverability by determining whether the net book value of the related assets will be recovered through projected undiscounted future cash flows. The Company records any related impairment losses in the period in which it identifies such impairment. Stock-Based Compensation--The Company accounts for equity grants and awards to employees, officers and directors using the intrinsic value method prescribed by Accounting Principles Board Opinion (APB) No. 25 "Accounting For Stock Issued To Employees," and related interpretations. In addition, the Company also provides the required disclosures under SFAS No. 123, "Accounting For Stock Based Compensation," as if the fair-value based method (defined in SFAS No. 123) had been applied. (See note 10). Fair Value of Financial Instruments--As of December 31, 2000 the carrying amount of the Company's 5.0% convertible notes and the 2.25% and 6.25% convertible notes was approximately $450.0 million and $470.9 million, respectively and the fair value of such notes was $408.4 million and $780.2 million, respectively, based on quoted market prices. See note 6 for fair value of derivative instruments. The carrying values of all other financial instruments reasonably approximate the related fair values as of December 31, 2000. F-10
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Retirement Plan--The Company has a 401(k) plan covering substantially all employees who meet certain age and employment requirements. Under the plan, the Company matched 35% in 2000 and 30% in 1999 of participants' contributions up to a maximum 5% of a participant's compensation. Prior to the ATC Separation, employees of the Company participated in a similar plan sponsored by ARS. The Company contributed approximately $1,875,000, $461,000, and $207,700 to the plans for the years ended December 31, 2000, 1999 and 1998, respectively. Recent Accounting Pronouncements--On January 1, 2001, the Company adopted the provisions of SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities." This statement establishes accounting and reporting standards for derivative instruments. Specifically, it requires that an entity recognize all derivatives as either assets or liabilities on the balance sheet at fair value. The accounting for changes in the fair value of a derivative (that is unrealized gains or losses) will be recorded as a component of an entity's net income or other comprehensive income, depending upon designation (as defined in the statement). As a result of adopting SFAS No. 133, the Company expects to record a pre-tax non-cash loss from a cumulative effect of change in accounting principle of approximately $12.0 million to $14.0 million in the first quarter of 2001. During 2000, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition," which provides the SEC staff's views in applying generally accepted accounting principles to revenue recognition. SAB No. 101 was effective for the Company on October 1, 2000. The adoption of SAB No. 101 was not material to the Company's consolidated financial statements. In March 2000, the Financial Accounting Standards Board issued Interpretation No. 44 (FIN 44), "Accounting for Certain Transactions involving Stock Compensation", an interpretation of APB No. 25. FIN 44 was effective July 1, 2000. The adoption of FIN 44 was not material to the Company's consolidated financial statements. Comprehensive Loss--The Company had no other component of comprehensive loss, and accordingly, net loss is equal to comprehensive loss for each of the years in the three year period ended December 31, 2000. Reclassifications--Certain reclassifications have been made to the 1999 and 1998 financial statements to conform with the 2000 presentation. 2. COSTS AND EARNINGS IN EXCESS OF BILLINGS ON UNCOMPLETED CONTRACTS AND UNBILLED RECEIVABLES The Company derives a portion of its network development services revenue from customer contracts that provide for billing only after certain milestones within contracts have been achieved. As the Company recognizes revenue on these contracts using the percentage-of-completion and cost plus profit and time and materials methodologies, such contracts give rise to revenue which has been earned, but, as of a certain point in time, remains unbilled. Such amounts (along with unbilled rental revenue) are included in costs and earnings in excess of billings on uncompleted contracts and unbilled receivables in the accompanying consolidated balance sheets. The Company also enters into contracts within its network development services segment that provide for progress billings as the Company fulfills its obligation under the related contracts. These contracts may give rise to billings that are in excess of amounts actually earned as of a certain point in time. The excess of amounts billed over the amount earned on these contracts is reflected (along with customer rent received in advance) in billings in excess of costs and earnings on uncompleted contracts and unearned revenue in the accompanying consolidated balance sheets. F-11
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) The following are the components of costs and earnings in excess of billings on uncompleted contracts and unbilled receivables and billings in excess of costs and earnings on uncompleted contracts and unearned revenue as of December 31, (in thousands): 2000 1999 ---------- ---------- Costs incurred on uncompleted contracts............ $ 165,982 $ 20,783 Estimated earnings................................. 67,222 13,228 Unbilled receivables............................... 10,113 3,664 Less billings to date.............................. (247,913) (41,827) ---------- ---------- $ (4,596) $ (4,152) ========== ========== Included in the accompanying consolidated balance sheets: Costs and earnings in excess of billings on uncompleted contracts and unbilled receivables.. $ 43,652 $ 13,363 Billings in excess of costs and earnings on uncompleted contracts and unearned revenue...... (48,248) (17,515) ---------- ---------- $ (4,596) $ (4,152) ========== ========== 3. PROPERTY AND EQUIPMENT Property and equipment consist of the following as of December 31, (in thousands): 2000 1999 ---------- ---------- Towers............................................. $1,579,616 $ 672,039 Equipment.......................................... 366,343 148,614 Buildings and improvements......................... 224,836 156,005 Construction in progress........................... 206,069 127,171 Land and improvements.............................. 115,151 61,007 ---------- ---------- Total.......................................... 2,492,015 1,164,836 Less accumulated depreciation and amortization..... (195,345) (72,490) ---------- ---------- Property and equipment, net........................ $2,296,670 $1,092,346 ========== ========== 4. GOODWILL AND OTHER INTANGIBLE ASSETS The Company's intangible assets consist of the following as of December 31, (in thousands): 2000 1999 ---------- ---------- Goodwill........................................... $1,372,399 $1,016,846 Acquired customer base and network locations....... 1,292,631 474,723 Acquired workforce, licenses, deferred financings and other intangibles............................. 129,394 35,911 ---------- ---------- Total.......................................... 2,794,424 1,527,480 Less accumulated amortization...................... (288,743) (123,583) ---------- ---------- Goodwill and other intangible assets, net.......... $2,505,681 $1,403,897 ========== ========== F-12
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 5. NOTES RECEIVABLE In December 1999, the Company signed agreements to loan up to $120.0 million to TV Azteca S.A. de C.V. (TV Azteca), the owner of a major national television broadcast network in Mexico. In 2000, the Company loaned TV Azteca $119.8 million. The loan which bears interest at 12.87%, payable quarterly, has been discounted by the Company, as the fair value interest rate was determined to be 14.25%. As of December 31, 2000 approximately $119.8 million undiscounted ($108.9 million discounted) was outstanding. The term of the loan is seventy years. The loan may be prepaid by TV Azteca without penalty during the last fifty years of the agreement. The discount recorded on the note is being amortized to interest income using the effective interest method over the term of the loan. Simultaneous with the signing of the loan agreement, the Company also entered into an agreement with TV Azteca that entitles the Company to assume the marketing responsibility and future economic rights for approximately 190 broadcasting towers owned by TV Azteca. Under the terms of the agreement the Company pays TV Azteca $1.5 million annually and is entitled to receive 100% of the revenues generated from leases with new tenants and is responsible for any incremental operating expenses associated with those new leases during the term of the loan. In anticipation of the loan described above, the Company made an interim loan of $60.0 million to TV Azteca in September 1999. The interim loan, which bore interest at approximately 11%, matured at the closing of the loan described above and was partially collateralized by the stock of TV Azteca. As of December 31, 1999 the amount due to the Company in connection with this interim loan was $60.0 million. An executive officer and director of the Company became a director of TV Azteca in December 1999. As of December 31, 2000 and 1999, the Company also had several other notes receivable outstanding totaling approximately $15.0 million and $58.8 million, respectively. These notes bear interest at rates ranging from 7% to 15% and mature in periods ranging from the earlier of two to three years or upon the consummation of certain transactions. 6. FINANCING ARRANGEMENTS Outstanding amounts under the Company's long-term financing arrangements consisted of the following as of December 31, (in thousands): 2000 1999 ---------- -------- Credit facilities..................................... $1,350,000 $ 90,000 Convertible notes, net of discount.................... 920,908 602,259 Notes payable, capital leases and other obligations... 197,315 48,563 ---------- -------- Total................................................. 2,468,223 740,822 Less current portion.................................. (11,178) (4,736) ---------- -------- Long-term debt........................................ $2,457,045 $736,086 ========== ======== The following is a description of the Company's outstanding long-term debt as of December 31, 2000: Credit Facilities--In January 2000, the Company through its principal operating subsidiaries (Principal Operating Subsidiaries) completed its amended and restated credit facilities (Amended Credit Facilities). Under the Amended Credit Facilities (as amended through March 26, 2001), the borrowing capacity of the Company is up to $2.0 billion, with the option to increase the capacity up to an additional $500.0 million subject to lender approval. All borrowings under the Amended Credit Facilities are subject to borrowing base restrictions such as operating cash flow and construction cost levels. F-13
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Components of the Amended Credit Facilities include: . $650.0 million revolving credit facility maturing on June 30, 2007; . $850.0 million multi-draw term loan A maturing on June 30, 2007; and . $500.0 million term loan B maturing December 31, 2007. The Amended Credit Facilities are scheduled to amortize quarterly commencing on March 31, 2003 based on defined percentages of outstanding commitment and principal balances. As of December 31, 2000, the Company has $850.0 million outstanding under the multi-draw term loan A and $500.0 million outstanding under the term loan B. Any amounts repaid under the multi-draw term loan A and the term loan B will reduce future borrowing capacity under these facilities to the extent of the amount repaid. Interest rates for the revolving credit facility and the multi-draw term loan A are determined at the option of the Company as either 1.5% to 2.75% above the LIBOR Rate or 0.5% to 1.75% above the defined Base Rate. Interest rates for the term loan B are determined at either 3.0% to 3.25% above LIBOR or 2.0% to 2.25% above the defined Base Rate. The Company is required to pay quarterly commitment fees ranging from 0.5% to 1.0% per annum, depending on the level of facility usage. In addition, the Amended Credit Facilities require compliance with financial coverage ratios that measure operating cash flow against total debt, interest expense, pro forma debt service and fixed charges, as defined in the Amended Credit Facilities. The Amended Credit Facilities also contain financial and operational covenants and other restrictions which the Company must comply with, whether or not there are borrowings outstanding. Such covenants and restrictions include restrictions on certain types of acquisitions, indebtedness, liens, capital expenditures, and the ability of the Company to pay dividends and make other distributions. The borrowers under the Amended Credit Facilities are the Company's Principal Operating Subsidiaries. The Company and the restricted subsidiaries (as defined in the Amended Credit Facilities) have guaranteed all of the loans under our Amended Credit Facilities. These loans are secured by liens on substantially all assets of the Principal Operating Subsidiaries and the restricted subsidiaries. The Amended Credit Facilities also restrict the Principal Operating Subsidiaries ability to transfer funds to the Company. Substantially all assets of the Company are held by the Principal Operating Subsidiaries. Prior to the consummation of the Amended Credit Facilities described above, the Company maintained credit facilities that provided for total capacity of $925.0 million. Interest rates under the prior credit facilities were determined at the option of the Company as either LIBOR plus margin (as defined) or the Base Rate plus margin (as defined). As of December 31, 1999, the Company had $90.0 million outstanding under the prior credit facilities. All amounts outstanding under the prior credit facilities were repaid in January 2000 with proceeds from the Amended Credit Facilities. In connection with the repayment of borrowings under the Company's prior credit facilities, the Company recognized an extraordinary loss on extinguishment of debt of approximately $3.0 million, net of a tax benefit of $2.0 million, in January 2000. For the years ended December 31, 2000, 1999 and 1998, the combined weighted average interest rate related to the Company's amended and prior credit facilities was 9.56%, 7.94%, and 7.97%, respectively. Commitment fees incurred by the Company related to the amended and prior credit facilities aggregated approximately $9,777,000, $1,504,000 and $1,172,000 for the years ended December 31, 2000, 1999 and 1998, respectively. As a result of a reduction in borrowing capacity under prior credit facilities, in October of 1999 associated with the issuance of the 2.25% and 6.25% convertible notes, the Company recognized an extraordinary loss on extinguishment of debt during the year ended December 31, 1999 of approximately $1.4 million, net of an income tax benefit of $0.9 million. The Company also incurred an extraordinary loss on extinguishment of debt of approximately $1.4 million, net of an income tax benefit of $0.9 million, in 1998 as a result of a refinancing to its previously existing credit facilities. F-14
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 5% Convertible Notes--In February 2000, the Company completed a private placement of $450.0 million 5% Convertible Notes (5% Notes), issued at 100% of their face amount. The 5% Notes mature on February 15, 2010. Interest on the 5% Notes is payable semiannually on February 15 and August 15, commencing August 15, 2000. The indenture governing the 5% Notes does not contain any restrictive covenants. The 5% Notes are convertible at any time into shares of the Company's Class A common stock at a conversion price of $51.50 per share. The Company cannot redeem the 5% Notes prior to February 20, 2003 and the Company may be required to repurchase all or any of the 5% Notes on February 20, 2007 at their principal amount, together with accrued and unpaid interest. The Company may, at its option, elect to pay the repurchase price in cash or shares of Class A common stock or any combination thereof. The 5% Notes rank equally with the 6.25% and 2.25% Notes described below and are structurally and effectively junior to indebtedness outstanding under the Amended Credit Facilities. Total net proceeds from the 5% Notes were approximately $438.7 million. A portion of the proceeds was used to pay off amounts outstanding under the Amended Credit Facilities. The remaining proceeds were used to finance acquisitions and construction. As of December 31, 2000 the Company had $450.0 million outstanding under the 5% Notes. 2.25% and 6.25% Convertible Notes--In October 1999, the Company completed a private placement of $300.0 million 6.25% Convertible Notes (6.25% Notes), issued at 100% of their face amount and $425.5 million 2.25% Convertible Notes (2.25% Notes), issued at 70.52% of their face amount (collectively, the "Notes"). The yield to maturity on the 2.25% Notes is 6.25%, giving effect to the accrued original issue discount and accrued interest. The Notes mature on October 15, 2009. Interest on the Notes is payable semiannually on April 15 and October 15 of each year, beginning April 15, 2000. The 6.25% Notes and 2.25% Notes are convertible at any time, at the option of the holder, into the Company's Class A common stock at a conversion price of $24.40 per share and $24.00 per share, respectively, subject to adjustment in certain events. The Company may redeem the Notes at any time on or after October 22, 2002. The initial redemption price on the 6.25% Notes is 103.125% of the principal amount, subject to ratable declines immediately after October 15 of each following year to 100% of the principal amount in 2005. The 2.25% Notes are redeemable incrementally at increasing prices designed to reflect the accrued original issue discount. The holders have the option of requiring the Company to repurchase all or a portion of the 6.25% Notes on October 22, 2006 at their principal amount, together with accrued and unpaid interest, and all or a portion of the 2.25% Notes on October 22, 2003 at $802.93, plus accrued and unpaid interest. The Company may elect to pay the repurchase price on the Notes in cash or shares of Class A common stock. The Notes rank equally with one another and the 5% Notes and are structurally and effectively junior to indebtedness outstanding under the Company's Amended Credit Facilities. In May of 2000, the Company acquired an aggregate of $87.3 million of the 6.25% Notes and $73.1 million (face amount) of the 2.25% Notes for an aggregate of 5,724,180 shares of Class A common stock. As an inducement to the noteholders to convert all or a portion of their holdings, the Company issued an aggregate of 402,414 shares of Class A common stock to such holders in addition to the amounts issuable upon conversion of those notes as provided in the applicable indentures. The Company made these exchanges pursuant to negotiated transactions with a limited number of noteholders. As a consequence of those exchanges, the Company recorded a premium on note conversion of approximately $17.0 million during the second quarter of 2000. As of December 31, 2000 and 1999 the Company had $470.9 million and $602.3 million outstanding respectively, under the Notes. Notes Payable--In connection with a number of acquisitions consummated during 2000, 1999 and 1998, the Company issued or assumed several notes payable. Such notes approximated $57.2 million and $43.8 million as of December 31, 2000 and 1999, respectively. These notes bear interest at rates ranging from 7.9% to 12.0% and mature in periods ranging from approximately two to six years. F-15
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Capital Lease Obligations--The Company's capital lease obligations expire in periods ranging from less than one year to approximately fifty years. Future minimum capital lease payments for the next five years and thereafter are as follows (in thousands): Year Ending December 31, 2001............................................................... $ 20,977 2002............................................................... 20,387 2003............................................................... 18,830 2004............................................................... 18,227 2005............................................................... 16,898 Thereafter......................................................... 119,876 -------- Total minimum lease payments....................................... 215,195 Less amounts representing interest................................. (89,900) -------- Present value of capital lease obligations......................... $125,295 ======== Derivative Positions--Under the terms of the Amended Credit Facilities, the Company is required, to enter into interest rate protection agreements on its variable rate debt. Under these agreements the Company is exposed to credit risk to the extent that a counterparty fails to meet the terms of a contract. Such exposure is limited to the current value of the contract at the time the counterparty fails to perform. The Company believes its contracts as of December 31, 2000 are with credit worthy institutions. As of December 31, 2000, the Company had interest rate protection agreements outstanding as follows (in thousands): Notional Interest Fair Derivative Amount Range Term Value ---------- --------- ----------- -------------------------- ---------- Interest rate caps...... $ 364,980 9.00% Expiring 2002 Interest rate swaps..... 395,000 6.19%-7.00% Expiring 2002 through 2003 $ (7,680) Interest rate collars... 465,000 5.95%-9.00% Expiring 2002 through 2003 (6,107) Interest rate swaptions.............. 290,000 6.00%-6.60% Expiring 2001 1,707 ---------- Total.................................................................. $ (12,080) ========== As of December 31, 2000, aggregate principal payments of long-term debt, including capital leases, for the next five years and thereafter are estimated to be (in thousands): Year Ending December 31, 2001.............................................................. $ 11,178 2002.............................................................. 11,474 2003.............................................................. 66,493 2004.............................................................. 202,900 2005.............................................................. 289,953 Thereafter........................................................ 1,886,225 ---------- Total........................................................... $2,468,223 ========== F-16
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 7. COMMITMENTS AND CONTINGENCIES Lease Obligations--The Company leases certain land, office, tower and satellite space under operating leases that expire over various terms. Many of the leases also contain renewal options with specified increases in lease payments upon exercise of the renewal option. Escalation clauses present in operating leases, excluding those tied to CPI, are straight-lined over the initial term of the lease. Future minimum rental payments under noncancelable operating leases in effect at December 31, 2000 are as follows (in thousands) Year Ending December 31, 2001................................................................ $165,994 2002................................................................ 134,033 2003................................................................ 94,917 2004................................................................ 65,418 2005................................................................ 43,023 Thereafter.......................................................... 200,129 -------- Total............................................................. $703,514 ======== Aggregate rent expense under operating leases for the years ended December 31, 2000, 1999 and 1998 approximated $99,060,000, $23,211,000 and $10,818,000, respectively. Customer Leases--The Company's lease agreements with its customers vary depending upon the industry. Escalation clauses present in operating leases, excluding those tied to CPI, are straight-lined over the initial term of the lease. Future minimum rental receipts expected from customers under noncancelable operating lease agreements in effect at December 31, 2000 are as follows (in thousands): Year Ending December 31, 2001.............................................................. $ 214,226 2002.............................................................. 201,835 2003.............................................................. 185,334 2004.............................................................. 165,630 2005.............................................................. 126,111 Thereafter........................................................ 588,722 ---------- Total........................................................... $1,481,858 ========== Acquisition Commitments--See notes 11 and 14. ATC Separation--See note 1. Litigation--The Company periodically becomes involved in various claims and lawsuits that are incidental to its business. In the opinion of management, after consultation with counsel, there are no matters currently pending which would, in the event of adverse outcome, have a material impact on the Company's consolidated financial position, the results of its operations or liquidity. F-17
8. RELATED PARTY TRANSACTIONS 2000 and 1999 Chase Manhattan Bank (Chase) is a lender under the Company's credit facilities and had participation percentages ranging from 3.14% to 6.67% during 2000 and 1999. Chase is an affiliate of J.P. Morgan Partners, LLC (JPMP), which indirectly controls J.P. Morgan Partners (BHCA), L.P. (JPLP) and J.P. Morgan Partners (23ASBIC), LLC (JPSBIC), stockholders of the Company. A director of the Company is an Executive Partner of JPMP. At December 31, 2000 and 1999 the aggregate principal amount outstanding under the credit facilities was $1.4 billion and $90.0 million, respectively. Chase's participation in the credit facilities at December 31, 2000 was 3.14%. Chase's approximate share of interest and fees paid by the Company pursuant to its various credit arrangements was $3.2 million, $1.2 million and $0.8 million in 2000, 1999 and 1998, respectively. In 1999, the Company owned 33 1/3% of the outstanding equity of Kline Iron & Steel Co. (Kline). During 1999 the Company purchased approximately $7.4 million of tower steel products from Kline. In 2000, the Company purchased the remaining equity interest in Kline. During 2000 and 1999, the Company made demand loans to two executive officers. At December 31, 2000 and 1999 amounts outstanding under the loans approximated $1.0 million and $1.1 million respectively. 1998 In June 1998, American Radio contributed the majority of its corporate fixed assets to the Company (with an American Radio net book value of approximately $1.4 million). During the period that the Company was a majority owned subsidiary of American Radio, the Company received revenues of approximately $565,000 from American Radio for tower rentals at Company-owned sites for the period ending June 4, 1998 (date of the ATC Separation). In January 1998, American Radio contributed to the Company nineteen communications sites used by American Radio and various third parties (with an American Radio aggregate net book value of approximately $4.7 million), and American Radio and the Company entered into leases or subleases of space on the transferred towers. In May 1998, two additional communications sites were transferred and leases were entered into following acquisition by American Radio of the sites from third parties. These sites were contributed to the Company at an aggregate ARS net book value of approximately $0.3 million. In January 1998, the Company consummated the transactions contemplated by a stock purchase agreement with certain related parties. (See note 10). F-18
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 9. INCOME TAXES The income tax benefit (provision) from continuing operations was comprised of the following for the years ended December 31, (in thousands): 2000 1999 1998 ------- ------- --------- Current: Federal......................................... $(116,322) State........................................... (18,866) Foreign......................................... $(1,220) Deferred: Federal......................................... 68,582 $ 1,029 (8,407) State........................................... 8,560 148 (841) Foreign......................................... 58 Add: Deferred tax assets related to corporate tax restructuring.................................. 150,150 Less: Benefit from disposition of stock options recorded to additional paid-in capital......... (10,266) (1,449) (1,223) Valuation allowance............................. (6,000) ------- ------- --------- Income tax benefit (provision) ................... $59,656 $ (214) $ 4,491 ======= ======= ========= A reconciliation between the U.S. statutory rate from continuing operations and the effective rate was as follows for the years ended December 31, 2000 1999 1998 ------- ------- --------- Statutory tax rate................................ 35% 35% 35% State taxes, net of federal benefit............... 5 5 4 Non-deductible tower separation expenses.......... (11) Non-deductible intangible amortization and premium on note conversion............................... (14) (42) (16) Other (including valuation allowance)............. (2) 2 (1) ------- ------- --------- Effective tax rate................................ 24% % 11% ======= ======= ========= The components of the net deferred tax asset and related valuation allowance are as follows (in thousands): 2000 1999 -------- -------- Current assets: Allowances, accruals and other items not currently non- deductible............................................... $ 15,166 $ 1,718 ======== ======== Long-term items: Assets: Basis step-up from corporate restructuring............... 120,042 $133,380 Net operating loss carry-forwards........................ 175,859 63,070 Other.................................................... 716 152 Liabilities: Depreciation and amortization............................ (150,222) (82,350) -------- -------- Subtotal................................................... $146,395 $114,252 Less: Valuation allowance................................. (6,000) -------- -------- Net long-term deferred tax assets........................ $140,395 $114,252 ======== ======== F-19
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) At December 31, 2000, the Company has net federal and state operating loss carry-forwards available to reduce future taxable income of $437.7 million. These loss carry-forwards, if not utilized, expire at various dates through 2020. During 2000, the Company recorded a $6.0 million deferred tax asset valuation allowance related to a portion of its state net operating loss carry-forward. Management believes that sufficient uncertainty exists regarding the realizability of these items to warrant such allowance. In the opinion of management, all other deferred tax assets are more likely than not recoverable. 10. STOCKHOLDERS' EQUITY Preferred Stock As of December 31, 2000 the Company was authorized to issue up to 20.0 million shares of $0.01 par value preferred stock. As of December 31, 2000 and 1999 there were no preferred shares issued or outstanding. Common Stock As of December 31, 2000 the Company was authorized to issue up to 500.0 million shares of its $.01 par value per share Class A common stock, 50.0 million shares of its $.01 par value per share Class B common stock and 10.0 million shares of its $.01 par value per share Class C common stock. The Class A and B common stockholders are entitled to one and ten votes per share, respectively. The Class C common stock is non-voting. In addition, holders of Class B and C common stock may exchange their shares on a one-to-one basis for shares of Class A common stock. During the years ended December 31, 2000, 1999 and 1998, holders of Class B and Class C common stock exchanged 613,286, 1,192,354 and 469,576 of their shares, respectively, for shares of Class A common stock. The following is a summary of the Company's principal equity transactions during the years ended December 31, 2000, 1999 and 1998. See note 11 of the consolidated financial statements for issuances of common stock in connection with the Company's acquisitions. 2000 In June 2000, the Company completed a public offering of 12,500,000 shares of its Class A common stock, at $41.125 per share. The Company's net proceeds of the offering (after deduction of the offering expenses) were approximately $513.9 million. The Company used the proceeds to reduce borrowings under the Amended Credit Facilities and to finance acquisitions and the construction of towers, as well as for general working capital purposes. 1999 In February 1999, the Company completed a public offering of 25,700,000 shares of Class A common stock, (including 1,700,000 shares sold by the Company pursuant to the exercise in full of the underwriters' over-allotment option) at $25.00 per share. The Company's net proceeds of the offering (after deduction of the underwriting discount and offering expenses) were approximately $618.0 million. The Company used such proceeds, together with borrowings under its prior credit facilities, to fund acquisitions and construction activities. In February 1999, the Company consummated the sale of 500,000 shares of Class A common at $26.31 per share. The Company's net proceeds of the offering were approximately $13.2 million. The Company used such proceeds, together with borrowings under its prior credit facilities, to fund acquisitions and construction activities. 1998 In July, 1998, the Company completed its initial public offering of 27,861,987 shares of Class A common stock, (including 2,361,987 shares sold by the Company pursuant to the exercise in full of the underwriters' F-20
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) over-allotment option) at $23.50 per share. The Company's net proceeds of the offering (after deduction of the underwriting discount and offering expenses) were approximately $625.0 million. On July 9, 1998, the Company used approximately $306.1 million of the net proceeds from the offering to redeem all of the outstanding shares of the Interim Preferred Stock described below. The balance was used, together with borrowings under the prior credit facilities, to fund acquisitions and construction activities. In June 1998, the Company merged with a company owning a broadcasting tower in the Boston, Massachusetts area and issued 720,000 shares of Class A common stock valued at approximately $18.0 million. Under a put agreement that was executed in connection with the merger, the sellers had the right to require the Company to purchase, at any time prior to June 5, 1999, any or all shares of Class A common stock received pursuant to consummation of the merger for a purchase price equal to the then current market price. On June 5, 1999, the sellers' right to require the Company to purchase shares of common stock expired. Accordingly, all unsold shares as of that date (336,250) were reclassified from Redeemable Class A common stock to common stock and additional paid in capital. In June 1998, the Company entered into a stock purchase agreement (the Interim Financing Agreement) with respect to a preferred stock financing, which provided for the issuance and sale by the Company of up to $400.0 million of Series A Redeemable Pay-In-Kind Preferred Stock (the Interim Preferred Stock) to finance the Company's obligation to CBS with respect to tax reimbursement. The Company issued $300.0 million of Interim Preferred Stock, which accrued dividends at a rate equal to the three-month LIBOR then in effect (approximately 5.69%) plus an agreed upon adjustable spread (5.0% for the period in which the obligation was outstanding). Due to the short term nature of the issue, accrued dividends were recorded as interest expense in the accompanying consolidated financial statements. Such interest expense approximated $3.1 million for the year ended December 31, 1998. The Interim Preferred Stock was redeemed in July 1998 at a redemption price equal to $1,010 per share plus accrued and unpaid dividends for an aggregate redemption value of $306.1 million. The Company incurred an extraordinary loss of approximately $7.5 million, net of a tax benefit of $5.0 million, during the third quarter of 1998, representing the write-off of certain commitment, deferred financing and redemption fees. In January 1998, the Company consummated the transactions contemplated by the stock purchase agreement (the ATC Stock Purchase Agreement), dated as of January 8, 1998, with Steven B. Dodge, Chairman of the Board, President and Chief Executive Officer of American Radio and the Company, and certain other officers and directors of American Radio (or their affiliates or family members or family trusts), pursuant to which those persons purchased 8.0 million shares of the Company's common stock at a purchase price of $10.00 per share for an aggregate purchase price of approximately $80.0 million, including 4.0 million shares by Mr. Dodge for $40.0 million. Payment of the purchase price was in the form of cash aggregating approximately $30.6 million and in the form of notes aggregating approximately $49.4 million which were repaid upon the consummation of the ATC Separation. Stock Issued for Acquisitions and Subsequent events--See note 11 of the consolidated financial statements for issuances of warrants and common stock in connection with the Company's acquisitions and note 14 for a description of common stock issued in connection with the equity offering consummated in January 2001. Stock Option Plans--The Company maintains a stock option plan for directors, officers and employees (the Plan), which provides for non qualified and incentive stock options. Exercise prices in the case of incentive stock options are not less than the fair market value of the underlying common stock on the date of grant. Exercise prices in the case of non-qualified stock options are set at the discretion of the Company's Board of Directors (which to date has not been less than the fair market value on the date of grant). F-21
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) The option pool under the Plan consists of an aggregate of 24,000,000 shares of common stock. In addition to the 24,000,000 shares authorized under the Plan, options to purchase approximately 2,300,000 shares of common stock were outstanding as of December 31, 2000 outside of the Plan. Options outside the Plan are the result of the exchange of certain American Radio options that occurred pursuant to the ATC Separation and the assumption of certain options that occurred pursuant to the mergers of OmniAmerica, Inc, and American Tower Corporation (Old ATC) as described in note 11. Each unexercised option to purchase shares of American Radio, Omni America and Old ATC common stock held by persons who became directors or employees of the Company were exchanged or converted into the Company's options. All options were exchanged or converted in a manner that preserved the spread in such options between the option exercise price and the fair market value of the common stock and the ratio of the spread to the exercise price prior to such conversion. Option grants vest ratably over various periods, generally three to five years, commencing one year from the date of grant. Option grants generally expire ten years from the date of grant. The following table summarizes the Company's option activity for the periods presented: Weighted Average Options Options Exercise Price Exercisable ----------- ---------------- ----------- Outstanding as of January 1, 1998... 931,332 $ 4.16 252,640 ----------- Granted............................. 8,371,700 16.16 Transferred -- American Radio (a)... 1,862,806 6.21 Transferred -- Old ATC Merger (a)... 1,252,364 2.29 Exercised........................... (1,103,213) 2.48 Cancelled........................... (226,894) 8.80 ----------- Outstanding as of December 31, 1998............................... 11,088,095 13.43 1,513,639 ----------- Granted............................. 5,391,450 22.72 Transferred -- OmniAmerica Merger (a)................................ 971,850 13.83 Exercised........................... (314,305) 13.43 Cancelled........................... (419,848) 20.72 ----------- Outstanding as of December 31, 1999............................... 16,717,242 16.23 4,132,562 ----------- Granted............................. 7,092,350 32.77 Exercised........................... (1,517,928) 15.45 Cancelled........................... (693,525) 27.72 ----------- Outstanding as of December 31, 2000............................... 21,598,139 $21.35 5,781,018 =========== (a) Represents options outside the Plan F-22
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) The following table sets forth information regarding options outstanding at December 31, 2000: Options Outstanding Options Exercisable - ------------------------------------------------------------------------ ------------------------------------ Outstanding Weighted Average Number of Range of Exercise Weighted Average Remaining Life Options Weighted Average Options Price Per Share Exercise Price Per Share (Years) Exercisable Exercise Price Per Share - ----------- ----------------- ------------------------ ---------------- ----------- ------------------------ 2,617,762 $2.05-$9.09 $ 5.47 5.53 2,160,246 $ 4.99 2,798,132 10.00-10.00 10.00 7.01 1,085,050 10.00 4,083,784 10.91-21.13 17.82 7.56 1,185,201 16.61 2,577,231 21.38-23.75 22.89 8.10 748,731 23.23 2,361,250 23.81-23.81 23.81 8.86 462,010 23.81 424,480 24.31-30.38 26.75 8.93 64,780 25.74 4,930,400 30.63-30.63 30.63 9.72 75,000 30.62 1,785,600 30.69-46.38 37.87 9.48 19,500 46.75-48.87 48.83 9.20 - ---------- --------- 21,598,139 $2.05-$48.87 $21.35 8.13 5,781,018 $12.74 ========== ========= ATC Teleports Stock Option Plan--During 1999, Verestar, Inc.'s (Verestar, formerly ATC Teleports, Inc.) Board of Directors approved the formation of the ATC Teleports Stock Option Plan (ATC Teleports Plan) which provides for the issuance of options to officers, employees, directors and consultants of the Company's wholly owned subsidiary Verestar. The ATC Teleports Plan limits the number of shares of common stock which may be granted to an aggregate of 1,000,000 shares. During 2000, Verestar, granted 809,400 options to purchase shares of Verestar common stock to officers, directors and employees. Such options were issued at one time with an exercise price of $7.75 per share. The exercise price per share was at fair market value based on an independent appraisal performed at the Company's request. The fair value of ATC Teleports Plan options granted during 2000 were $1.97 per share. Options granted vest based on the discretion of Verestar's Board of Directors and expire ten years from the date of grant. No options under the ATC Teleports Plan were exercised in 2000 and none were exercisable as of December 31, 2000. Pro Forma Disclosure--As described in note 1, the Company uses APB. No. 25 to account for equity grants and awards to employees. Accordingly, there is no compensation cost related to option grants reflected in the accompanying consolidated financial statements. Had the Company used the fair value method, as prescribed in SFAS No. 123, to measure compensation for grants under all plans made in 2000, 1999 and 1998, the reported net loss and basic and diluted loss per common share would have been as follows (in thousands, except per share amounts): 2000 1999 1998 --------- -------- -------- Net loss..................................... $(245,814) $(87,221) $(62,439) Basic and diluted earnings per share......... $ (1.46) $ (0.58) $ (0.78) The "fair value" of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. The weighted average fair values of the Company's options granted during 2000, 1999 and 1998 were $18.19, $13.14 and $15.50 per share, respectively. Key assumptions used to apply this pricing model are as follows: 2000 1999 1998 ------- ------- ------- Approximate risk-free interest rate (both the Company and ATC Teleports plans).............. 5.95% 5.7% 5.5% Expected life of option grants (both the Com- pany and ATC Teleports plans)................. 5 years 5 years 5 years Expected volatility of underlying stock (the Company plan)................................. 68.0% 72.0% 177.5% Expected volatility of underlying stock (ATC Teleports plans).............................. N/A N/A N/A Expected dividends (both the Company and ATC Teleports plans).............................. N/A N/A N/A F-23
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Employee Stock Purchase Plan--During 2000, the Company established an employee stock purchase plan for all eligible employees. Under the plan, shares of the Company's common stock may be purchased at six-month intervals at 85% of the lower of the fair market value on the first or the last day of each offering period. Employees may purchase shares having a value not exceeding 15% of their gross compensation during an offering period and may not purchase more than $25,000 worth of stock in a calendar year (based on market values at the beginning of each offering period). During 2000, employees purchased 33,794 shares at $25.61 per share. At December 31, 2000, 4,966,206 shares remain reserved for future issuance. 11. ACQUISITIONS General--The acquisitions consummated during 2000, 1999 and 1998 have been accounted for under the purchase method of accounting. The aggregate purchase price has been allocated to the net assets acquired, (principally tangible and intangible assets), and the liabilities assumed based on estimated fair values at the date of acquisition. For certain acquisitions, the consolidated financial statements reflect preliminary allocations of purchase price, as appraisals of the net assets acquired have not been finalized. The Company does not expect any changes in depreciation and amortization resulting from the finalization of these appraisals to be material to its consolidated results of operations. 2000 Acquisitions--During the year ended December 31, 2000, the Company consummated more than 60 transactions involving the acquisition of various communications sites and related businesses and several satellite and fiber network access services businesses for a purchase price of approximately of $1.8 billion. This purchase price includes approximately $1.4 billion in cash, the issuance of approximately 4.5 million shares of Class A common stock and options valued at approximately $164.0 million, warrants to purchase approximately 3.0 million shares of Class A common stock valued at $63.5 million and the assumption of $59.2 million of debt. Total purchase price allocated to goodwill was approximately $426.8 million. The principal transactions were as follows: AirTouch transaction--In August 1999, the Company agreed to lease on a long- term basis up to 2,100 towers located throughout the United States from AirTouch Communications, Inc. (now part of Verizon Wireless Inc.) (AirTouch). The Company's cumulative lease payments, based on 2,100 towers, aggregate $800.0 million in cash payable in part upon each closing and the issuance of five-year warrants to purchase 3.0 million shares of Class A common stock at $22.00 per share. At various closings in 2000, the Company leased 1,801 towers, paid AirTouch approximately $686.1 million in cash and issued warrants for approximately 3.0 million shares of its Class A common stock. It is expected that the Company will not close on approximately 150 of the towers included in the initial agreement. The remaining closings are expected to occur in the first and second quarters of 2001, as the initial term of the agreement was extended through April 2001. The Company has accounted for the AirTouch transaction as a purchase of assets. AT&T transaction--In September 1999, the Company agreed to purchase up to 1,942 towers from AT&T. These towers are located throughout the United States and were constructed by AT&T for its microwave operations. The purchase price is $260.0 million in cash, subject to adjustment if all towers are not purchased. At various closings in 2000, the Company acquired 1,929 towers and paid AT&T $258.1 million. It is expected that the Company will close on any remaining towers in the first quarter of 2001. Management has concluded that a portion of the towers acquired in the AT&T transaction will not be marketable for wireless colocation and has recorded those towers at net realizable value. Accordingly, the Company has committed to a plan to dispose of these towers, which it is currently in the process of implementing. In connection with this Plan, the Company has recorded a liability of $2.0 million related to the disposition of these towers. For the year ended December 31, 2000 approximately $0.8 million has been charged against this accrual. F-24
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) UNISite merger--In January 2000, the Company consummated its merger with UNISite, Inc. (UNISite). The purchase price was approximately $196.4 million, which included payment of $147.7 million in cash and the assumption of $48.7 million of debt. In February 2000, the Company repaid the debt assumed in connection with the UNISite transaction. Such repayment was at a premium of the outstanding principal balance. Accordingly, the Company recognized an extraordinary loss of $1.3 million (net of an income tax benefit of $0.9 million) from the extinguishment of this debt in the first quarter of 2000. USEI merger--In June 2000, the Company consummated its merger with U.S. Electrodynamics, Inc. (USEI). The purchase price consisted of approximately 1.1 million shares of Class A common stock, $33.2 million in cash and vested options to purchase 0.4 million shares of Class A common stock. The acquisition involved around-the-clock teleport facilities in the Pacific Northwest, the Southwest and the Northeast, with a total of 52 antennae that access satellites covering the continental United States and Pacific Ocean region. General Telecom acquisition--In June 2000, the Company consummated the stock purchase of General Telecom, Inc. (General Telecom). The purchase price consisted of approximately $28.8 million in cash. The Company's acquisition of General Telecom provides it with independent partition voice switching capabilities and network management services at three major voice communications gateways in New York, Miami and Los Angeles. Publicom transaction--In October 2000, the Company consummated the purchase of Publicom Corporation (Publicom) and its affiliates. The aggregate purchase price was approximately $31.4 million, which included a payment of approximately $14.5 million in cash and the issuance of approximately 0.4 million shares of Class A common stock. Publicom and its affiliates distribute satellite and telecommunications equipment via strategic vendor relationships with established equipment providers. Publicom also provides wholesale Internet Service Provider (ISP) services. InterPacket Networks merger--In December 2000, the Company consummated its merger with InterPacket Networks, Inc. (InterPacket). Total merger consideration was approximately $63.5 million and included approximately $21.4 million in cash and the issuance of approximately 1.1 million shares of Class A common stock. InterPacket is a leader in providing international ISPs low- cost Internet access via a global satellite overlay network. InterPacket's customer base includes companies primarily in Africa, the Middle East, Latin America and Asia. 1999 Acquisitions--During the year ended December 31, 1999, the Company consummated more than 60 transactions involving the acquisition of various communications sites, service providers and satellite and fiber network access services assets for an estimated purchase price of approximately $1.2 billion. This purchase price includes the issuance of approximately 20.7 million shares of Class A common stock valued at $430.8 million. The principal transactions were as follows: OmniAmerica merger--In February 1999, the Company consummated its merger with Omni America Inc. (Omni). Omni owned or co-owned 223 towers in 24 states. Omni also offered nationwide turnkey tower construction and installation services and manufactured wireless infrastructure components. Total merger consideration was $462.0 million, consisting of the issuance of 16.8 million shares of Class A common stock and the assumption of $96.6 million of debt. The Company also assumed certain Omni employee stock options that were converted into options to purchase approximately 1.0 million shares of the Company's Class A common stock. TeleCom merger--In February 1999, the Company consummated its merger with TeleCom Towers, LLC (TeleCom). TeleCom owned or co-owned approximately 271 towers and managed 121 revenue-generating sites in 27 states. The aggregate merger consideration was $194.6 million, consisting of the payment of $63.1 million in cash, the issuance of 3.9 million shares of Class A common stock and the assumption of $48.4 million in debt. Triton PCS acquisition--In September 1999, the Company acquired 187 wireless communications towers from Triton PCS for $70.7 million in cash. F-25
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ICG transaction--In December 1999, the Company acquired ICG Satellite Services and its subsidiary, Maritime Telecommunications Network, Inc., (collectively, ICG), for $100.0 million in cash. The acquisition involved a major around-the- clock teleport facility in New Jersey and a global maritime telecommunications network headquartered in Miramar, Florida. ICG provides Internet, voice, data and compressed video satellite services to major cruise lines, the U.S. military, Internet-related companies and international telecommunications customers. 1998 Acquisitions--During the year ended December 31, 1998, the Company acquired various communications sites and a major site acquisition business for an aggregate purchase price of approximately $853.8 million, including the issuance of approximately 36.3 million shares of Class A common stock valued at approximately $382.6 million. The principal transactions were as follows: Gearon merger--In January 1998, the Company acquired all of the outstanding stock of Gearon & Co. Inc. (Gearon), for an aggregate purchase price of approximately $80.0 million. Gearon was engaged in site acquisition, development and construction and facility management of wireless network communication facilities. The purchase price consisted of approximately $32.0 million in cash and the issuance of approximately 5.3 million shares of Class A common stock . OPM merger--In January 1998, the Company acquired OPM-USA-INC. (OPM), a company that owned and developed communications towers, for approximately $70.0 million in cash. ATC merger--On June 8, 1998, the Company consummated its merger with American Tower Corporation (ATC merger). The total purchase price was approximately $425.8 million. At the time of closing, the acquired company owned approximately 775 communications towers and managed approximately 125 communications towers. In conjunction with the ATC merger, the Company issued 28.8 million shares of Class A common stock valued at approximately $287.8 million (excluding 1,252,364 shares of common stock reserved for options held by former employees of the acquired company valued at approximately $9.7 million) and assumed approximately $4.5 million of redeemable preferred stock (which was paid at closing) and $122.7 million of debt (of which approximately $118.3 million, including interest and associated fees, was paid at closing). Upon consummation of the ATC merger, the Company changed its name from American Tower Systems Corporation to American Tower Corporation. Grid/Wauka/other transactions--In October 1998, the Company acquired approximately 300 towers and certain tower related assets in six transactions for an aggregate purchase price of approximately $100.2 million. These transactions included the acquisition of Wauka Communications, Inc. and the assets of Grid Site Services, Inc. Unaudited Pro Forma Operating Results--The operating results of the 2000 and 1999 acquisitions have been included in the Company's consolidated results of operations from the date of acquisition. The following unaudited pro forma summary presents the consolidated results of operations as if the acquisitions had occurred as of January 1, 1999, after giving effect to certain adjustments, including depreciation and amortization of assets and interest expense on debt incurred to fund the acquisitions. This unaudited pro forma information has been prepared for comparative purposes only and does not purport to be indicative of what would have occurred had the acquisitions been made as of January 1 of each of the periods presented or results which may occur in the future. 2000 1999 ---------- ----------- (In thousands, except per share data- unaudited) Operating revenues................................... $860,672 $625,598 Loss before extraordinary losses..................... (239,241) (206,158) Net loss............................................. (243,579) (207,530) Basic and diluted loss per common share.............. (1.42) (1.32) F-26
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 12. SUPPLEMENTAL CASH FLOW INFORMATION Supplemental cash flow information and noncash investing and financing activities are as follows (in thousands): 2000 1999 1998 -------- ------- ------- Supplemental cash flow information: Cash paid during the period for interest (including amounts capitalized).............................. $140,251 $22,160 $23,011 Cash paid during the period for income taxes (including amounts paid to CBS)................... 4,335 2,242 212,196 Noncash investing and financing activities: Issuance of common stock, warrants and assumption of options for acquisitions....................... 227,507 448,036 392,226 Treasury stock transactions........................ 2,812 1,528 Conversion of convertible notes.................... 136,399 Capital leases..................................... 77,427 4,518 Corporate tax restructuring........................ 150,150 (Decrease) increase to CBS Corporation from estimated remaining tax liabilities......................... (12,003) 66,736 Property, equipment and other assets transferred from American Radio............................... 6,489 Accrual for final payment for OPM Merger........... 21,914 F-27
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 13. BUSINESS SEGMENTS The Company operates in three business segments: rental and management (RM), network development services (Services), and satellite and fiber network access services (formerly internet, voice, data and video transmission services) (SFNA). The RM segment provides for the leasing and subleasing of antennae sites on multi-tenant towers and other properties for a diverse range of customers in the wireless communication and broadcast and other industries. The Services segment offers a broad range of services, including radio frequency engineering, network design, site acquisition, zoning and other regulatory approvals, construction, component part sales and antennae installation. The SFNA segment offers satellite and fiber network services to telecommunications companies, internet service providers, broadcasters and maritime customers. The accounting policies applied in compiling segment information below are similar to those described in note 1. In evaluating financial performance, management focuses on Operating Profit (Loss), excluding depreciation and amortization, tower separation, development and corporate general and administrative expenses. This measure of Operating Profit (Loss) is also before interest expense, interest income and other, net, premium on note conversion, minority interest in net earnings of subsidiaries, income taxes and extraordinary losses. For reporting purposes the RM segment includes interest income-TV Azteca, net for the year ended December 31, 2000. The Company's reportable segments are strategic business units that offer different services. They are managed separately because each segment requires different resources, skill sets and marketing strategies. Summarized financial information concerning the Company's reportable segments as of and for the years ended December 2000, 1999 and 1998 is shown in the following table. The "Other" column below represents amounts excluded from specific segments, such as income taxes, extraordinary losses, corporate general and administrative expense, tower separation expense, development expense, depreciation and amortization, interest expense, interest income and other net, premium on note conversion and minority interest in net earnings of subsidiaries. In addition, the Other column also includes corporate assets such as cash and cash equivalents, tangible and intangible assets and income tax accounts which have not been allocated to specific segments. All amounts shown are in thousands. RM Services SFNA Other Total --------- -------- -------- --------- ---------- 2000 Revenues................... $ 278,153 $311,921 $145,201 $ 735,275 Operating profit (loss).... 151,592 37,152 35,136 $(418,508) (194,628) Assets..................... 3,861,060 723,262 640,913 435,444 5,660,679 Capital expenditures....... 491,343 19,402 25,560 12,686 548,991 Depreciation and amortization.............. 211,432 41,018 27,074 3,836 283,360 1999 Revenues................... $ 135,303 $ 90,416 $32,362 $ 258,081 Operating profit (loss).... 72,862 21,098 8,264 $(152,951) (50,727) Assets..................... 1,847,847 505,018 229,260 436,741 3,018,866 Capital expenditures....... 271,231 4,588 15,835 2,588 294,242 Depreciation and amortization.............. 98,011 25,991 7,264 1,273 132,539 1998 Revenues................... $ 60,505 $ 23,315 $ 19,724 $ 103,544 Operating profit (loss).... 31,050 3,836 6,907 $ (88,635) (46,842) Assets..................... 1,031,426 91,444 64,359 315,114 1,502,343 Capital expenditures....... 118,926 61 3,405 4,063 126,455 Depreciation and amortization.............. 39,568 7,038 4,887 571 52,064 F-28
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Summarized geographical information related to the Company's operating revenues and long-lived assets as of and for the year ended December 31 is as follows (in thousands): 2000 1999 ---------- ---------- Operating Revenues: United States.......................................... $ 729,161 $ 258,081 Mexico................................................. 6,114 ---------- ---------- Total operating revenues............................. $ 735,275 $ 258,081 ========== ========== Long-Lived Assets: United States.......................................... $4,685,754 $2,489,870 Mexico................................................. 116,597 6,373 ---------- ---------- Total long-lived assets.............................. $4,802,351 $2,496,243 ========== ========== The Company did not maintain operations or long-lived assets internationally prior to 1999. For the year ended December 31, 1999, one customer within the rental and management and services segments, accounted for approximately 17% of the Company's consolidated operating revenues. No single customer accounted for more than 10% of consolidated operating revenues for the years ended December 31, 2000 or 1998. 14. SUBSEQUENT EVENTS The following is a description of significant transactions involving the Company subsequent to December 31, 2000: Financing Transactions: Equity offering--In January 2001, the Company completed a public offering of 10.0 million shares of its Class A common stock at $36.50 per share. The net proceeds of the offering (after deduction of offering expenses) were approximately $360.8 million. Proceeds from the offering will be used to finance the construction of towers, fund pending and future acquisitions and for general corporate purposes. 9 3/8% Senior Notes offering--In January 2001, the Company completed a private notes placement of $1.0 billion 9 3/8% Senior Notes (Senior Notes), issued at 100% of their face amount. The Senior Notes mature on February 1, 2009. Interest on the Senior Notes is payable semiannually on February 1 and August 1, commencing on August 1, 2001. The indenture governing the Senior Notes contains certain restrictive convenants including restrictions on the Company's ability to incur more debt, guarantee debt, pay dividends and make certain investments. Proceeds from the Senior Notes placement will be used to finance construction of towers, fund pending and future acquisitions and for general corporate purposes. Mexican credit facility--In February 2001, the Company's Mexican subsidiary consummated a loan agreement that will provide for borrowings of $95.0 million (U.S. Dollars). If additional lenders are made party to the agreement, the size of the facility may increase to $140.0 million. The Company has committed to loan its Mexican subsidiary up to $45.0 million if additional lenders are not made party to the agreement. The Company's committment will be reduced on a dollar-for-dollar basis if additional lenders join the loan agreement. This facility requires the maintenance of various covenants and ratios and is guaranteed and collateralized by all of the assets of the Mexican subsidiary. Interest rates on the loan are determined at the Mexican subsidiary's option at either LIBOR plus margin or the Base Rate plus margin (as defined in the agreement). Amounts borrowed under the loan will be due in 2003. F-29
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Pending Transactions: ALLTEL transaction--In December 2000, the Company entered into an agreement to acquire the rights from ALLTEL to up to 2,193 communications towers through a 15-year sublease agreement. Under the agreement, the Company will sublease these towers for consideration of up to $657.9 million in cash. ALLTEL also granted the Company the option to acquire the rights through sublease agreements, to approximately 200 additional towers to be selected by the Company on a site-by-site basis for cash consideration of up to $300,000 per tower. As the anchor tenant on the towers, ALLTEL will pay a site maintenance fee of $1,200 per tower per month, escalating at a rate equal to the lower of 5% per annum or the increase in the Consumer Price Index plus 4% per annum. Under the agreement with ALLTEL, the Company will have the option to purchase the towers at the end of the 15-year sublease term. The purchase price per tower will be $27,500 plus interest accrued at 3% per annum. At ALLTEL's option, this price will be payable in cash or with 769 shares of the Company's Class A common stock in the case of approximately 1,900 of the towers. In the case of the approximately 300 other towers and any of the 200 additional towers that the Company subleases, the per tower purchase price at the end of the sublease term is subject to adjustment based on the cash consideration paid for the sublease and the Company's Class A common stock price on the date the Company agrees to the tower sublease terms. The Company expects the transaction to close incrementally beginning in the second quarter of 2001. Other transactions--In addition to the above, the Company is party to various agreements relating to the acquisition of assets and businesses from third parties (including certain remaining portions of the AirTouch and AT&T transactions) for an estimated aggregate purchase price of approximately $211.0 million. The Company is also pursuing the acquisitions of other properties and businesses in new and existing locations, although there are no definitive material agreements with respect thereto. F-30
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 15. INFORMATION PRESENTED PURSUANT TO THE INDENTURE FOR THE 9 3/8% SENIOR NOTES (UNAUDITED) The following table sets forth information that is presented solely to address certain reporting requirements contained in the indenture for our Senior Notes. This information presents certain financial data of the Company on a consolidated basis and on a restricted group basis, as defined in the indenture governing the Senior Notes. All of the Company's subsidiaries are part of the restricted group, except its wholly owned subsidiary Verestar. Consolidated Restricted Group ------------------- ------------------- Year Ended Year Ended December 31, December 31, ------------------- ------------------- 2000 1999 2000(1) 1999(1) --------- -------- --------- -------- (in thousands) Statement of Operations Data: Operating revenues................... $ 735,275 $258,081 $ 590,074 $225,719 --------- -------- --------- -------- Operating expenses: Operating expenses excluding depreciation and amortization, development and corporate general and administrative expenses....... 524,074 155,857 414,009 131,759 Depreciation and amortization...... 283,360 132,539 256,286 125,275 Development expense................ 14,517 1,607 14,433 1,406 Corporate general and administrative expense............ 14,958 9,136 14,958 9,136 --------- -------- --------- -------- Total operating expenses............. 836,909 299,139 699,686 267,576 --------- -------- --------- -------- Loss from operations................. (101,634) (41,058) (109,612) (41,857) Interest expense..................... (156,839) (27,492) (155,006) (27,487) Interest income and other, net....... 13,018 17,695 12,661 17,632 Interest income-TV Azteca, net of interest expense of $1,047 in 2000.. 12,679 1,856 12,679 1,856 Premium on note conversion........... (16,968) (16,968) Minority interest in net earnings of subsidiaries........................ (202) (142) (202) (142) --------- -------- --------- -------- Loss before income taxes and extraordinary losses. $(249,946) $(49,141) $(256,448) $(49,998) ========= ======== ========= ======== December 31, 2000 ----------------------- Restricted Consolidated Group ------------ ---------- (in thousands) Balance Sheet Data: Cash and cash equivalents.............................. $ 82,038 $ 66,547 Property and equipment, net............................ 2,296,670 2,013,270 Total assets........................................... 5,660,679 5,019,766 Long-term obligations, including current portion....... 2,468,223 2,355,911 Net debt(2)............................................ 2,386,185 2,289,364 Total stockholders' equity............................. 2,877,030 2,877,030 - -------- (1) Corporate overhead allocable to Verestar, Inc. and interest expense related to intercompany borrowings to Verestar, Inc. (unrestricted subsidiary) have not been excluded from results shown for the restricted group. (2) Net debt represents long-term obligations, including current portion, less cash and cash equivalents. F-31
AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 16. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) Selected quarterly financial data for the years ended December 31, 2000 and 1999 is as follows: Three Months Ended -------------------------------------------------- March 31, June 30, September 30, December 31,(1) --------- -------- ------------- --------------- (in thousands, except per share data) 2000: Operating revenues......... $115,517 $167,047 $208,958 $243,753 Gross profit............... (23,808) (26,985) (20,904) (29,937) Loss before extraordinary losses.................... (37,660) (58,632) (39,527) (54,471) Net loss................... (41,998) (58,632) (39,527) (54,471) Basic and diluted loss per common share amounts: Loss before extraordinary losses.................. ($0.24) ($0.36) ($0.22) ($0.30) Net loss................. ($0.27) ($0.36) ($0.22) ($0.30) 1999: Operating revenues......... $ 42,408 $ 59,153 $ 67,539 $ 88,981 Gross profit .............. (9,271) (10,136) (10,332) (11,319) Loss before extraordinary losses.................... (9,500) (9,883) (13,091) (16,881) Net loss................... (9,500) (9,883) (13,091) (18,253) Basic and diluted loss per common share amounts: Loss before extraordinary losses.................. ($0.07) ($0.06) ($0.08) ($0.11) Net loss................. ($0.07) ($0.06) ($0.08) ($0.12) - -------- (1) During the fourth quarter of 2000 the Company recorded a specific charge for a bad debt reserve of approximately $7.0 million. * * * * F-32
EXHIBIT INDEX Below are the exhibits which are included, either by being filed herewith or by incorporation by reference, as part of this Annual Report on Form 10-K Exhibits are identified according to the number assigned to them in Item 601 of Regulation S-K. Documents that are incorporated by reference are identified by their Exhibit number as set forth in the filing from which they are incorporated by reference. With respect to documents filed under Exhibit 2, copies of schedules and exhibits have not been filed herewith, but will be furnished supplementally to the Commission upon request. The filings of the Registrant from which various exhibits are incorporated by reference into this Annual Report are indicated by parenthetical numbering which correspondence to the following key: (1) Quarterly Report Form 10-Q (File No. 001-14195) filed on August 16, 1999; (2) Registration Statement on Form S-3 (File No. 333-37988) filed on May 26, 2000; (3) Registration Statement on Form S-3 (File No. 333-89345) filed on October 20, 1999; (4) Current Report on Form 8-K (File No. 001-14195) filed on February 24, 2000; (5) Amendment No. 1 to Registration Statement on Form S-1 (File No. 333- 50111) filed on May 8, 1998; (6) Amendment No. 2 to Registration Statement on Form S-1 (File No. 333- 52481) filed on June 30, 1998; (7) Registration Statement on Form S-4 (File No. 333-70683) filed on January 15, 1999; (8) Amendment No. 1 to Current Report on Form 8-K (File No. 001-14195) filed on March 18, 1999. (9) Annual Report on Form 10-K (File No. 001-14195) filed on March 19, 1999; (10) Registration Statement on Form S-4 (File No. 333-46025) filed on February 10, 1998; (11) Current Report on Form 8-K (File No. 001-14195) filed on January 28, 2000; (12) Annual Report on Form 10-K (File No. 001-14195) filed on March 29, 2000; (13) Quarterly Report on Form 10-Q (File No. 001-14195) filed on August 14, 1998; (14) Current Report on Form 8-K (File No. 001-14195) filed on September 17, 1999; (15) Registration Statement on Form S-4 (File No. 333-39030) filed on August 31, 2000; and (16) Quarterly Report on Form 10-Q (File No. 001-14195) filed on November 13, 2000. Exhibit No. Description of Document Exhibit File No. ------- ----------------------- ----------------- 2.1 Lease and Sublease by and among ALLTEL Communications, Inc. and the other entities named therein and American Towers, Inc. and American Filed herewith as Towers Corporation, dated , 2000............. Exhibit 2.1 2.2 Agreement to Sublease by and among ALLTEL Communications, Inc. the ALLTEL entities and American Towers, Inc. and American Towers Filed herewith Corporation, dated December 19, 2000............... as Exhibit 2.2 2.3 Build to Suit Agreement by and among ALLTEL Communications, Inc. the ALLTEL entities named therein, American Towers, Inc. and American Towers Filed herewith Corporation, dated December 19, 2000............... as Exhibit 2.3 3.1 Restated Certificate of Incorporation, as amended, of the Company as filed with the Secretary of State of the State of Delaware on June 4, 1999........... 3(i)(1) 3.2 By-Laws, as amended as of March 15, 2001, of the Filed herewith Company............................................ as Exhibit 3.2
Exhibit Exhibit File No. Description of Document No. ------- ----------------------- --------------- 4.1 Indenture, by and between the Company and The Bank of New York as Trustee, for the 6.25% Convertibles Notes due 2009, dated as of October 4, 1999, including form of 6.25% Note........................ 4.1(3) 4.2 Indenture by and between the Company and The Bank of New York as Trustee, for the 2.25% Convertibles Notes due 2009, dated as of October 4, 1999, including the form of 2.25% Note.................... 4.2(3) 4.3 Form of 6.25% Note (included in Exhibit 4.1)........ 4.1(3) 4.4 Form of 2.25% Note (included in Exhibit 4.2)........ 4.4(3) 4.5 Registration Rights Agreement, by and between the Company and the Initial Purchasers named therein, dated as of October 4, 1999......................... 4.5(3) 4.6 Indenture, by and between the Company and The Bank of New York as Trustee, for the 5.0% Convertibles Notes due 2010, dated as of February 15, 2000, including form of 5.0% Note......................... 4.1(4) 4.7 Form of 5.0% Note (included in Exhibit 4.6)......... 4.2(4) 4.8 Registration Rights Agreement, by and between the Company and the Initial Purchasers named therein, dated as of February 15, 2000....................... 4.3(4) 4.9 Indenture, by and between the Company and The Bank of New York as Trustee, for the 9 3/8% Senior Notes due 2009, dated January 31, 2001, including the form Filed herewith of 9 3/8% Senior Note............................... as Exhibit 4.9 4.10 Registration Rights Agreement, by and between the Company and the Initial Purchasers named therein Filed herewith dated January 31, 2001.............................. as Exhibit 4.10 10.1 American Tower Systems Corporation 1997 Stock Option Plan, dated as of November 5, 1997, as amended and restated on April 27, 1998.......................... 10.26(5) 10.1A Amendment to the Amended and Restated American Tower Corporation 1997 Stock Option Plan as Amended and Restated on April 27, 1998.......................... 10.1A(12)* 10.2 American Tower Systems Corporation Stock Purchase Agreement, dated as of January 8, 1998, by and among ATC and the Purchasers.............................. 10.27(10) 10.3 Employment Agreement, dated as of January 22, 1998, by and between ATC by and between ATI and J. Michael Gearon, Jr.......................................... 10.28(10)** 10.4 Letter of Agreement, dated as of April 13, 1998, by and between ATC and Douglas Wiest................... 10.22(7)** 10.5 ARS-ATS Separation Agreement, dated as of June 4, 1998 by and among American Radio Systems Corporation, ("ARS'), ATC and CBS Corporation....... 10.30(6) 10.6 Securities Purchase Agreement, dated as of June 4, 1998 by and among ATC, Credit Suisse First Boston Corporation and each of the Purchasers named therein............................................. 10.31(6) 10.7 Registration Rights Agreement, dated June 4, 1998, by and among ATC, Credit Suisse First Boston Corporation and each of the Parties named therein... 10.32(6) 10.8 Registration Rights Agreement, dated as of January 22, 1998, by and among ATC and each of the Parties named therein....................................... 10.3(13)
Exhibit Exhibit No. Description of Document File No. ------- ----------------------- ----------------- 10.9 Stock Purchase Agreement, dated as of February 4, 1999, by and among ATC and Credit Suisse First Boston Corporation................................. 10.13(9) 10.10 Registration Rights Agreement, dated as of February 4, 1999, by and among ATC and Credit Suisse First Boston Corporation................................. 10.14(9) 10.11 Amended and Restated Registration Rights Agreement, dated as of February 25, 1999, by and among ATC and each of the Parties named therein.................. 10.1(8) 10.12 Agreement to Sublease, dated as of August 6, 1999, by and between AirTouch Communications, Inc., the other parties named therein as Sublessors, ATC and American Tower, L.P................................ 10.1(1) 10.13 Stock Purchase Agreement, dated as of August 11, 1999, between ATC Teleports, Inc., ICG Holdings, Inc. and ICG Satellite Services.................... 10.2(1) 10.14 Purchase and Sale Agreement, dated as of September 10, 1999, by and among ATC and AT&T Corp., a New York corporation................................... 10.1 (14) 10.15 Amended and Restated Loan Agreement, dated as of January 6, 2000, among American Tower, L.P., American Towers, Inc. and ATC Teleports, Inc., as Borrowers and Toronto Dominion (Texas) Inc., as Administrative Agent, and the banks party thereto.. 10.1 (11) 10.16 First Amendment and Waiver Agreement, dated as of February 9, 2000, by and among American Towers, L.P., American Towers, Inc., and ATC Teleports, Inc., as Borrowers and Toronto Dominion (Texas) Inc., as Administrative Agent, and the banks party thereto............................................ 10.1(16) 10.17 Second Amendment to Amended and Restated Loan Agreement, dated as of May 11, 2000, by and among American Towers, L.P., American Towers, Inc., and ATC Teleports, Inc., as Borrowers and Toronto Dominion (Texas) Inc., as Administrative Agent, and the banks party thereto............................ 10.2(16) 10.18 Waiver and Third Amendment to Amended and Restated Loan Agreement, dated as of October 13, 2000, by and among American Towers, L.P., American Towers, Inc., and ATC Teleports, Inc., as Borrowers and Toronto Dominion (Texas) Inc., as Administrative Agent, and the banks party thereto................. 10.3(16) 10.19 ATC Teleports Corporation 1999 Stock Option Plan... 10.16(12)* 10.20 American Tower Corporation 2000 Employee Stock Purchase Plan...................................... 10.18(12)* 10.21 Purchase Agreement, dated as of January 24, 2001, by and among the Company and the Purchasers named Filed herewith as therein with respect to the 93/8% Senior Notes..... Exhibit 10.21 12 Statement Regarding Computation of Ratios of Filed herewith as Earnings to Fixed Charges.......................... Exhibit 12 21 Subsidiaries of ATC................................ Filed herewith as Exhibit 21 23 Independent Auditors' Consent--Deloitte & Touche Filed herewith as LLP................................................ Exhibit 23 - -------- * Compensatory Plan ** Management Contract
Exhibit 2.1 ----------- ================================================================================ LEASE AND SUBLEASE by and among ALLTEL COMMUNICATIONS, INC. and THE OTHER ALLTEL ENTITIES NAMED HEREIN and AMERICAN TOWERS, INC. and AMERICAN TOWER CORPORATION Dated _____________ _____, 2001 ================================================================================
TABLE OF CONTENTS Page Section 1. Definitions............................................................ 1 Section 2. Sublease Documents..................................................... 17 Section 3. Subleased Property..................................................... 18 Section 4. Term; Surrender; ATC Improvements...................................... 18 Section 5. Ground Lease........................................................... 21 Section 6. Third Party Tenant Leases and Swap and Other Agreements................ 25 Section 7. Reserved Space......................................................... 27 Section 8. ALLTEL's Expansion Rights.............................................. 29 Section 9. Withdrawal............................................................. 36 Section 10. Permitted Use.......................................................... 37 Section 11. Rent; Site Maintenance Charge; Other Payments.......................... 39 Section 12. ATC's Maintenance Obligations.......................................... 42 Section 13. ALLTEL's Work on the Site.............................................. 44 Section 14. Damage to the Site, Tower or the Improvements.......................... 48 Section 15. Interference........................................................... 50 Section 16. Regulatory Compliance.................................................. 53 Section 17. No Liens............................................................... 67 Section 18. Condemnation........................................................... 68 Section 19. Indemnity.............................................................. 69 Section 20. Subordination and Attornment........................................... 71 Section 21. Environmental Covenants................................................ 72 Section 22. Insurance.............................................................. 75 Section 23. Assignment and Subletting.............................................. 77 Section 24. Estoppel Certificate................................................... 78 Section 25. Holding Over........................................................... 79 Section 26. A Party's Right To Act for the Other Party; ALLTEL Set-Off Right....... 79 Section 27. Defaults and Remedies.................................................. 79 Section 28. Quiet Enjoyment........................................................ 84 Section 29. No Merger.............................................................. 84
Section 30. Recording of Ground Leases and Site Designation Supplement............. 84 Section 31. Purchase Options....................................................... 85 Section 32. [Reserved]............................................................. 91 Section 33. ATC Parent's Guaranty.................................................. 91 Section 34. ALLTEL Guaranty........................................................ 92 Section 35. Taxes.................................................................. 94 Section 36. General Provisions..................................................... 97 ii
LEASE AND SUBLEASE THIS LEASE AND SUBLEASE is made and entered into this _____ day of _______, 2001 (this "Sublease"), by and among ALLTEL COMMUNICATIONS, INC., a Delaware corporation ("ALLTEL Inc.") and the other entities listed under the heading "ALLTEL Entities" on the signature pages hereto (ALLTEL Inc. and the ALLTEL Entities (as defined below) being each referred to herein individually as "ALLTEL," and collectively as the "ALLTEL Companies"), and AMERICAN TOWERS, INC., a Delaware corporation ("ATC") and AMERICAN TOWER CORPORATION, a Delaware corporation ("ATC Parent"). In consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties to this Sublease agree as follows: Section 1. Definitions. For purposes of this Sublease, the following capitalized terms have the following respective meanings: "Action" means any action, suit, litigation, complaint, counterclaim, petition, mediation contest or administrative proceeding, whether at law, in equity, in arbitration or otherwise, and whether conducted by or before any Governmental Authority or other Person. "Additional ALLTEL Equipment" means additional equipment or modifications installed or performed after the Effective Date (i) to be installed at the Reserved Space that exceeds the ALLTEL Maximum Equipment, (ii) to be installed at the Microwave Reserved Space that exceeds the Microwave Equipment, or (iii) to be installed at a location at the Site other than the Reserved Space (as modified or expanded from time to time in accordance with this Sublease) or Microwave Reserved Space, subject to Sections 8, 10 and 13 and Exhibit 4. "Additional ALLTEL Maintenance Charge" has the meaning given to such term in Section 8(b) of Exhibit 4. "Additional ALLTEL Space" means Available Space at the Site (including, without limitation, the Land, Site Improvements or the Tower) upon which ALLTEL installs or intends to install Additional ALLTEL Equipment pursuant to which the associated portion of the Subleased Property shall revert to ALLTEL as a reservation and shall no longer be part of the Subleased Property and Subleasehold Estate pursuant to a mutual execution of an amendment to the applicable Site Designation Supplement for the associated Site in accordance with Section 8(b) of Exhibit 4. "Affiliate(s)" or "Affiliated" of a Person means any Person which, whether directly or indirectly, Controls, is Controlled by or is under common Control with the subject Party. "Affiliate Assignee" means, with respect to any Person, any other Person directly or indirectly controlled by, controlling or under common control with such first Person. For the purposes of this definition only, control of any Person means ownership, directly or indirectly, of 50% or more of the voting stock of such Person, if a corporation, and ownership of 50% or more 1
of the equity or beneficial interest in any other Person and the general partner of any Person who is a partnership will be deemed to control such Person. "Aggregate Interest Accrual Amount" shall mean an amount equal to the sum of each Interest Accrual Amount. "Agreement to Sublease" means that certain Agreement to Sublease dated December 19, 2000 by and among ATC, ATC Parent and the ALLTEL Companies. "ALLTEL" has the meaning given to such term in the preamble and shall mean one, some or all of the ALLTEL Companies, as the context may require. "ALLTEL Companies" has the meaning given to such term in the preamble. "ALLTEL Entities" means those partnerships and corporations that are listed on Exhibit 5 attached hereto and which (i) are signatories to this Sublease as --------- of the Initial Closing Date or (ii) have joined in the execution and delivery of this Sublease by executing and delivering to ATC and ALLTEL Inc. a Joinder to Agreement in the form attached hereto as Exhibit 1 in accordance with the terms --------- and conditions of the Agreement to Sublease. This Sublease shall automatically be deemed amended to include any of the ALLTEL Entities that executes and delivers to ATC and ALLTEL Inc. within the time frame set forth above a Joinder to Agreement in the form attached hereto as Exhibit 1 without any other action ---------- or approval of any other Party hereto. "ALLTEL Equipment" means each of the following, if any, owned by and used exclusively for the benefit of ALLTEL or its Affiliates and located on the Land, the Site Improvements or Tower portion of the Reserved Space as of the Effective Date, including without limitation (i) antennas, lines, waveguides, Platforms, moment arms and other ancillary antenna equipment, (ii) equipment shelters, equipment buildings, equipment shelters and other constructions (excluding any such construction which is used as of the Effective Date by a Third Party Tenant), (iii) generators and associated fuel tanks, (iv) grounding rings for ALLTEL's equipment shelters and antenna equipment, (v) connections for utilities service from the meter to such equipment building, shelter or cabinets, (vi) one or more foundations, concrete equipment pads or raised Platforms for such equipment shelters, buildings and constructions, and (vii) global positioning system equipment. The ALLTEL Equipment is subject to expansion, modification or replacement after the Effective Date in accordance with Section 8. With respect to any Zoned Sites, ALLTEL Equipment shall include all of the above items that are located on the Zoned Site and used exclusively by ALLTEL as of the date ALLTEL designates such Site as an "Included Site" in accordance with the Agreement to Sublease and that otherwise satisfy the criteria to be included in the ALLTEL Equipment. ALLTEL Equipment shall exclude the Lighting and Monitoring Equipment. "ALLTEL Guarantors" means, individually and in the aggregate, ALLTEL Inc. and those Affiliates of ALLTEL Inc. listed under the heading "ALLTEL Guarantors" on the signature pages hereto, each of whom have agreed to jointly and severally guarantee the obligations of ALLTEL under this Agreement in accordance with the terms and conditions set forth in Section 34. 2
"ALLTEL Inc." has the meaning given to such term in the preamble. "ALLTEL Indemnitee" means ALLTEL, its Affiliates and the respective directors, officers, members, partners, employees, representatives and agents of ALLTEL or any ALLTEL Affiliate (excluding ATC, its Affiliates and any of their agents). "ALLTEL Maximum Equipment" means the physical locations (subject to ALLTEL's Right of Substitution), vertical Tower dimensions, Tower capacity effect, and windload effect on the Tower (prior to any expansions, modifications or additions by ATC or any of its Affiliates) and other space at a Site exclusively utilized by ALLTEL Equipment as of the Effective Date, but excluding any Microwave Equipment; provided, however, that in no event shall the ALLTEL Equipment installed on a Zoned Site exceed the specifications set forth in Section 8(a)(vi)(A) of Exhibit 4. ALLTEL Maximum Equipment shall be subject to decreases pursuant to the exercise of certain Right of Substitutions as set forth in Section 8(a)(ii) of Exhibit 4. "ALLTEL Obligation" has the meaning given to such term in Section 34(a). "ALLTEL Permitted Use" means use of the Reserved Space of each Site and, if applicable, Additional ALLTEL Space and/or Microwave Reserved Space, for the purposes of operating and maintaining the wireless communication services contemplated by the ALLTEL Equipment, Microwave Equipment and/or Additional ALLTEL Equipment as set forth in the applicable Site Designation Supplement, as amended from time to time in accordance with the terms and conditions of this Sublease. "ALLTEL Work" has the meaning given such term in Section 13. "Annual Escalator" has the meaning given such term in Section 11(c). "ATC" has the meaning given to such term in the preamble. "ATC Class A Common Stock" means the Class A Common Stock of ATC Parent, par value $0.01 per share (as adjusted for stock splits, dividends and other events pursuant to Section 31(g)). "ATC Improvements" means such equipment, alterations, replacements, modifications, additions and improvements as may, from time to time, be installed on or made to all or any component of a Site (including the Land and the Tower) by ATC or any of its Affiliates, pursuant to Section 10 and 12, including, without limitation, additional shelters, Towers, buildings and utilities services. "ATC Indemnitees" means ATC, its Affiliates and the respective directors, officers, members, partners, employees, representatives and agents of ATC or its Affiliates. "ATC Loan Agreement" means the Amended and Restated Loan Agreement, by and among certain Subsidiaries of ATC Parent, the Financial Institutions named therein and the 3
Agents named therein, dated as of January 6, 2000, as heretofore amended, and as from time to time hereafter amended, modified, extended, restated or refunded. "ATC Obligation" has the meaning given to such term in Section 33(a). "ATC Parent" has the meaning given to such term in the preamble. "ATC's Permitted Use" means use of the Subleased Property of each Site in accordance with the terms and conditions of this Sublease (i) for the purposes of constructing, installing, operating, managing, maintaining and marketing the Site, Tower(s) and Site Improvements thereof and making further ATC Improvements to such Site and expansions and modification to the applicable Ground Lease and Tower in furtherance thereof, and (ii) by Third Party Tenants and ALLTEL with respect to Additional ALLTEL Space, and the right to use by Third Party Tenants of any portions of the Subleased Property of each Site as are reasonably necessary for operation of the Third Party Tenant Property. "ATC Work" has the meaning given such term in Section 12(g). "Available Space" means, as to any Site, a Tower location, a portion of the Land, a portion of the Site Improvements or any other portion, space or area of such Site that is available for further sublease by ATC to any Third Party Tenant or ALLTEL and its Affiliates with respect to Additional ALLTEL Space and all rights appurtenant to such portion, space or area. For the purposes of this definition, the determination of "availability" of Available Space shall be based on adequate existing Tower, Site Improvements, building and ground space capacity available at the Site, at no additional direct, out-of-pocket cost to ATC, after giving effect to any then-existing Third Party Tenants, reservations, pending applications, setback requirements and third party (nongovernmental) consents required, if any. "Award" means any amounts paid, recovered or recoverable as damages, compensation or proceeds by reason of any taking on account of a Taking, including all amounts paid pursuant to any agreement with any Governmental Authority which has been made in settlement or under threat of any such Taking, less the reasonable costs and expenses incurred in collecting such amounts. "BTS Site(s)" shall have the meaning ascribed to such term in the MLA. "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close in Arkansas or Massachusetts. "Capitalization Event" shall have the meaning set forth in Section 31(g). "Claims" means any and all debts, liabilities, obligations, losses, damages, deficiencies, assessments and penalties, together with all Actions, pending or, to a Party's knowledge, threatened claims and judgments of whatever kind and nature relating thereto, and all fees, costs, expenses and disbursements (including without limitation reasonable attorneys' and other legal fees, costs and expenses) relating to any of the foregoing. 4
"Code" means the Internal Revenue Code of 1986, and the rules and regulations thereunder, all as from time to time in effect, or any successor Law, rules or regulations, and any reference to any statutory or regulatory provision shall be deemed to be a reference to any successor statutory or regulatory provision. "Communications Equipment" means, collectively or individually, as applicable ALLTEL Equipment, Microwave Equipment, Additional ALLTEL Equipment or Third Party Tenant Property. "Contract" or "Contractual Obligation" shall mean any agreement, arrangement, commitment, contract, covenant, indemnity, undertaking or other obligation or liability to which ALLTEL or ATC, as applicable, is a party or to which it or any of the Subleased Property is subject. "Control" (including the terms "controlled," "controlled by" and "under common control with") means the possession, directly or indirectly or as trustee or executor, of the power to direct or cause the direction of the management or policies of a Person, or the disposition of such Person's assets or properties, whether through the ownership of stock, equity or other ownership, by contract, arrangement or understanding, or as trustee or executor, by contract or credit arrangement or otherwise. The sole general partner of any Person that is a partnership will be deemed to control such Person and sole manager of any Person that is a limited liability company shall be deemed to control such Person. "CPI" means the Consumer Price Index for all Consumers, U.S., City Average (1982-84 = 100) All Items Index, published by the Bureau of Labor Statistics, United States Department of Labor. If the CPI shall cease to be compiled and published at any time during the term of this Sublease, but a comparable successor index is compiled and published by the Bureau of Labor Statistics, United States Department of Labor, the adjustments to the Site Maintenance Charge and the Additional ALLTEL Maintenance Charge provided for in Sections 8, 11 and Exhibit 4, if any, shall be computed according to such successor index, with appropriate adjustments in the index to reflect any differences in the method of computation from the CPI. If the CPI is discontinued or revised, such other government index or computation with which it is replaced shall be used in order to obtain substantially the same result as if the CPI had not been discontinued or revised. "CPI Change" means an increase, if any, but not decrease (expressed as a positive but not negative percentage) in the most recently published CPI as of January 1 of the applicable Sublease Year, from the CPI published for January 1 of the immediately preceding Sublease Year. In the event that CPI decreases (expressed as a negative percentage), then CPI Change shall be zero. "Date of Taking" means the earlier of the date upon which title to applicable Site, or any portion thereof, subject to a Taking is vested in the condemning Governmental Authority, or the date upon which possession of such Site or portion thereof is taken by the condemning Governmental Authority. 5
"Day" or "days" means a calendar day unless specifically stated to be a Business Day. "Default Notice" has the meaning given to such term in Section 5(d). "Economic Offer" has the meaning given such term in Section 8(a)(viii) of Exhibit 4. "Effective Date" means December 19, 2000. "Emergency" means any event that causes, has caused or is likely to cause (i) any bodily injury, personal injury or property damage; (ii) the suspension, revocation, termination or any other material adverse effect as to any licenses and/or permits; (iii) any material adverse effect on the ability of Third Party Tenants, ALLTEL or its Affiliates to operate Communications Equipment or ATC to operate the Site; or (iv) the imposition of a material fine, penalty or levy due to the failure of a Party to comply with the provisions of Section 16. "Environmental Conditions" means, as to each Site, any conditions or circumstances, including without limitation, the presence of any unregistered above or below ground storage tank for Hazardous Materials or the presence of Hazardous Materials, that (i) require abatement or correction under the Environmental Laws, (ii) give rise to any civil or criminal liability under any Environmental Law relating to the use or occupancy of any Site or (iii) constitute a public or private nuisance. "Environmental Law" shall mean any Law relating to or otherwise imposing Liability or standards of conduct concerning pollution or protection of the environment, including without limitation Laws relating to Releases or threatened Releases of Hazardous Materials or other chemicals or industrial pollutants, substances, materials or wastes into the environment (including, without limitation, ambient air, surface water, ground water, mining or reclamation or mined land, land surface or subsurface strata), Environmental Conditions, or otherwise relating to the manufacture, processing, generation, distribution, use, treatment, storage, disposal, cleanup, transport or handling of Hazardous Materials and other pollutants, contaminants or chemicals. Environmental Laws shall include without limitation the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 6901 et seq.) ("CERCLA"), the Hazardous Material Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.), the Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.), the National Historic Preservation Act (16 U.S.C. Section 470 et seq.), the Federal Insecticide Fungicide and Rodenticide Act (7 U.S.C. Section 136 et seq.) and the Surface Mining Control and Reclamation Act of 1977 (30 U.S.C. Section 1201 et seq.), and any analogous Laws and the rules and regulations promulgated thereunder all as from time to time in effect, and any reference to any statutory or regulatory provision shall be deemed to be a reference to any successor statutory or regulatory provision. "Escalation Date" means, for the purposes of determining the annual calendar day upon which certain rates under this Agreement shall increase by the Annual Escalator during the Term, 6
that specific calendar date that is determined after the Final Closing Date (as such term is defined in the Agreement to Sublease) as follows: the first day of the calendar month immediately following the Site Commencement Date of the numerical median Site for which a Site Designation Supplement was entered into hereunder. "Excluded Assets" means all right, title and interest of ALLTEL or its Affiliates in and to the following assets: (i) so long as ALLTEL's right to use the Reserved Space, Microwave Reserved Space or Additional ALLTEL Space shall not have terminated hereunder, the Reserved Space and, if applicable, the Microwave Reserved Space and Additional ALLTEL Space, (ii) the ALLTEL Equipment, Microwave Equipment and any Additional ALLTEL Equipment, including, without limitation, any equipment or transmission systems used for remote monitoring of the ALLTEL Equipment, Microwave Equipment and any Additional ALLTEL Equipment (other than the Lighting & Monitoring Equipment), (iii) any Governmental Authorizations relating exclusively to the ALLTEL Equipment, Microwave Equipment and any Additional ALLTEL Equipment, including, without limitation, FCC Authorizations, (iv) all Claims under insurance policies of ALLTEL or its Affiliates or Claims for refunds and/or credits for Taxes for periods ending on or prior to the Site Commencement Date for any Site, (v) Intellectual Property of ALLTEL and its Affiliates, including network design and configuration, (vi) any receivables under Existing Tenant Leases arising on or prior to the applicable Site Commencement Date, and (vii) any phone lines (including, without limitation, T1 lines) or other Non-Wireless Assets on a Site. "Existing Tenant Lease" means, with respect to any Site, any sublease, license, lease or other agreement for use of a Tower location and other space on such Site between ALLTEL and any other Person (other than any Affiliate of ALLTEL) that is in effect as of the applicable Site Commencement Date and assigned to or purported to be assigned to ATC effective as of the Site Commencement Date pursuant to the Agreement to Sublease. "Expansion Rights" means ALLTEL's rights pursuant to Section 8(a) of Exhibit 4. "FAA" means the United States Federal Aviation Administration or any successor Governmental Authority. "FCC" means the United States Federal Communications Commission or any successor Governmental Authority. "FCC Authorizations" means all licenses, franchises, permits, authorizations or approvals issued by the FCC or any other Governmental Authority to ALLTEL or any of its Affiliates to construct, own and operate wireless communications services, including without limitation all associated microwave facilities, and all construction permits that have been applied for to the FCC or issued by the FCC to ALLTEL or any of its Affiliates with respect to construction of wireless communications systems and related stations and facilities, other than FCC 854 Antenna Structure Registrations. "Governmental Authority(ies)" means any nation or government, any state, province or other political subdivision thereof, any entity exercising executive, legislative, judicial, 7
regulatory or administrative functions of or pertaining to government, or any entity statutorily empowered to exercise condemnation authority. "Governmental Authorizations" shall mean all approvals, concessions, consents, franchises, licenses, permits, plans, registrations and other authorizations of all Governmental Authorities, in connection with the ownership or operation of Sites (other than Ground Leases). "Ground Lease" means, as to a Leased Site, the ground lease, easement, right of way, or other right of use agreement or authorization, pursuant to which ALLTEL holds a leasehold interest, leasehold estate, or other real property possessory or right of use interest (other than fee simple title), as amended, extended or modified from time to time in accordance with Section 5(c). "Ground Lessor" means, as to a Leased Site, the "grantor" or "lessor" or "landlord" under the related Ground Lease. "Ground Rents" means, as to any Site, all rents, fees and other charges payable by an ALLTEL Company to the Ground Lessor under the Ground Lease for such Site, subject to Section 11(f). "Hazardous Materials" means and includes any substance, material, waste, constituent, compound, chemical, natural or man-made element or force (in whatever state of matter): (a) the presence of which requires investigation or remediation under any Environmental Law; (b) that is defined as a "hazardous waste" or "hazardous substance" or "hazardous material" under any Environmental Law; (c) that is toxic, explosive, corrosive, etiologic, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and is regulated by any applicable Governmental Authority or subject to any Environmental Law; (d) the presence of which on the real property owned or leased by such Person poses or threatens to pose a hazard to the health or safety of persons on or about any such real property; or (e) that contains gasoline, diesel fuel or other petroleum hydrocarbons, or any byproducts or fractions thereof, natural gas, polychlorinated biphenyls ("PCBs") and PCB-containing equipment, radon or other radioactive elements, ionizing radiation, electromagnetic field radiation and other nonionizing radiation, sonic forces, lead, asbestos or asbestos-containing materials or urea formaldehyde foam insulation. "Intellectual Property" means all of ALLTEL's and its Affiliates' rights in and to, (a) copyrights, patents, trademarks, trade names, service marks, URLs and applications for the foregoing, and software, firmware, trade secrets, proprietary technologies, know-how, inventions, processes and formulas (secret or otherwise, whether patentable or unpatentable and whether or not reduced to practice), (b) all applications, registrations, renewals in connection with the foregoing, and all improvements and goodwill associated therewith; and (c) all copies and tangible embodiments thereof (in whatever form or medium) provided, however, that notwithstanding the foregoing, Intellectual Property shall not include, and the Subleased Property shall include, the Required Co-Location Documents, the Tower File Data and the Required Oasis Information (as such terms are defined in the Agreement to Sublease), it being understood that 8
both ALLTEL and ATC shall have the right to have copies of and to use the Required Co-Location Documents, the Tower File Data and the Required Oasis Information "Interest Accrual Amount" shall mean, for each Capitalization Event that caused shares of ATC Class A Common Stock (or other securities or non-cash property into which such ATC Class A Common Stock was previously converted) to be converted into cash, an amount equal to interest at the rate of ten percent (10%) per annum, compounded annually from the date of such Capitalization Event through the Purchase Option Trigger Date based upon the cash realized upon such Capitalization Event for each Purchase Option Site. "Land" means, as to each Site, the land constituting such Site, together with all easements and other rights appurtenant thereto. "Laws" means (a) all administrative, judicial, legislative or other actions, codes consent decrees, constitutions, decrees, directives, enactments, laws, injunctions, judgments, orders, ordinances, promulgations, regulations, requirements, rules, rules of law, rules of settlement agreements, statutes or writs of any Governmental Authority, domestic or foreign, (b) the common law, or other legal precedent, or (c) all arbitrator's, mediator's or referee's awards, final, binding and nonappealable decisions, findings or recommendations. "Leased Site" means a Site as to which ALLTEL holds a leasehold interest, leasehold estate or other real property possessory or right of use interest (other than fee simple title) in the Land, which is part of such Site pursuant to a Ground Lease. "Liens" means, as to each Site, an interest or a claim by a Person other than ALLTEL or any of its Affiliates, whether such interest or claim is based on the common law, statute or contract, including, without limitation, liens, charges, Claims, leases, licenses, Mortgages, conditional agreements, title retention agreements, preference, priority or other security agreements or preferential arrangements of any kind, reservations, easements, exceptions, encroachments, covenants, conditions, restrictions, Tax liens and other title exceptions and encumbrances affecting all or any part of the Land, the Tower or Site Improvements thereof. "Lighting and Monitoring Control Devices" has the meaning given such term in Section 16(a)(vi)(B). "Lighting and Monitoring Equipment" has the meaning given such term in Section 16(a)(vi). "Loss and Expense" means any and all damages, losses, deficiencies, penalties, fines, judgments, liabilities, costs, Taxes and expenses, including reasonable attorneys' fees and amounts paid in settlements. "Microwave Equipment" means microwave antenna equipment owned and exclusively used by ALLTEL that is installed and operating as of the Effective Date at a Site. "Microwave Reserved Space" means, as to each Site, subject to the applicable terms and conditions of this Sublease the physical location on the Tower, vertical Tower space, Tower 9
capacity and windload effect on a Tower required by and used exclusively by ALLTEL for ALLTEL's Microwave Equipment, all as specifically described in the applicable Site Designation Supplement, as amended from time to time in accordance with this Sublease. So long as the reservation by ALLTEL of the Microwave Reserved Space shall be effective pursuant to the terms hereof, ALLTEL shall have (i) an appurtenant right of nonexclusive use of the portion of the Site commonly used by ALLTEL, ATC and Third Party Tenants during the term of this Sublease consisting of parking spaces, access roads, and walkways, and (ii) an appurtenant, nonexclusive right of use of any utility or access easements or rights of way associated with the Site, and (iii) any and all other appurtenant rights reasonably inferable to permit ALLTEL's full use and enjoyment of the Microwave Reserved Space, including all appurtenant rights described in Section 7, subject to Section 10(e). "Microwave Site(s)" has the meaning given such term in the Agreement to Sublease. "MLA" means that certain Master Tower Space License Agreement dated December 19, 2000 between an Affiliate of ATC and ALLTEL Inc. "Mortgage" means, as to any Site, any mortgage, deed to secure debt, deed of trust, trust deed or other conveyance of, or encumbrance against, the Land or Improvements on such Site as security for any debt, whether now existing or hereafter arising or created. "Mortgagee" means, as to any Site, the holder of any Mortgage, together with the heirs, legal representatives, successors, transferees and assigns of the holder. "NDA" means a nondisturbance, subordination and attornment agreement executed between a Mortgagee and ATC. "Non-Wireless Assets" shall mean the following improvements or assets that are associated with the non-wireless telecommunications operations of ALLTEL or its Affiliates: (i) underground telecommunication cables, conduits or other assets of ALLTEL and its Affiliates in such locations existing as of the Effective Date, and (ii) associated manholes, markers and surface testing terminals and any regeneration huts or other above-surface improvements or assets existing upon, over and under the Land as of the Effective Date. "Owned Site" means a Site with respect to which ALLTEL now or hereinafter owns fee simple title in the Land which is part of the Site. "Part 15" has the meaning given to such term in Section 15(f). "Party" means each of the ALLTEL Companies, on the one hand, and ATC and ATC Parent, on the other hand, as appropriate. "Parties" means ALLTEL Companies, ATC and ATC Parent together. "Permitted Liens" means, as to each Site: (i) Permitted Subleasehold Mortgages of ATC's Subleasehold Estate in such Site, Tower or Site Improvements thereof; (ii) Third Party Tenants' sublease interests in the certain space subleased to such Third Party Tenant at such Site 10
in accordance with this Sublease; (iii) Liens existing immediately prior to the Site Commencement Date for such Site; (iv) Liens arising by, through or under ALLTEL or its Affiliates on the Reserved Space, Microwave Reserved Space, Additional ALLTEL Space, ALLTEL Equipment, Microwave Equipment or Additional ALLTEL Equipment that are subject to and subordinate to this Sublease and the purchase option contained herein; (v) Liens for taxes not yet due and payable or which are being contested in good faith and in accordance with the provisions of Section 35; (vi) mechanics' liens for amounts which are not more than 30 calendar days over due; and (vii) any easement, right-of-way and similar encumbrances (but excluding any Liens securing indebtedness or that are monetary in nature) granted after the Site Commencement Date for any Site with the consent of the Parties hereto, which consent shall not be unreasonably withheld, conditioned or delayed, provided that such encumbrance does not have a material adverse effect on the value, use or enjoyment of such Site or the Reserved Space or Microwave Reserved Space; provided, however, that in no event shall Permitted Liens include any Liens arising by, through or under ALLTEL or its Affiliates affecting any of the Towers, Subleased Property or Sites (other than the Reserved Space, Microwave Reserved Space, Additional ALLTEL Space, ALLTEL Equipment, Microwave Equipment, or Additional ALLTEL Equipment) securing the debt of any of the ALLTEL Companies (or any of their Affiliates) or otherwise for the benefit of any creditor of any ALLTEL Company (or any of their Affiliates). "Permitted Subleasehold Mortgage" means a mortgage, deed of trust, trust deed, deed to secure debt or other like security instrument for the benefit of a Permitted Subleasehold Mortgagee. "Permitted Subleasehold Mortgagee" means (a) ATC's lenders (and their assigns), under the ATC Loan Agreement, or (b) a Mortgagee that has assets at the time of the execution of the Permitted Subleasehold Mortgage together with its Affiliates of not less than $2 billion, and is (i) a national bank, (ii) a commercial, national or state savings bank or trust company, (iii) an investment or merchant bank, (iv) a foreign bank authorized to make loans in the United States, (v) a charitable foundation, (vi) a real estate investment fund, (vii) an insurance company, (viii) a credit company, (ix) a pension or retirement fund or a fund which, in turn, is funded substantially by a pension or retirement fund, (x) a real estate investment trust, (xi) a venture capital firm, (xii) a mortgage banking house, (xiii) an international bank or investment company, or (xiv) any other institutional lender performing lending functions similar to any of the foregoing. "Permitted Use" means, collectively, ATC Permitted Use and ALLTEL Permitted Use. "Person" means an individual, partnership, joint venture, limited liability company, association, corporation, trust or any other legal entity. "Platform" means a platform or mount upon which any of the ALLTEL Equipment, Additional ALLTEL Equipment or Microwave Equipment is attached to the Tower . "Pre-Existing Condition" shall mean, with respect to any Site (or any portion thereof, including without limitation, any Land, ALLTEL Equipment, Microwave Equipment, Additional ALLTEL Equipment, Tower or other Site Improvement), any act, action, activity, circumstance, condition, event, fact, failure to act, incident, omission, or practice, or any set or combination of 11
any of the foregoing, that occurred or failed to occur on or prior to, or existed as of, the Site Commencement Date of such Site. "Pre-Existing Tenant" means, as to any Site, any Person (other than ALLTEL and its Affiliates), which is a "sublessee" or "lessee" or "licensee" under an Existing Tenant Lease affecting such Site as of the applicable Site Commencement Date. "Pre-Existing Use" has the meaning given such term in Section 15(a). "Proceeds" means all insurance moneys recovered or recoverable by ATC or ALLTEL as compensation for casualty damage to any Site (including the Tower and Site Improvements thereof). "Purchase Option Closing Date" means, with respect to any Purchase Option Site, the date upon which ATC acquires such Site pursuant to the exercise of the purchase option set forth in Section 31. "Purchase Option Consideration" means, with respect to all of the Purchase Option Sites subject to a particular Purchase Option Closing Date, the aggregate of the Purchase Option Purchase Price for all such included Purchase Option Sites. "Purchase Option Exercise Date" means, with respect to any Purchase Option Site, the date on which ATC delivers its written notice to ALLTEL evidencing its election to purchase the applicable Purchase Option Sites pursuant to Section 31(a). "Purchase Option Floor" means (i) with respect to each Purchase Option Site (other than Microwave Sites) Forty-Two Thousand Eight Hundred Forty-Four and No/100 Dollars ($42,844.00), or (ii) with respect to Purchase Option Sites that are Microwave Sites, such amount determined by the Parties pursuant to Section 4.6(e) of the Agreement to Sublease and set forth in the applicable Site Designation Supplement. "Purchase Option Price" means, with respect to each Purchase Option Site, either, in ALLTEL's sole discretion, (a) (i) with respect to each Purchase Option Site that is not a Microwave Site, seven hundred sixty-nine (769) shares of ATC Class A Common Stock (based on $27,500.00 divided by $35.75 per share), or (ii) with respect to Purchase Option Site that are Microwave Sites, such number of shares of ATC Class A Common Stock determined by the Parties pursuant to Section 4.6(e) of the Agreement to Sublease and set forth in the applicable Site Designation Supplement (each as thereafter adjusted for stock splits, dividends, and other events pursuant to Section 31(g)), or (b) the Purchase Option Floor. ALLTEL shall notify ATC of its election (which election must be the same option with respect to all of the Purchase Option Sites subject to a particular Purchase Option Closing Date) by delivering written notice of its election no later than 20 business days following its receipt of ATC's written notice of its election to exercise its purchase option pursuant to Section 31 during the Purchase Option Window Period. 12
"Purchase Option Site" means any Site that continues to be leased or subleased by ATC pursuant to this Sublease on the Purchase Option Exercise Date and the Purchase Option Closing Date. "Purchase Option Trigger Date" means, as to any Purchase Option Site, the fifteenth anniversary of the applicable Site Commencement Date for such Site. "Purchase Option Window Period" means, with respect to any Purchase Option Site, the period commencing on the day 150 days prior to the Purchase Option Trigger Date and ending on the day 90 days prior to the Purchase Option Trigger Date. "Release" shall have the meaning given to such term, or any term of similar import, in the Environmental Laws, including, without limitation, Section 101(14) of CERCLA. "Removable Equipment" means (i) any Microwave Equipment (x) that is owned or operated by ALLTEL and located within the Microwave Reserved Space on a Tower at a Site, and (y) that ceases to be in current activation and operation by ALLTEL (and is not removed at the sole election of ALLTEL prior to such time) at any date from or after the Effective Date and for which ALLTEL does not intend to resume use thereof within six (6) months thereafter. "Rent" has the meaning given such term in Section 11(c). "Reserved Space" means, as to each Site, subject to the applicable terms and conditions of this Sublease the portion of the Land, the Tower and Site Improvements, or other portion, areas or space at such Site reserved for ALLTEL's exclusive use and occupancy, as follows and all as specifically described in the applicable Site Designation Supplement, as amended from time to time in accordance with this Sublease: (a) the physical location, vertical Tower space, Tower capacity and windload effect on a Tower required by the ALLTEL Maximum Equipment and (b) the physical location at the Site where equipment shelters, buildings, cabinets, generator, fuel tanks and other ALLTEL Equipment are located. So long as the reservation by ALLTEL of the Reserved Space shall be effective pursuant to the terms hereof, ALLTEL shall have (i) an appurtenant right of nonexclusive use of the portion of the Site commonly used by ALLTEL, ATC and Third Party Tenants during the term of this Sublease consisting of parking spaces, access roads, and walkways, (ii) an appurtenant, nonexclusive right of use of any utility or access easements or rights of way associated with the Site, and (iii) any and all other appurtenant rights reasonably inferable to permit ALLTEL's full use and enjoyment of the Reserved Space, including all appurtenant rights described in Section 7, subject to Section 10(e). Reserved Space may be expanded, terminated, modified or reduced pursuant to an amendment of the Site Designation Supplement in accordance with this Sublease, including, without limitation, Sections 8, 9, 15 and 31 and Exhibit 4. "Restoration" or "Restore" means, as to a Site that has suffered casualty damage, such restoration, repairs, replacements, rebuilding, changes and alterations, including the cost of temporary repairs for the protection of such Site, or any portion thereof, pending completion thereof, required to restore the applicable Site (including the Tower and Site Improvements thereon) to a condition which is at least as good as the condition that existed immediately prior to 13
such damage, and such other changes or alterations as may be reasonably acceptable to ALLTEL and ATC or required by Law. "Return" means any report, return, statement, estimate, declaration, form or other information required to be supplied to a taxing authority in connection with any Taxes. "Right of First Refusal" means the right of ALLTEL, exercisable in its sole discretion, to sublease any Available Space from ATC pursuant to Section 8(a)(viii) of Exhibit 4. "Right of Substitution" means the right of ALLTEL, exercisable in its sole discretion, to substitute the Reserved Space of any Tower for an Available Space on such Tower by relocation of the ALLTEL Equipment on such Tower to such Available Space, all pursuant to Section 8 and Exhibit 4. "Securities Act" means the Securities Act of 1933, as amended, or any successor Law. "SEC" means the Securities and Exchange Commission or any successor Government Authority. "Site" means any site now or hereafter subject to this Sublease pursuant to a Site Designation Supplement with respect thereto. Reference to a Site shall include the Land, the Tower, and the Site Improvements, but shall not include Communications Equipment thereon. "Site Commencement Date" means the date on which the Term of this Sublease commences as to such Site, which shall be the applicable Closing Date (as such term is defined in the Agreement to Sublease) and set forth in the applicable Site Designation Supplement with respect to each Site. "Site Designation Supplement" means, as to any Site, a supplement to this Sublease completed and executed by the applicable ALLTEL Company or ATC or its Affiliate, in the form of Exhibit 2 attached hereto, pursuant to which such Site --------- is made subject to this Sublease. "Site Expiration Date" means, with respect to any Site, the earlier to occur of (a) with respect to Leased Sites only, the expiration of the relevant Ground Lease (as the same may be extended or renewed pursuant to the terms hereof), (b) the Purchase Option Closing Date, or if the purchase option under Section 31 is not exercised, the Purchase Option Trigger Date, or (c) any date on which this Sublease may terminate with respect to such Site in accordance with the provisions of this Sublease. "Site Improvements" means, as to each Site, all (i) commonly used buildings, shelters or huts, if any, (ii) grounding rings, (iii) fencing, (iv) signage, (v) connections for utility service, (vi) access roads, and (vii) such other equipment, property and materials as may be installed on or made to all or any component of a Site as of the Site Commencement Date, other than Communications Equipment. Site Improvements also include ATC Improvements made by ATC, from time to time, from and after the Site Commencement Date pursuant to Section 10. "Site Maintenance Charge" has the meaning given to such term in Section 11(b). 14
"Sublease" means this Lease and Sublease, together with any and all Exhibits, Schedules and attachments hereto, as the same may hereafter be modified and amended, including, without limitation, pursuant to Site Designation Supplements. "Sublease Year" means, with respect to any Site, each succeeding calendar year period during the term of this Sublease. "Subleased Property" means each Site that is now or hereafter leased or subleased by ATC pursuant to this Sublease, including the Land, Tower and Site Improvements comprising a portion thereof and any Lighting and Monitoring Equipment, less and except Excluded Assets and Third Party Tenant Property on such Site. The Subleased Property constitutes a leasehold interest in each Owned Site subject to all matters affecting ALLTEL's right, title and interest in and to each Owned Site (including without limitation, Third Party Tenant Leases but excluding all Excluded Assets), and, as to Leased Sites, the Subleased Property is a subleasehold interest in each Leased Site subject to all matters affecting title to ALLTEL's leasehold interest, leasehold estate or other possessory interest therein (including without limitation, Third Party Tenant Leases but excluding all Excluded Assets); provided, however, that nothing in this definition shall affect ALLTEL's obligations under this Agreement including, without limitation, with respect to Liens (other than Permitted Liens). With respect to any Site for which either Party has exercised its rights of termination pursuant to this Sublease, the Subleased Property shall not include any such Site after the effective date of such termination. "Subleasehold Estate" means: (i) the rights, title, interest, powers, privileges, benefits and options of ATC under this Sublease (whether as lessee of an Owned Site or as sublessee of a Leased Site); and (ii) all of the right, title and interest of ATC in and to the Sites under this Sublease (whether as lessee of an Owned Site or as sublessee of a Leased Site). "Subsequent Use" has the meaning given such term in Section 15(b). "Substantial Portion of Site" means, as to a Site, so much of such Site (including the Land, Tower and Site Improvements thereof, or any portion thereof) as, when subject to a Taking or damage as a result of a casualty, leaves the untaken or undamaged portion unsuitable for the continued feasible and economic operation of such Site for the Permitted Use. "Swap Agreements" means any contractual arrangements and agreements between any of the ALLTEL Companies and other providers of wireless telecommunications services, local public safety organizations, Governmental Authorities (including without limitation post offices and law enforcement organizations) and operators of remote monitoring systems for commercial purposes, whereby any of the ALLTEL Companies (or any of their Affiliates) receives reciprocal and favorable terms (such as a lease rate or a right to co-locate on a site owned or operated by such third party) for each Site upon which such third party co-locates. "Taking" means, as to any Site, any condemnation or exercise of the power of eminent domain by any or through Governmental Authority or Law vested with such power, or any taking in any other manner for public use, including a private purchase, in lieu of condemnation, by a public authority vested with the power of eminent domain. 15
"Tax Claim" has the meaning set forth in Section 35(g) hereof. "Tax" and "Taxes" means, as to each of the Parties hereto as to each Site, any and all of the following levied, assessed or imposed upon, against or with respect to any such Party, the Site (including the Reserved Space, Microwave Reserved Space, or Additional ALLTEL Space), any portion of the Site (including the Reserved Space, Microwave Reserved Space, or Additional ALLTEL Space), the use and occupancy of the Site (including the Reserved Space, Microwave Reserved Space, or Additional ALLTEL Space) or the existence and/or operation of this Sublease or any portion thereof, at any time during the Term as to such Site: (i) taxes including, without limitation, income (net, gross or other, including recapture of any Tax items such as investment Tax credits), alternative or add- on minimum Tax, gross income, gross receipts, gains, franchise, sales, use, leasing, lease, user, ad valorem, transfer, recording, franchise, profits, property (real or personal, tangible or intangible), fuel, license, withholding on amounts paid to or by such Person, payroll, employment, unemployment, social security, excise, severance, stamp, occupation, premium, environmental or windfall profit Tax, custom, duty or other Tax or other like assessment or charge of any kind whatsoever, together with any interest, levies, assessments, charges, penalties, additions to Tax or additional amount imposed by any Taxing Authority, (ii) any and all Governmental Authority or quasi-governmental fees (including, without limitation, license, filing, and registration fees); (iii) interest equalization and stamp taxes, impositions, charges, duties, levies, assessments, required contributions or withholdings of any kind or nature whatsoever, together with any and all penalties, fines, additions to tax or interest thereon. "Taxing Authority" shall mean any Governmental Authority responsible for the imposition, assessment or collection of any Tax. "Tax Return" or "Tax Returns" shall mean all returns, reports, summaries or information consolidated or otherwise (including without limitation information returns), required to be filed with any Governmental Authority with respect to Taxes. "Term" means: (i) as to this Sublease, the term set forth in Section 4(a); and (ii) as to each Site, the term during which this Sublease is applicable to such Site, subject to ALLTEL's Withdrawal Right. "Third Party Action" has the meaning given to such term in Section 19(d). "Third Party Action Notice" has the meaning given to such term in Section 19(d). "Third Party Tenant" means, as to any Site, any Person (other than ALLTEL and its Affiliates but including, if applicable, ATC or any Affiliate of ATC), which: (i) is a Pre-Existing Tenant; or (ii) subleases, licenses or otherwise acquires from ATC the right to use Available Space on such Site. "Third Party Tenant Leases" means, as to any Site, any agreement, lease, sublease, or license between ATC and any Third Party Tenant with respect to the right to use Available Space on such Site and any Existing Tenant Lease. 16
"Third Party Tenant Property" means, as to any Third Party Tenant, such Third Party Tenant's personal property and equipment at any Site, including, without limitation, equipment buildings, equipment shelters, antennas, lines, cages, grounding rings, fences and other constructions now or hereinafter located on the such Site and owned by such Third Party Tenant. "Tower" means a wireless transmission tower structure or structures now or hereinafter located on a Site. "Transfer Taxes" has the meaning set forth in Section 35(b). "Withdrawal Date" means the effective date of ALLTEL's election to terminate its use of the Reserved Space, Microwave Reserved Space, and/or Additional ALLTEL Space at a Site on the applicable tenth or subsequent fifth anniversary of the Site Commencement Date, as provided in Section 9. "Withdrawal Notice" has the meaning given such term in Section 9(a). "Withdrawal Right" means the right of ALLTEL to elect to terminate its use of the Reserved Space, Microwave Reserved Space and/or Additional ALLTEL Space with respect to a Site whereupon such Reserved Space, Microwave Reserved Space, and/or Additional ALLTEL Space shall become a portion of the Subleased Property pursuant to the definition thereof and in accordance with the terms and conditions set forth in Section 9. "Zoned Site" has the meaning given to such term in the Agreement to Sublease. Any other capitalized terms used in this Sublease shall have the respective meanings given to them elsewhere in this Sublease. SECTION 2. Sublease Documents. (a) This Sublease shall consist of the following documents, as amended from time to time as provided herein: (i) this Lease and Sublease; (ii) the following Exhibits, which are incorporated herein by this reference: (A) Exhibit 1--Form of Joinder to Agreement; (B) Exhibit 2--Form of Site Designation Supplement and Tower Lease Agreement; (C) Exhibit 3--Form of Right of First Refusal Notice; (D) Exhibit 4 - ALLTEL's Expansion Rights; and (E) Exhibit 5 - List of ALLTEL Entities; 17
(iii) Schedules to the Exhibits, which are incorporated herein by reference; (iv) All executed Site Designation Supplements and Exhibits attached thereto; and (v) such additional documents as are incorporated by reference. (b) If any of the foregoing are inconsistent, this Sublease shall prevail over the Exhibits, the Schedules and additional incorporated documents. SECTION 3. Subleased Property. (a) Subject to the terms and conditions of this Sublease, ALLTEL hereby lets, leases and demises unto ATC, and ATC hereby leases, takes and accepts from ALLTEL, the Subleased Property of the Site owned or leased by ALLTEL or its Affiliates, in its "as is" condition, without any representation, warranty or covenant of or from ALLTEL whatsoever as to the condition thereof or the suitability thereof for any particular use, except as may be expressly set forth in the Agreement to Sublease or this Sublease. ATC hereby acknowledges that neither ALLTEL or its Affiliates nor any agent of ALLTEL has made any representation or warranty, express or implied, with respect to any of the Subleased Property, or any portion thereof, except as specifically set forth in this Sublease and the Agreement to Sublease. ATC further acknowledges that it has had or by its execution and delivery of a Site Designation Supplement will have had sufficient opportunity to inspect and approve of the condition of the Subleased Property of the Sites. (b) Each Site shall be made subject to this Sublease by the execution and delivery of a Site Designation Supplement with respect thereto between ALLTEL and ATC. SECTION 4. Term; Surrender; ATC Improvements. (a) The term of this Sublease, as to each Site, shall commence on the Site Commencement Date set forth in the Site Designation Supplement with respect thereto and shall expire on the Site Expiration Date therefor or any earlier date on which this Sublease terminates with respect to such Site in accordance with the provisions of this Sublease. (b) Subject to Sections 8, 14, 18, 27 and 31 and Exhibit 4, no surrender by ATC to ALLTEL of the Subleased Property of any Site, prior to the expiration of the Term as to such Site, shall be valid or effective unless agreed to and accepted in writing by ALLTEL, and no act by ALLTEL, other than such a written acceptance, shall constitute an acceptance of any such surrender. (c) Upon the Site Expiration Date for any Site: (i) Subject to Sections 9 and 31, all ATC Improvements to such Site that cannot be removed without material damage to the Site (unless ATC agrees in 18
writing to pay the cost of restoration) or without constituting a default under any Ground Lease or Third Party Tenant Lease, shall, at ALLTEL's election in the exercise of its sole discretion, be deemed a part of such Site and the same shall not be removed. (ii) Subject to Sections 4(c)(i) and (v), 9 and 31, (A) ATC shall peaceably deliver up and surrender the Subleased Property to ALLTEL and stop and cease the use of the Site on or before the Site Expiration Date, and (B) so long as ATC is not in default hereunder, or under any Ground Lease or Third Party Tenant Lease, ATC may within a reasonable period of time, but in no event less than 30 days after the Site Expiration Date, at ATC's sole cost and expense and upon written instructions from ALLTEL, remove all of the ATC Improvements from such Site, repair any damage (including any impairment to Hazardous Materials (including those introduced by ATC) or other materials caused by such removal) caused by such removal, and restore each Site substantially to the condition it was in on the applicable Site Commencement Date, reasonable wear and tear and damage by casualty or condemnation excepted. (iii) Any removal of ATC Improvements performed by ATC or its Affiliates pursuant to Section 4(c)(ii) shall be performed in accordance with Section 12 and without any interference, damage or destruction to any other equipment, structures or operations of the Site, and without injury or damage to the Site, the surrounding real property or improvements located thereon. If ATC fails to make repairs within 10 days after notice of occurrence of any such damage, ALLTEL may perform the necessary repairs upon five days' written notice to ATC at ATC's expense. ATC shall pay ALLTEL all reasonable out-of-pockets amounts so invoiced within 10 days after receipt of the invoice. (iv) In the event any ATC Improvement is not removed by ATC in accordance with the time periods of this Section 4(c), such ATC Improvements shall be deemed abandoned, and ALLTEL may, at its option, (A) remove and store such property at the expense (including the costs of any repairs required due to such removal) of ATC which must be promptly reimbursed to ALLTEL upon receipt of an invoice(s), (B) sell all or any part of such property at public or private sale, without notice to ATC, and retain the proceeds of such sale (to the extent they do not exceed the direct out-of-pocket costs reasonably incurred by ALLTEL), or (C) declare that title to such property shall be deemed to have passed to ALLTEL and ATC shall execute any documents reasonably requested by such ALLTEL Company to evidence such transfer of interest. (v) Notwithstanding anything to the contrary, in the event ATC does not exercise its purchase option in accordance with Section 31, upon the written request of either Party, ATC agrees to grant, convey, transfer, assign and deliver, as applicable, to ALLTEL, and ALLTEL agrees to take, accept and assume from ATC, (A) an assignment and assumption, without warranty or representations, of any and all of ATC's rights, title and interests in and to any then-existing Third 19
Party Tenant Leases and any maintenance or other agreements relating exclusively to the Sites (but not relating to the ALLTEL Equipment, Microwave Equipment or Additional ALLTEL Equipment), subject to Section 9(d), (B) a bill of sale and/or assignment and assumption, as applicable, without warranty or representation, with respect to all ATC Site Improvements and any other property and assets, tangible and intangible, that remain on such Site after the Site Expiration Date (subject to ATC's rights of removal under this Section 4), and (C) a release of any interest of ATC or its Affiliates in the Subleased Property or the Site, the Tower or any Site Improvements (including releases in recordable form with respect to any instruments of record). Each transfer and/or assignment of interest shall be of a good, marketable and insurable interest and free and clear of all Liens except for Permitted Liens that were not suffered or incurred by ATC or its Affiliates. ATC shall use commercially reasonable efforts to assist in the transfer and assignment of any Governmental Authorizations required in order to effect any release, transfer or assignment contemplated under this Section 4(c)(v). ATC shall cooperate with ALLTEL and do all such additional and further acts, and shall execute and deliver all such additional and further instruments, certificates and documents, as ALLTEL may reasonably request to fully vest in and assure to ALLTEL full right, title and interest in and to the Site, the Tower and Site Improvements pursuant to this Section 4(c)(v). (d) As to any Site, upon termination of ALLTEL's right to utilize any Reserved Space, Microwave Reserved Space or Additional ALLTEL Space hereunder (including, without limitation, pursuant to Sections 8, 9 or 27 or Exhibit 4) or in the event that ALLTEL exercises its Withdrawal Right, ALLTEL shall, at its cost and expense, within a reasonable period of time, but in no event less than 30 days, stop and cease, and cause its Affiliates on such Site to stop and cease, the operation of the ALLTEL Equipment, Microwave Equipment and/or Additional ALLTEL Equipment, as applicable, at such Site and shall remove all ALLTEL Equipment, Microwave Equipment, and/or Additional ALLTEL Equipment, as applicable, from such Site and repair any damage caused by such removal. In the event that ALLTEL fails to perform such removal within the periods specified above, ALLTEL shall continue to pay the Site Maintenance Charge or applicable Additional ALLTEL Maintenance Charge for the affected Additional ALLTEL Space or Microwave Reserved Space and Reserved Space unless ALLTEL has removed its property and ATC may, at its option, remove and store such property at the expense of ALLTEL (including the costs of any repairs required due to such removal) which must be promptly reimbursed to ATC upon receipt of an invoice(s). Notwithstanding anything to the contrary unless otherwise expressly provided in this Sublease, in the event that ALLTEL removes, ceases to operate (on a permanent and not a temporary basis) or abandons any of the ALLTEL Equipment, Additional ALLTEL Equipment, Microwave Equipment, Reserved Space, Additional ALLTEL Space or Microwave Reserved Space, there shall be no reduction or abatement of the Site Maintenance Charge or Additional ALLTEL Maintenance Charge. ALLTEL shall use commercially reasonable efforts to assist in the transfer and assignment of any Governmental Authorizations associated with the Reserved Space, Microwave Reserved Space and Additional ALLTEL Space required 20
in order to effect any release, transfer or assignment contemplated under this Section 4(d). ALLTEL shall cooperate with ATC and do all such additional and further acts, and shall execute and deliver all such additional and further instruments, certificates and documents, as ATC may reasonably request to confirm the full vesting of the Reserved Space, Additional ALLTEL Space and/or Microwave Reserved Space in ATC as a portion of the Subleased Property and assure to ATC such full right, title and interest in and to the Reserved Space, Additional ALLTEL Space and/or Microwave Reserved Space pursuant to this Section 4(d). (e) ALLTEL may exercise its Withdrawal Right at any time prior to the applicable Withdrawal Date in the event that any permit or license necessary for ALLTEL's use of the Reserved Space, Microwave Reserved Space or Additional ALLTEL Space as contemplated in the applicable Site Designation Supplement is revoked, terminated, or cancelled due to no act or omission on the part of ALLTEL or any of its Affiliates or agents. (f) ATC reserves the right to terminate this Sublease with respect to a particular Site without any further liability or obligation by either Party to the other if any Law of any Governmental Authority hereinafter enacted or ordered prohibits ALLTEL's or ATC's Permitted Use of such Site. ALLTEL reserves the right to exercise its Withdrawal Right with respect to any Site at any time prior to the applicable Withdrawal Date in the event that any Law of any Governmental Authority hereinafter enacted or ordered prohibits ALLTEL's Permitted Use of such Site due to no act or omission on the part of ALLTEL or any of its Affiliates or agents, subject to the requirements of Section 4(d). (g) Subject to ATC's rights and obligations under and the requirements of Sections 7(c), 10, 12, 15 and 16, ATC, at its own cost and expense, may from time to time make, any ATC Improvements to the Site as ATC deems reasonably necessary or desirable for the conduct of its business pursuant to this Sublease. ATC covenants and agrees that any such ATC Improvements shall be made in a workmanlike manner in compliance with standard industry practices and in all material respects with all applicable Laws. SECTION 5. Ground Lease. (a) ATC hereby acknowledges that, as to the Subleased Property of each Leased Site, this Sublease is a sublease by ALLTEL under the provisions of, and is subject and subordinate to all of the terms and conditions of, the applicable Ground Lease of such Leased Site. As to any Leased Site, ALLTEL shall not be deemed to have assumed any duty or obligation of the Ground Lessor under the applicable Ground Lease and shall not be liable or responsible in any manner whatsoever for any failure of such Ground Lessor to perform any such duty or obligation. ATC agrees that it will promptly pay or cause to be paid the Ground Rent directly to the Ground Lessor (unless otherwise agreed by ALLTEL and ATC on a Site-by-Site basis) under each of the Ground Leases of the Leased Sites during the Term of this Sublease when such payments become due and payable and in the event ATC fails to pay Ground Rent under any Ground Lease on a 21
timely basis, ATC shall be responsible for any late charges, fees or interest payable to the Ground Lessor as a result thereof. Except as specifically provided in Section 5(c), ATC shall abide by, comply in all respects with, and fully and completely perform all other terms, covenants, conditions, and provisions of each Ground Lease (including, without limitation, terms, covenants, conditions, and provisions relating to maintenance, insurance and alterations) as if ATC were the "ground lessee" thereunder and, to the extent evidence of such performance must be provided to the Ground Lessor of the applicable Ground Lease, ATC shall promptly provide such evidence to ALLTEL upon request. Neither ALLTEL nor ATC shall engage in or permit any conduct that would: (i) constitute a breach of or default under any Ground Lease; or (ii) result in the Ground Lessor being entitled to terminate the applicable Ground Lease or to terminate ALLTEL's right as ground lessee under such Ground Lease or pursuant which the Ground Lessor may be entitled to terminate the Ground Lease for a default or breach under the applicable Ground Lease. Except as otherwise specifically provided in Section 5(c) or elsewhere in this Sublease, ATC expressly acknowledges that, as between ALLTEL and ATC, ATC has assumed and agrees to perform and discharge all obligations and liabilities of ALLTEL as ground lessee under any Ground Lease which arise on or after the Site Commencement Date with respect to any Leased Site. (b) During the Term of this Sublease, and at ATC's sole cost and expense, (1) ATC agrees to provide reasonable advance notice (and in no event less than 15 business days prior to the applicable expiration date) to ALLTEL of the expiration date by which ALLTEL must exercise any and all applicable renewal options existing as of the applicable Site Commencement Date and as may be further extended or renewed pursuant to the terms of this Sublease, for any Leased Site under the Ground Leases of such Leased Sites and (2) ALLTEL agrees to exercise such renewal options prior to the expiration thereof and in accordance with the provisions of the applicable Ground Lease (a copy of such notice, if any, shall be simultaneously sent by ALLTEL to ATC). ATC shall not be entitled to act as agent for, or otherwise on behalf of, ALLTEL in any way whatsoever in connection with any Ground Lease or otherwise, except as otherwise provided in this Section 5 and Sections 26 and 27. (c) With respect to any negotiations with a Ground Lessor for the extension or terms of renewal of a Ground Lease, ATC shall, at ATC's sole cost and expense, be responsible for and negotiate and obtain any extension or renewal of the Ground Leases on behalf of and for the benefit of ALLTEL, and ALLTEL shall make commercially reasonable efforts to assist ATC in obtaining such extension or renewal at ATC's sole cost and expense, provided that (i) the terms and conditions of such extension or renewal as negotiated by ATC do not impose any additional liability or obligation on ALLTEL under the terms of this Sublease for which ATC is not responsible under the terms of this Sublease (or subsequently agrees to be responsible for by providing a signed acknowledgement notice to ALLTEL of its responsibility thereto) during the Term as to each Site, (ii) in no event may ATC agree to provide consideration to the Ground Lessor in the form of any telephone service, telephone equipment, or any wireless service product or offering, and (iii) in no event shall an amendment impose liabilities and obligations on ALLTEL under a Ground Lease (other than those liabilities and 22
obligations under the Ground Lease in effect as of the Site Commencement Date) during the period following the Site Expiration Date that are materially greater (in kind or in magnitude) than those liabilities and obligations that, in the aggregate, applied to such Ground Lease in the five year period immediately preceding the Site Expiration Date, including (A) any rental payments or other payments to be made to the Ground Lessor in the year immediately following the Site Expiration Date for a Site that exceeds five percent (5%) of the average annual payments due to the Ground Lessor in the immediately preceding five-year period and payments during any annual period thereafter that exceeds five (5%) over payments in the immediately preceding year (it being understood that each such annual increase shall be compounded for increases that occur in intervals that exceed one year), unless ATC agrees in writing to be responsible for such excess, during any period beyond the Site Expiration Date or any termination or expiration of this Sublease with respect to such Site, (B) a term of a Ground Lease (not including renewal options exercisable at the sole option of ALLTEL) which extends more than ten years following the Site Expiration Date. With respect to any amendment, renewal, extension or other change to the Ground Lease desired by ATC during the Term pursuant to this Section 5, which is consistent with the terms of this Section 5(c), ALLTEL shall execute any such amendment, renewal, extension, or change within 10 days of its receipt thereof from ATC without condition and shall bear all cost and expense associated with its review. ATC shall commence its negotiations with the applicable Ground Lessor sufficiently in advance of any expiration of each Ground Lease, subject to the following: (i) Notwithstanding anything to the contrary contained herein, if at any time during the six-month period immediately prior to any expiration of a Ground Lease, ATC has not successfully effected the extension or renewal of such Ground Lease, ALLTEL shall have the right to take responsibility for conducting and completing negotiations for such extension or renewal on its own behalf. Upon ALLTEL's exercise of such right by written notice thereof, ATC shall cease participating in any negotiations with the applicable Ground Lessor as to such Site and ATC shall reimburse ALLTEL for its reasonable out-of-pocket expenses relating to such negotiation unless ATC exercises its termination right provided in the following sentence within the applicable time period. ALLTEL shall keep ATC reasonably apprised of the foregoing negotiations for such extension or renewal and if ALLTEL completes such negotiations, the Site Expiration Date shall be extended to the earlier of the Purchase Option Trigger Date with respect to such Site or the scheduled expiration date of such amended Ground Lease; provided, however, if ALLTEL completes the foregoing negotiations for such extension, ATC shall have the option, exercisable within 30 days of receipt of notice of the terms of the extension or renewal, of (A) retaining its sublease interest in such Site on the terms set forth in this Sublease or (B) terminating its subleasehold interests in such Site as of the date the Ground Lease would have expired had ALLTEL not extended such Ground Lease. (ii) Except as provided in 5(c)(i), in the event ATC determines that it is unable or deems it undesirable to effect the proposed terms of any amendment, 23
renewal, extension or change of any Ground Lease directly with the Ground Lessor, ATC may request, in writing, that ALLTEL attempt to effect such amendment, renewal, extension or change (at ATC's sole cost and expense); provided, however, that ALLTEL shall keep ATC regularly and promptly apprised of such negotiations and shall not make any agreements with the Ground Lessor without the prior written approval of ATC. (iii) If ALLTEL or ATC is not able, after using commercially reasonable efforts, to effect such amendment, extension or renewal or change with respect to any Ground Lease in accordance with this Section 5(c), then the Parties shall permit such Ground Lease to expire on the applicable expiration date and this Sublease shall have no further force and effect as to the Subleased Property of the Leased Site to which such Ground Lease applies. ATC and ATC Parent or any of their Affiliates may seek to obtain, obtain or hold, any underlying fee interest that is superior or prior to the Ground Lessor's or ALLTEL's interests in such Ground Lease so long as ATC transfers, at ATC's sole cost and expense, such fee simple interest to ALLTEL for $1, in which event there shall be no Ground Rents for that Site as of the date fee simple title vests in ALLTEL. (iv) With the prior written approval of ATC, ALLTEL or its Affiliate shall have the right to acquire the fee simple interest in the Site from the Ground Lessor whereupon such Site shall be deemed an Owned Site, in which event ATC shall have a leasehold interest in such Owned Site; provided, that this Section 5(c)(iv) shall not apply to any Site for which ATC or its Affiliates has exercised its termination rights under this Sublease. (v) Except as provided in this Section 5(c), or as ATC may otherwise agree or direct, during the Term, ALLTEL shall not take any action to amend, modify, renew, replace, extend or supplement any Ground Lease (other than to exercise renewals as expressly provided herein which ALLTEL covenants to do as provided above) nor to communicate directly with any Ground Lessor, except (A) to the extent reasonably necessary for ALLTEL to perform its obligations to ATC under this Sublease, (B) to respond to unsolicited inquiries received from a Ground Lessor under a Ground Lease, and (C) to the extent such communications do not relate directly to the Ground Lease so long as such communications do not relate to or result in the purchase or lease of space or other use rights of any adjacent property for any wireless communication uses by ALLTEL or other Persons. Subject to the rights of ALLTEL under this Section 5(c), with respect to any renewal, extension, amendments, changes or replacement of the Ground Lease desired by ATC during the Term and subject to the terms of this Section 5(c) and Sections 26 and 27, ATC reserves the exclusive right to negotiate any such renewals, extensions, amendments, modifications, changes, additions or replacements to the then-existing Ground Lease directly with the Ground Lessor. (vi) With respect to each and every Ground Lease, at all times during the term of each Ground Lease, ATC shall take all reasonably necessary actions to 24
provide ALLTEL with a then-current copy of any fully executed amendments to the Ground Lease, and, upon ALLTEL's written request, copies of other information necessary for ALLTEL to be able to perform the obligations of the lessee under the Ground Lease, as permitted pursuant to Section 26 herein, including but not limited to any obligations of lessee to pay Taxes, utilities, maintenance, insurance and other expenses under the Ground Lease. (d) ALLTEL shall perform any obligations under and comply with the terms of each of the Ground Leases, but only if such obligations are expressly reserved to ALLTEL for its performance under the terms of this Sublease. Upon receipt by ALLTEL of any notice of default or notice of an act or omission which could with the passing of time and/or the giving of notice constitute an event of default under a Ground Lease or noncompliance with a term of a Ground Lease (the "Default Notice"), ALLTEL shall, within 10 business days after receipt of the Default Notice, provide ATC with a copy of the Default Notice. If any such default or noncompliance is solely in respect of an obligation expressly reserved for performance by ALLTEL hereunder and is caused by or attributable to (including without limitation any inaction of) any of the ALLTEL Companies or any of their Affiliates, then ALLTEL shall, at the time it furnishes the Default Notice, provide ATC with a letter with a reasonably detailed explanation of the actions ALLTEL intends to take to effect a cure, or that there is no default or noncompliance and the basis, if any, for ALLTEL's good faith position to that effect. Upon receipt by ATC of any Default Notice that is not caused or attributable to ALLTEL or its Affiliates, ATC shall, or shall cause the applicable Third Party Tenant to, cure or otherwise remedy such default or noncompliance unless within 10 days of receipt of the Default Notice, ATC provides ALLTEL with a letter with a reasonably detailed explanation of the basis, if any, for ATC's good faith position to the effect there is no default or noncompliance. Notwithstanding anything in this Sublease to the contrary, unless an obligation under a Ground Lease is expressly reserved under this Sublease for performance by ALLTEL, any default under a Ground Lease shall constitute a default by ATC under this Sublease after the expiration of any applicable cure period contained in the Ground Lease, unless the event giving rise to such default is due to an act or omission (in the event ALLTEL has an obligation with respect to any such omission) by ALLTEL, its Affiliates, agents, vendors, employees or contractors (other than ATC or its Affiliates). (e) ALLTEL agrees to promptly provide ATC, throughout the Term, with copies of all notices, correspondence, orders, documents, reports, studies and other information used or useful in the operation of the Sites that comes into ALLTEL or its Affiliates' possession, except with respect to information related solely to the Reserved Space, Microwave Reserved Space, Microwave Equipment, Additional ALLTEL Equipment or ALLTEL Equipment, privileged documents or where disclosure is prohibited by Law or Contractual Obligation existing as of the Effective Date. ATC shall have the right, throughout the Term, during normal business hours and upon reasonable prior notice, to examine (and to make copies at its sole cost and expense of) ALLTEL's files and records relating to the Sites, except with respect to information related solely to the Reserved Space, Microwave Reserved Space, Microwave Equipment, Additional ALLTEL Equipment or ALLTEL Equipment, privileged documents or where disclosure is 25
prohibited by Law or Contractual Obligation existing as of the Effective Date. ALLTEL agrees that it shall send copies of all Tax bills received by ALLTEL associated with the Site to ATC. SECTION 6. Third Party Tenant Leases and Swap and Other Agreements. (a) Without limiting the generality of Sections 3 and 5, ATC and ALLTEL expressly acknowledge that, as to each Site, this Sublease is subject to all Third Party Tenant Leases affecting such Site, including, without limitation, those with Pre-Existing Tenants executed prior to the Effective Date pursuant to any Swap Agreement with respect to a specific Site. Pursuant to the Agreement to Sublease, ALLTEL has transferred, assigned, and conveyed unto ATC in respect of each Site, all of its rights, title and interest, and ATC has agreed to assume, perform and discharge in respect of each Site all of ALLTEL's duties, obligations, liabilities, and responsibilities as "landlord," "lessor," "sublandlord" or "sublessor" in, to or under any Third Party Tenant Leases affecting such Sites effective as of the applicable Site Commencement Date. (b) Subject to the procedures set forth in Section 19(d), ATC shall indemnify, defend and hold each ALLTEL Indemnitee harmless from and against any and all Loss and Expense paid, suffered, incurred or sustained by any ALLTEL Indemnitee by reason of, arising out of, or in connection with any failure of the duties, obligations, liabilities and responsibilities as "landlord," "lessor," "sublandlord" or "sublessor" under any of the Third Party Tenant Leases affecting each Site and arising from and after the Site Commencement Date for such Site, except to the extent caused by any act of ALLTEL or an ALLTEL Affiliate or arising after a reassignment pursuant to the provisions of Section 6(c). (c) Unless ATC exercises the purchase option with respect to a Site under Section 31, in the event of any termination of ATC's rights under this Sublease with respect to any Site for any reason, ALLTEL agrees that it shall accept any and all assignments of all then-existing Third Party Leases effective as of the applicable termination date of ATC's right to occupy the affected Site subject to the following conditions and limitations: (i) In no event shall ALLTEL be obligated to accept or assume any Third Party Lease (1) that imposes liabilities and obligations on the sublessor during the period following the Site Expiration Date that are materially greater (in kind or in magnitude) than those liabilities and obligations that applied to such Third Party Lease in the five year period immediately preceding the Site Expiration Date, (2) that provides for rights and benefits to the sublessor during the period following the Site Expiration Date that are materially less (in kind or in magnitude) than those rights and benefits that applied to such Third Party Tenant Lease in the five year period immediately preceding the Site Expiration Date, and (3) under which ATC or any of its Affiliates is in default. 26
(ii) ALLTEL's obligation to accept or assume any Third Party Lease will be subject to its receipt of (1) a complete copy of each Third Party Lease, including any amendments thereto, (2) any contact, payment or other information reasonably requested by ALLTEL so that it will be able to perform the obligations of the lessor or sublessor thereunder, (3) all amounts of pre-paid rent for periods after the Site Expiration Date, and (4) prorated amounts with respect to any deposits, utilities, and similar items. (iii) The conditions and limitations set forth in Section 6(c)(i) shall not apply to any Third Party Tenant Lease to which ALLTEL or its Affiliate is the Third Party Tenant or any Pre-Existing Tenant Lease for which ATC has not executed any amendment introducing terms and conditions covered by Section 6(c)(i). (d) Notwithstanding anything to the contrary, ALLTEL agrees that (i) ATC may terminate (or cause ALLTEL to terminate) any agreement relating to the maintenance, repair, management, or operation of any Site or any other agreement affecting a Site (unless such other agreement relates only to the ALLTEL Equipment, Microwave Equipment or Additional ALLTEL Equipment), at ATC's sole cost and expense, upon the written request by ATC to terminate such agreement(s), and (ii) in ATC's sole discretion, ATC shall be entitled to perform any such associated services for itself or to enter into an agreement with any third party relating to any such services, at ATC's sole cost and expense. In no event shall this Section 6(d) be applicable to any agreement (A) related solely to the Reserved Space, Microwave Reserved Space, Additional ALLTEL Space, Microwave Equipment, ALLTEL Equipment or Additional ALLTEL Equipment, (B) that would result in any additional costs, expenses or liabilities to ALLTEL that are not ATC's responsibility hereunder or that ATC agrees in writing to assume. Section 7. Reserved Space. (a) ATC expressly acknowledges that, as to any Site, the Subleased Property of such Site does not include, and that ALLTEL has reserved and excepted from this Sublease, the Reserved Space and Microwave Reserved Space of such Site for ALLTEL's and its Affiliates' exclusive possession and use so long as ALLTEL's right to use the Reserved Space and Microwave Reserved Space has not been terminated as provided for in this Sublease. As an appurtenance to, and a part of, the Reserved Space and Microwave Reserved Space of each Site, so long as ALLTEL's right to use the Reserved Space and Microwave Reserved Space has not been terminated, ALLTEL (for the benefit of ALLTEL or any Affiliate) also reserves a nonexclusive right for ingress to and egress from the entire Site (including any and all easements but excluding any space leased or subleased exclusively to any Third Party Tenants in accordance with this Sublease), at such times (on a 24-hour, seven-day-per-week basis unless otherwise limited by the Ground Lease or other restrictions of record that have priority over this Sublease), to such extent, and in such means and manners (on foot or by motor vehicle, including trucks and other heavy equipment), at ALLTEL's sole cost and expense, as is possible with respect to any Site and permitted under the Ground Lease with respect to any Leased Site in 27
connection with its full use and enjoyment of the Reserved Space and Microwave Reserved Space, including, without limitation, the construction, installation, use, operation, maintenance, repair and replacement of ALLTEL Equipment and Microwave Equipment thereon in accordance with the terms and conditions of this Sublease; and the right to use any portion of the Subleased Property of a Site, upon the prior written approval of ATC (which shall not be unreasonably withheld, conditioned or delayed) for purposes of temporary location and storage of any ALLTEL Equipment or Microwave Equipment in connection with performing any permitted repairs or replacements; provided, however, that such storage shall not exceed one month and shall be subject to and not have an adverse effect on ATC's Permitted Use, permitted use by Third Party Tenants or interfere in any manner with ATC's efforts to market and/or sublease any or all Available Space (including such portion of the Subleased Property) to any third party. (b) Notwithstanding anything to the contrary contained herein, the Parties acknowledge and agree that the Reserved Space and Microwave Reserved Space of each Site will include, without limitation, all portions of such Site utilized or occupied by ALLTEL or its Affiliate as of the Effective Date for the use, enjoyment, operation or maintenance of the ALLTEL Equipment and Microwave Equipment as specifically set forth in the applicable Site Designation Supplement. (c) Without limiting ATC's rights or obligations under this Sublease, ATC acknowledges and agrees that ATC will not engage, nor will it permit any Third Party Tenant to engage, in any conduct that might reasonably be expected to significantly interfere (excluding electrical interference which shall be governed by Section 15) with ALLTEL's peaceful and quiet enjoyment of the Reserved Space, Microwave Reserved Space and Additional ALLTEL Space. (d) Notwithstanding anything to the contrary (including, without limitation, the definitions of "Reserved Space," or "Additional ALLTEL Space"), in the event that ALLTEL now or hereafter operates any antennas on any Tower that exceed nine (9) feet in vertical space on the Tower, ATC shall reserve the right to install any other equipment or Third Party Tenant Property on a Platform located within the vertical space occupied by such antennas or next to ALLTEL's mounts, which space shall be deemed Available Space hereunder and part of the Subleased Property so long as (X) the Tower can structurally accommodate such installation, (Y) ATC (or the associated Third Party Tenant) must perform and deliver to ALLTEL an RF interference study (at no cost or expense to ALLTEL) that reasonably demonstrates that ALLTEL shall not suffer any measurable electronic interference as a result of such additional installation, and (Z) ATC shall provide ALLTEL with no less than 10 business days' prior written notice of the date and time such installation is to be performed and ALLTEL shall have the right to have a representative present at such installation. If all such antennas located on one Platform are removed from the Tower (other than replacements with ALLTEL Equipment, or Additional ALLTEL Equipment of the same or substantially similar vertical height, dimension and locations) by ALLTEL, the vertical space on the Tower associated with the Reserved Space or Additional ALLTEL Space shall automatically revert to no greater than six (6) vertical feet on the Tower for such Platform. 28
(e) In the event that ALLTEL exercise any of its Expansion Rights under Section 8(a) of Exhibit 4, any Available Space occupied by ALLTEL pursuant to such Expansion Rights shall automatically revert to ALLTEL and shall no longer be included in the Subleased Property or Subleasehold Estate of ATC upon compliance by the parties with the procedures set forth in Section 8(b) of Exhibit 4 (including, without limitation, the execution of an amendment to the Site Designation Supplement), subject to Section 9(d). (f) Subject to the provisions of this Section 7(d), ATC and Third Party Tenants shall have the right to install equipment or property (including, without limitation, shelters, cabinets, generators, fuel tanks and Towers) above Non-Wireless Assets that are not used in connection with or in servicing any of the communications needs of the Site on behalf of ALLTEL, ATC, Third Party Tenants or any of their Affiliates, if any. Notwithstanding the foregoing, ATC agrees to use reasonable and good faith efforts to avoid the installation of any equipment or property above such Non-Wireless Assets that are not used in connection with or in servicing any of the communications needs of the Site on behalf of ALLTEL, ATC, Third Party Tenants or any of their Affiliates in a manner that would adversely affect ALLTEL's use of such Non-Wireless Assets, but only if such Non-Wireless Assets are marked by utility installation markers. Section 8. ALLTEL's Expansion Rights. ALLTEL shall be entitled to the Expansion Rights described in and subject to Exhibit 4 attached hereto (any reference in this Sublease to any provision of Section 8 shall be deemed to include a reference to the provisions of Exhibit 4 without regard to whether a specific reference to Exhibit 4 is made). Section 9. Withdrawal. (a) Notwithstanding anything to the contrary contained herein, ALLTEL will have the Withdrawal Right exercisable in respect of the Reserved Space, Microwave Reserved Space and/or any Additional ALLTEL Space at any Site on the tenth anniversary of the applicable Site Commencement Date. To exercise any such Withdrawal Right, ALLTEL shall give ATC written notice of such exercise not less than 60 days, in the case of the exercise of a Withdrawal Right in respect of less than 20% of all Sites as of the Final Closing Date under this Sublease and 180 days, in the case of the exercise of a Withdrawal Right in respect of 20% or more of all Sites as of the Final Closing Date under this Sublease, prior to any such anniversary (the "Withdrawal Notice"). The Withdrawal Notice shall specify the precise Reserved Space, Microwave Reserved Space and/or Additional ALLTEL Space at such Site that ALLTEL intends to withdraw. If ALLTEL exercises the Withdrawal Right as to any Site, (A) ALLTEL shall not be required to pay the Site Maintenance Charge with respect to such Site for the period occurring after the Withdrawal Date so long as ALLTEL has 29
removed all of the ALLTEL Equipment and the Microwave Equipment from the Reserved Space and Microwave Reserved Space at such Site, (B) ALLTEL shall not be required to pay the applicable Additional Site Maintenance Charge with respect to the associated Additional ALLTEL Equipment for the period occurring after the Withdrawal Date so long as ALLTEL has removed all of the associated Additional ALLTEL Equipment from the associated Additional ALLTEL Space at such Site, (C) the foregoing Site Maintenance Charge and/or applicable Additional ALLTEL Maintenance Charge shall cease effective upon the removal of the associated equipment in accordance with Section 4(d) whereupon ALLTEL's use of such Reserved Space and/or the Additional ALLTEL Space pursuant hereto and ALLTEL's right to occupy and use the Reserved Space and/or the Additional ALLTEL Space of such Site shall be terminated and the Reserved Space and/or the Additional ALLTEL Space, as applicable, shall thereafter be part of the Subleased Property. (b) In addition to and not in limitation of any rights under Section 9(a) but subject to Section 9(d) with respect to Removable Equipment, ALLTEL will have the right, exercisable at any time during the Term of this Sublease, to cease occupying the Reserved Space, Microwave Reserved Space, and/or Additional ALLTEL Space of any Site, and retain all right to such Reserved Space, Microwave Reserved Space, and/or Additional ALLTEL Space, so long as ALLTEL continues to pay the Site Maintenance Charge and/or Additional ALLTEL Maintenance Charge, as applicable, in respect of such Site. (c) At the request of either ALLTEL or ATC, the appropriate parties shall execute any documents reasonably requested by the other party to evidence any transfer of interest and release of obligations pursuant to Section 9(a). (d) Notwithstanding anything to the contrary, ALLTEL shall remove (and shall repair any damage caused by or due to such removal), at ALLTEL's sole cost and expense, all of the Removable Equipment at a Site within forty-five (45) days after such Microwave Equipment becomes Removable Equipment. Upon the earlier of (i) the actual removable of the Removable Equipment, or (ii) the expiration of the foregoing forty-five (45) day period, ALLTEL's use of the Microwave Reserved Space with respect only to the Removable Equipment and ALLTEL's right to occupy and use the Microwave Reserved Space utilized by the Removable Equipment shall be terminated and the associated Microwave Reserved Space shall be thereafter deemed to be part of the Subleased Property. Notwithstanding the foregoing, following the removal of any Removable Equipment of ALLTEL pursuant to this Section 9(d), ALLTEL shall have the right to add microwave equipment to the same Tower as the Removable Equipment was previously located without any increase of the Site Maintenance Charge if (x) such additional equipment is placed at such locations and in such amounts which do not exceed the amount of physical locations, vertical space and windload/capacity effect of Microwave Reserved Space associated with the Removable Equipment that was so removed, (b) so long as capacity and space on the Tower is then available, and (c) so long as such microwave equipment is used for backhaul services. Section 10. Permitted Use. (a) ATC shall have the right, at ATC's cost and expense, to alter, replace, modify and expand any Site, including the expansion of the land, as ATC deems reasonably necessary or desirable for the conduct of ATC's Permitted Use pursuant to this Sublease, 30
including, but not limited to, the extension of the Tower, the reinforcement of the Tower, replacement of the Tower and the construction of additional Towers on such Site; provided, however, that such alterations, replacements, modifications or expansions (i) are permitted under the applicable Ground Lease or ATC obtains the consent of such Ground Lessor pursuant to Section 5(c), (ii) are performed in compliance with all Laws, and (iii) if required, in the reasonable determination of ALLTEL, ATC shall provide ALLTEL with space at the Site during the construction period to permit the continued operation of the ALLTEL Equipment, Microwave Equipment and/or Additional ALLTEL Equipment and ATC shall be solely responsible for the costs associated with removing and reinstalling the ALLTEL Equipment, Microwave Equipment and/or Additional ALLTEL Equipment on the replacement or modified Tower, (iv) are subject to the terms and conditions set forth in Section 12(h), are subject to ATC's obligations to ALLTEL pursuant to this Sublease, including without limitation, Sections 12, 15 and 16. ALLTEL acknowledges and agrees that it will reasonably cooperate with ATC in any actions, filings, or permits that may be required for ATC to exercise its rights under this Section 10(a). In the event that ATC constructs a replacement Tower, ATC agrees that ALLTEL may have its first choice of position on the new Tower subject to any obligations to Third Party Tenants to provide similar or substantially similar space on the new Tower. (b) ATC shall not use, or permit to be used, the Subleased Property of any Site, or any portion thereof, by ATC, any Person (other than ALLTEL or its Affiliates) or the public in such manner as might reasonably be expected to impair ALLTEL's title to or interest in such Site, or any portion thereof, or in such manner as might reasonably make possible a Claim or Claims of adverse usage or adverse possession by the public, as such, or any Person (other than ALLTEL or its Affiliates), or of implied dedication of such Subleased Property, or any portion thereof. Nothing contained in this Sublease and no action or inaction by ALLTEL or its Affiliates shall be deemed or construed to mean that ALLTEL or any Affiliate has granted to ATC any right, power or permission to do any act or make any agreement that may create, or give rise to or be the foundation for any such right, title, interest, or other Lien, upon the greater estate of ALLTEL or any Affiliate in any Site. (c) ALLTEL shall utilize the Site, the Reserved Space, Microwave Reserved Space and the Additional ALLTEL Space in accordance with ALLTEL's Permitted Use. ALLTEL shall not use, or permit to be used, the Reserved Space, Microwave Reserved Space, any Additional ALLTEL Space, or any portion of the Site, by ALLTEL, any Affiliate thereof, any other Person (other than ATC and Third Party Tenants) or the public in such manner as might reasonably be expected to impair ATC's right as a sublessor and a sublessee with respect to such Site, or any portion thereof, or in such manner as might reasonably make possible a Claim or Claims of adverse usage or adverse possession by the public, as such, or any Person (other than ATC and Third Party Tenants), or of implied dedication of such Reserved Space, Microwave Reserved Space, Additional ALLTEL Space, or any portion of the Site. 31
(d) ALLTEL shall use, and shall permit the use of, the Reserved Space, Microwave Reserved Space, and Additional ALLTEL Space subject to the terms and conditions of this Sublease and solely for the operation of ALLTEL Equipment, Microwave Equipment and Additional ALLTEL Equipment at the frequencies set forth in the applicable Site Designation Supplement, subject to Sections 8(a)(x) of Exhibit 4 and 15. Except as otherwise expressly permitted in Section 8(a)(x) of Exhibit 4, in no event shall ALLTEL operate more than one frequency from a single Platform or grant any form of shared use right, subleasing, splitting or diplexing to any other Person. (e) Subject to the terms and conditions of this Sublease, including without limitation Sections 12, ATC reserves the right at its sole cost and expense to install, and ALLTEL consents to the installation of, a Platform or stacked equipment shelter at any Site above any ALLTEL equipment shelter, building or cabinets. In the event that a Site is comprised of less than 2,500 square feet or the compound space is constrained in the reasonable determination of ATC with respect to then-existing uses, ATC also reserves the right to require that any ALLTEL replacement shelter, building or cabinets be stackable as long as such stackable replacement shelter will satisfy ALLTEL's technical requirements in all material respects, in which event ATC will reimburse ALLTEL for any cost or expense incurred in excess of that which would have been incurred by ALLTEL if ATC had not made such election. ALLTEL shall have the right to approve any plans and specifications associated with any shelter or Platform to be installed above its then-existing shelter, building or cabinets and such approvals shall not be unreasonably withheld, conditioned or delayed. Upon receipt of such plans and specifications, ALLTEL shall notify ATC within 15 Days of its approval or its grounds for reasonable rejection together with reasonable details of the changes that would be reasonably acceptable to ALLTEL. In the event that ALLTEL does not provide written notice within the foregoing period of time, such plans and specifications shall be deemed approved. (f) ATC, for itself or for the benefit of any Third Party Tenant, may (at ATC's sole cost and expense) utilize any power or teleco conduits servicing the Site and access and utility easements; provided, however, that ATC shall not interfere with ALLTEL's use of such conduits. Section 11. Rent; Site Maintenance Charge; Other Payments. (a) ATC shall pay Rent in respect of the Subleased Property of each Site, for the entire Term on the Site Commencement Date for each Site. Except as expressly provided in Section 27(b), ATC agrees that the Rent is nonrefundable and that ATC shall have no right of abatement, reduction, setoff, counterclaim, rescission, refund, defense or deduction with respect thereto. Without limiting the generality of the foregoing sentence, ATC shall have no right to any abatement, reduction, setoff, counterclaim, rescission, refund or deduction with respect to the Rent in the event of: (i) any termination by ALLTEL of ATC's rights under this Sublease in accordance with the terms of Section 27(e), including, without limitation, any termination as a result of an insolvency or other event described in Section 27(d)(iii); (ii) any damage to or destruction of any Site 32
or any part thereof by any cause whatsoever, unless directly resulting from the acts or omissions (in the event ALLTEL or its Affiliates has an express obligation relating to such omission) of ALLTEL, its Affiliates, contractors, agents or representatives; (iii) any Taking of any Site; or (iv) an occurrence covered by Section 36(w) unless directly resulting from the acts or omissions (in the event ALLTEL or its Affiliates has an express obligation relating to such omission) of ALLTEL, its Affiliates, contractors, agents or representatives. ATC shall also be responsible for the payment of Ground Rent directly to Ground Lessor in accordance with Section 5(a), subject to ALLTEL's obligations pursuant to Sections 5(a) and 11(f). (b) Each month during the Term, ALLTEL shall pay, or cause its Affiliate to pay, the Site Maintenance Charge in respect of the Reserved Space and, if any, Microwave Reserved Space for each Site which is subject to this Sublease, in advance on or prior to the first day of each calendar month, beginning on the Site Commencement Date for each Site. ALLTEL shall pay, or cause its Affiliate to pay, the Additional ALLTEL Maintenance Charge in respect of any Additional ALLTEL Space which is subject to this Sublease, in advance on or prior to the first day of each calendar month, beginning (A) in the event that neither ATC nor any of its Affiliates perform the installation of the related Additional ALLTEL Equipment, the earlier of: (i) the date on which the installation of the Additional ALLTEL Equipment is completed; or (ii) forty-five (45) days after ATC notifies ALLTEL in writing of its approval of ALLTEL's request for the Additional ALLTEL Space, or (B) in the event that ATC or one of its Affiliates performs the installation of the related Additional ALLTEL Equipment, the earlier of: (i) the date on which the installation of the Additional ALLTEL Equipment is completed; or (ii) in the event that ATC is prepared to commence installation but the Additional ALLTEL Equipment has not yet been delivered to the Site, fifteen (15) days after the date upon which ATC provided ALLTEL with written notice that it was prepared to commence such installation but for the failure to deliver the Additional ALLTEL Equipment.. All amounts due under this Section 11 (other than Rent) for partial months shall be prorated. Notwithstanding the foregoing, if the first calendar day of a month is not a business day, the payment shall be due on the next succeeding business day. (c) The following terms shall have the following definitions: "Rent" means, as to any Site, the rental amount paid by ATC for the leasing of the Sites pursuant to this Sublease at the rate of (i) with respect to all Sites (other than Microwave Sites), three hundred thousand dollars ($300,000.00), or (ii) with respect to Microwave Sites, such amount as may be determined by the Parties pursuant to Section 4.6(e) of the Agreement to Sublease and set forth on the Site Designation Supplement for the Site. Rent specifically excludes any amount due or payable to a Ground Lessor pursuant to Section 11(f). "Site Maintenance Charge" means, subject to increase on each anniversary of the Escalation Date during the Term hereof by the Annual Escalator, the monthly charge payable to ATC with respect to the Reserved Space and, if any, Microwave Reserved Space at such Site by ALLTEL or its Affiliate pursuant to this Sublease shall be an 33
amount equal to $1,200 per month for the ALLTEL Maximum Equipment and Microwave Equipment located within the Reserved Space or Microwave Reserved Space . The Site Maintenance Charge specifically excludes any amount due or payable to a Ground Lessor pursuant to Section 11(f). "Annual Escalator" means the lesser of (a) the applicable CPI Change (but never less than 0%), plus 4% or (b) 5%. (d) In addition to and not in limitation of the foregoing, any amount not paid by ATC or its Affiliates on or before the due date in respect of the Subleased Property of any Site for Ground Rents shall be subject to a late charge equal to the amount of any interest or fees that would be payable by ALLTEL if ALLTEL were to make a late payment under the applicable Ground Lease, and after the expiration of the applicable cure period in Section 27(d)(i) but subject to ALLTEL's rights under Section 26, ALLTEL shall have a right of setoff with respect to any such charges in addition to any other rights and remedies under this Sublease or at Law. (e) In addition to any charge provided in Section 11(d), ALLTEL and ATC, as applicable, shall pay a late charge of 1.5% of any Site Maintenance Charge or other payment due under this Sublease, respectively, per month in the event any such amount is not paid within ten (10) Days after the date the same is due; provided, however, that the late charge shall not be assessed in respect of the first payment of any Site Maintenance Charge or Additional ALLTEL Maintenance Charge due after the Site Commencement Date or the first payment due after an increase in the Site Maintenance Charge or Additional ALLTEL Maintenance Charge. Notwithstanding the foregoing, if ALLTEL fails to pay any portion of the Site Maintenance Charge or other amount due to ATC because ALLTEL, acting in good faith, reduced the amount of such charge or other payment due to a mistaken belief that ALLTEL was entitled to a reimbursement of expenses under Section 26, no late charge shall be assessed with respect thereof. (f) Notwithstanding anything to the contrary, ALLTEL shall remain solely and directly responsible for (i) any free or discounted telephone handsets and/or service minutes to be provided to the Ground Lessor to the extent such obligation exists under any Ground Lease as of the Site Commencement Date, (ii) any payments required to be made to a Ground Lessor under a Ground Lease with respect to the payment by ALLTEL of the Site Maintenance Charge or any Additional ALLTEL Maintenance Charge to ATC as a direct result of any form of revenue-sharing or similar payment required to be made under the Ground Lease (as in effect on the Site Commencement Date), but in no event to exceed 25% of such charges with respect to a Site, (iii) any payments required to be made to a Ground Lessor under a Ground Lease with respect to the payment of Ground Rent by ATC to ALLTEL as a direct result of any form of revenue-sharing or similar payment required under the Ground Lease (as in effect on the Site Commencement Date) but in no event to exceed twenty-five percent (25%) of such Ground Rent with respect to a Site, and (iv) any payments required to be made to a Ground Lessor under a Ground Lease with respect to the payment of Rent by ATC to ALLTEL as a direct result of any form of revenue-sharing or similar payment required under the Ground Lease (as in effect on the 34
Site Commencement Date) but in no event to exceed twenty-five percent (25%) of such Rent, in the aggregate, with respect to a Site. With respect to any payments to the Ground Lessor required to be made by ALLTEL pursuant to this Section 11(f), ATC reserves the right (acting reasonably and in good faith, after advance written notice to ALLTEL and consultation with ALLTEL in order to minimize the liability of both Parties under this Sublease) to make any such payment to the Ground Lessor (but subject to the provisions of the next sentence of this Section 11(f)), following demand by such Ground Lessor (unless the Ground Lessor has requested or the Ground Lease requires such payments to be made without demand) on ALLTEL's behalf and ALLTEL shall reimburse ATC within thirty (30) days following its receipt of an invoice for such reimbursement. (g) ATC shall pay, or cause to be paid, all charges associated with common utility usage at a Site. ALLTEL shall be solely responsible for charges associated with utility expenses directly associated with the use and operation of ALLTEL Equipment at each Site. ALLTEL shall reimburse ATC as mutually agreed by the Parties for any utility services utilized by ALLTEL which are not separately metered by ALLTEL. ALLTEL shall be solely responsible for and shall pay all bills for telephone services utilized by it at each Site directly to the relevant telecommunications service provider. (h) In the event that a Site is located on real property which is owned by the Bureau of Land Management, the United States Forest Service or other Governmental Authority, ALLTEL shall also pay any and all base fees or assessments invoiced to ALLTEL, ATC or the Ground Lessor under the Ground Lease by such Governmental Authority, as well as any fees or assessments and/or increases in such fees or assessments invoiced by any such Governmental Authority that are solely and directly attributable to or the use, presence or operation of ALLTEL Equipment, Microwave Equipment, or Additional ALLTEL Equipment at the Site. (i) ALLTEL shall be solely and directly responsible for all costs and expenses associated with the repair, maintenance, replacement and fueling of any ALLTEL Equipment or Additional ALLTEL Equipment that is a generator, fuel tank, shelter, building or cabinet located at the Site or, in the event such items are owned by or used by any Third Party Tenant, ALLTEL shall be responsible for its pro-rata share (based on all users of the applicable item of ALLTEL Equipment or Additional ALLTEL Equipment) of the foregoing costs and expenses (unless otherwise provided in any Existing Tenant Lease as of the Site Commencement Date or as otherwise agreed to between any Third Party Tenant and ALLTEL). SECTION 12. ATC's Maintenance Obligations. (a) ATC acknowledges that in respect of each Site, ATC has the obligation, right and responsibility to repair and maintain such Site (other than the ALLTEL Equipment, Microwave Equipment, Additional ALLTEL Equipment and Third Party Tenant Property), including, without limitation, an obligation to monitor each Tower, to maintain the structural integrity of the Tower and the ability of the Tower to hold and support all permitted Communications Equipment mounted on the Tower during the Term of this 35
Sublease, in accordance with all applicable Laws, standard industry practices, and Section 16. Subject to the other provisions contained in this Sublease, ATC, at its sole cost and expense, except if such cost or expense arises out of a grossly negligent or intentional act or omission of ALLTEL, its Affiliates, agents or representative, shall maintain and repair each Site such that ALLTEL or its Affiliates and Third Party Tenants may utilize such Site to the extent permitted herein, including, without limitation, each Tower lighting system (to the extent required by applicable Law), any specific maintenance or landscaping requirements imposed by Law (including, without limitation, local ordinances or zoning approvals), and markings and the structural integrity of each Tower. ATC's installation, maintenance and repair of each Site must comply with the provisions of Sections 12 and 16. (b) Without limiting ATC's obligations under this Section 12 and the other provisions of this Sublease, the Parties acknowledge that ALLTEL is licensed by the FCC to provide wireless communications services and that the Sites are used to provide those services. Nothing in this Sublease shall be construed to transfer control of any FCC Authorization held by ALLTEL or the ALLTEL Affiliates to ATC or to limit the right of ALLTEL and the ALLTEL Affiliates to take all necessary actions to comply with their obligations as an FCC licensee or with any other legal obligations to which they are or may become subject or to impose upon ATC any such obligation which relates to ALLTEL or the ALLTEL Affiliates position as a licensee of the FCC. (c) With respect to any construction, replacements, expansions, additions, maintenance or repair of or to the Land, the Tower(s), any equipment or personal property at the Site (other than ALLTEL Equipment, Microwave Equipment, Additional ALLTEL Equipment or Third Party Tenant Property), and Site Improvements of any Site performed by or on behalf of ATC ("ATC Work"), all ATC Work shall be performed at ATC's sole cost and expense. ATC shall provide and pay for all labor, materials, goods, supplies, equipment, appliances, tools, construction equipment and machinery, and other facilities and services necessary for the proper execution and completion of the ATC Work. ATC shall promptly pay, or cause to be paid, when due all costs and expenses incurred in connection with the ATC Work, including without limitation all fees and Taxes required by Law. (d) ATC shall be responsible for the acts and omissions of all of its employees, contractors, subcontractors, engineers, agents, representatives, advisors and all other persons performing any of the ATC Work. ATC shall be responsible for initiating, maintaining and supervising all necessary safety precautions and programs in connection with the ATC Work, and shall take all reasonable protection to prevent damage, injury or loss to the ATC Work, all persons performing ATC Work on the Site, all other persons who may be involved in or affected by the ATC Work, and all materials and equipment to be incorporated in the ATC Work, Tower and Site Improvements of such Site. (e) ATC shall cause the ATC Work to be done and completed with industry standard materials and in a good, substantial and workmanlike manner, free from faults and defects, and in compliance in all material respects with all Laws, and shall utilize 36
only industry standard materials and supplies. ATC shall be solely responsible for construction means, methods, techniques, sequences and procedures, and for coordinating all activities related to the ATC Work, and ALLTEL shall have no duty or obligation to inspect the ATC Work, but shall have the right to do so, at reasonable times, upon reasonable prior notice, in a reasonable manner and without hindering or delaying any of the ATC Work. ATC shall supervise and direct the ATC Work using commercially reasonable efforts and reasonable care, and shall assign qualified personnel to the ATC Work. (f) ATC shall procure and maintain in full force and effect, and shall cause its contractors and subcontractors to procure and maintain in full force and effect, with respect to the ATC Work; (i) full replacement cost "all-risk," "builder's risk" insurance, insuring the ATC Work; and (ii) the other types of insurance required to be maintained pursuant to Section 22 of this Sublease. Such additional insurance policies shall meet the requirements set forth elsewhere in this Sublease with respect to the insurance policies otherwise required to be obtained and maintained by ATC under this Sublease. (g) Title to all alterations owned by ATC or its Affiliates shall vest in ALLTEL immediately upon construction or installation on, or affixation or annexation to, the Site and shall be deemed a part of the Subleased Property. (h) Notwithstanding anything to the contrary (including, without limitation, Section 10(a)), in the event that ATC intends to perform any ATC Work on the Tower that will cause any type of physical interruption or electronic interference in ALLTEL's Permitted Use or the operations of the ALLTEL Equipment, Microwave Equipment or Additional ALLTEL Equipment, ATC shall provide no less than 30 days prior written notice to ALLTEL in the event of a modification of the Tower and 60 days in the event of replacement of a Tower; provided, however, that no notice shall be required in the event of an Emergency. ATC agrees that any necessary interruptions shall be conducted so as to produce the least disruption to the ALLTEL's business operations as possible and shall occur during mutually agreeable off-peak hours. SECTION 13. ALLTEL's Work on the Site. (a) Prior to installing any ALLTEL Equipment, Microwave Equipment, Additional ALLTEL Equipment or making any modifications, enhancements or changes thereto permitted hereunder (other than technical adjustments, routine maintenance or modifications to then-existing equipment) (collectively, the "ALLTEL Work"), the following provisions shall apply: (i) No ALLTEL Work shall be commenced until ALLTEL has obtained all certificates, licenses, permits, authorizations, consents, and approvals necessary for the ALLTEL Work, from all Governmental Authorities having jurisdiction with respect to any Site or the ALLTEL Work in accordance with Section 16. 37
(ii) ALLTEL or its applicable Affiliate shall submit its scope of work requirements, plans and specification for any proposed ALLTEL Work to ATC for its approval prior to the commencement of such ALLTEL Work. ALLTEL shall not commence any of the ALLTEL Work until ATC notifies ALLTEL of its written approval thereof. With respect to any installation or modification which (A) will be located at the same location on the Tower and the same center of radiation as the then existing permitted ALLTEL Equipment and does not exceed the windload effect or dimensions of the ALLTEL Maximum Equipment, or, with respect to Microwave Reserved Space and Microwave Equipment, does not exceed the windload effect or dimensions of the Microwave Equipment and is utilized for the microwave backhaul on the identical frequency, or (B) is made pursuant to Section 8 and Exhibit 4, ATC acknowledges and agrees that (X) ATC's approval shall not be unreasonably withheld, conditioned or delayed and (Y) the failure of ATC to notify ALLTEL in writing of its response within ten (10) Days after ALLTEL's delivery to ATC of the complete scope of work and specifications, or the failure to provide reasonable grounds for rejection of any such work shall, in each case, be deemed to constitute ATC's approval of such work. With respect to all other ALLTEL Work (except as provided below), ATC shall use reasonable good faith efforts to respond in writing to such scope of work within ten (10) days after ALLTEL's delivery to ATC of the scope of work. If ATC does not approve any scope of work and specifications, ATC's written response will outline its grounds for rejection together with reasonable details of the changes or conditions that would be acceptable to ATC. The prior approval of ATC shall not be required with respect to any ALLTEL Work involving an installation or modification (aa) in the event of an Emergency or (bb) that involves the replacement of existing ALLTEL Equipment, Microwave Equipment or Additional ALLTEL Equipment with identical items at the same location; provided, however, ALLTEL shall comply with the remaining provisions of this Section 13(a) and (except in the event of an Emergency, in which event ATC shall be provide with prompt written notice thereafter) provide ATC with no less than five business days prior written notice of the date upon which ALLTEL intends to perform such replacement and the parties shall mutually execute an amendment to the associated Site Designation Supplement. (iii) ALLTEL shall cause the ALLTEL Work to be done and completed with industry standard materials and in a good, substantial and workmanlike manner, free from faults and defects, and in compliance in all material respects with all Laws, and shall utilize only industry standard materials and supplies. (iv) All ALLTEL Work shall be performed at ALLTEL's sole cost and expense, including, without limitation, any structural analysis or modifications that may be reasonably required by ATC to accommodate any such installation or modification by ALLTEL. ALLTEL shall provide and pay for all labor, materials, goods, supplies, equipment, appliances, tools, construction equipment and machinery, and other facilities and services necessary for the proper execution and completion of the ALLTEL Work. ALLTEL shall promptly pay, or caused to be 38
paid, when due all costs and expenses incurred in connection with the ALLTEL Work, including, without limitation, all fees and Taxes required by Law. (v) With respect to any structural modifications by ALLTEL hereunder permitted by ATC, ATC reserves the right to simultaneously upgrade the Tower structure in excess of the modification required to accommodate ALLTEL Equipment, Microwave Equipment or Additional ALLTEL Equipment in order to increase the Tower capacity; provided, however, that ATC shall be solely responsible for any and all additional costs and expenses associated with such excess upgrade and ALLTEL Work shall not be delayed by any such upgrade unless approved in writing by ALLTEL, which shall not be unreasonably withheld, conditioned or delayed. (vi) ALLTEL shall be responsible for the acts and omissions of all of its employees, contractors, subcontractors, engineers, agents, representatives, advisors and all other persons performing any of the ALLTEL Work. ALLTEL shall be responsible for initiating, maintaining and supervising all necessary safety precautions and programs in connection with the ALLTEL Work, and shall take all reasonable protection to prevent damage, injury or loss to, the ALLTEL Work, all persons performing ALLTEL Work on the Site, all other persons who may be involved in or affected by the ALLTEL Work, and all materials and equipment to be incorporated in the ALLTEL Work of such Site. (vii) Upon the completion of ALLTEL's installation, replacement, or modification of ALLTEL Equipment at any Site, but in no event later than 20 business days following such completion, ALLTEL shall provide ATC with (A) as-built drawings of the ALLTEL Equipment, Microwave Equipment and/or Additional ALLTEL Equipment, as applicable, installed at the Site in hard or electronic form, and (B) to the extent applicable to the ALLTEL Work, a site drawing precisely identifying the location of ALLTEL's shelter, cabinets, cable runs, generators, utility lines and other pertinent installations, and (C) the date upon which such installation and/or modification was performed. (viii) Prior to any additional installation or any modification of existing ALLTEL Equipment, Microwave Equipment and/or Additional ALLTEL Equipment, as applicable, upon ATC's request if necessary in the reasonable determination of ATC based upon the proposed work and the availability of any recent analysis on such Site, ALLTEL shall perform (or cause to be performed) a shared site interference analysis at its sole cost and expense. (ix) ALLTEL shall procure and maintain in full force and effect, and shall cause its contractors and subcontractors to procure and maintain in full force and effect, with respect to the ALLTEL Work: (A) full replacement cost "all-risk," "builder's risk" insurance, insuring the ALLTEL Work; and (B) the other types of insurance required to be maintained pursuant to Section 22 of this Sublease. Such additional insurance policies shall meet the requirements set forth 39
elsewhere in this Sublease with respect to the insurance policies otherwise required to be obtained and maintained by ALLTEL under this Sublease. (b) ALLTEL or its applicable Affiliate shall submit its scope of work requirements for the installation of any permitted additional ALLTEL Equipment, Microwave Equipment and/or Additional ALLTEL Equipment, as applicable, or any permitted change or relocation hereunder at each Site to ATC either, at ALLTEL's election, (i) at the same time that ALLTEL delivers its request for a proposal for such services to other vendors, or (ii) exclusively to ATC. (1) ATC shall have the right of first offer to perform the required installation or modification services as follows: (x) in the event that ALLTEL delivers its request for proposal exclusively to ATC pursuant to this right of first offer (which fact must be disclosed to ATC within the associated request for proposal by a conspicuous statement that the proposal is only being delivered to ATC pursuant to this right of first offer), ATC shall submit a bid to ALLTEL in accordance with the reasonable time and delivery requirements set forth in such request for proposal (notwithstanding the provisions of Section 36(a) which shall not be applicable to this Section 13(b)), and for a period beginning on the date after the deadline provided in the request for proposal and for five (5) business days thereafter (unless ATC fails to submit a bid within the period of time reasonably required in the associated request for proposal, it being understood that ATC's failure to submit a definitive bid to perform such services shall be deemed an election not to perform the work), ATC and ALLTEL agree to engage in good faith negotiations with respect to the pricing and scope of work, and (y) in the event that ALLTEL delivers its request for proposal to ATC together with its submission to other vendors (or in the event that ALLTEL fails to make the conspicuous disclosure contemplated by Section 13(b)(1)), ATC may submit a bid to ALLTEL in accordance with the reasonable time and delivery requirements set forth in such request for proposal (notwithstanding the provisions of Section 36(a) which shall not be applicable to this Section 13(b)), and for a period beginning on the date after the deadline provided in the request for proposal and for five (5) business days thereafter (unless ATC elects not to perform the installation, which ATC agrees to promptly confirm in writing), ATC and ALLTEL agree to engage in good faith negotiations with respect to the pricing and scope of work. (2) If ALLTEL and ATC have not agreed on the pricing following the expiration of the five (5) business day negotiation period (or in the event that ATC elected not to submit a bid pursuant to the immediately preceding clause (1)), ALLTEL shall provide ATC redacted copies (only as to the name, address or 40
other identifying information associated with the company submitting such bid) of bids submitted by three (3) other reputable and experienced contractors to provide such installation or modification services, and ATC shall have the exclusive right to perform such services at the terms and conditions set forth in and at a price equal to the lesser of (A) the amount of the last bid submitted by ATC pursuant to Section 13(b)(1) or (2), if any, or (B) the lowest of the three (3) competing bids (provided, however, that in the event that the lowest bid is more than 10% less than the next lowest bid, the next lowest bid shall be used instead of the lowest competing bid based on the three competing bids submitted by ALLTEL) by notifying ALLTEL within five (5) business days after ATC's receipt of the three (3) competing bids (but after the expiration of the exclusive negotiation period) whether ATC will perform the services, in which event ATC shall commence the services as soon as reasonably practicable or as mutually agreed to by the Parties hereto after the negotiation and execution of an installations services construction agreement between the Parties with respect to such installation. (3) If ATC shall notify ALLTEL that ATC shall not perform the services as set forth in this Section 13(b), or if ATC shall fail to notify ALLTEL during the five (5) business day period after ATC's receipt of all of the competing bids, ALLTEL shall have the right to use another contractor of its choice to perform the associated services with respect to such request for proposal. In no event shall this Section 13(b) apply to modifications of existing ALLTEL Equipment, Microwave Equipment, or Additional ALLTEL Equipment where such modifications do not involve the installation of additional or replacement ALLTEL Equipment or Additional ALLTEL Equipment on the Tower and shall specifically exclude (X) any ALLTEL Work not associated with Communications Equipment located on the Tower (for example, installation of shelters and cabinets), and (Y) replacements of individual items resulting from wear and tear or repair (for example, this Section shall not be applicable to the replacement of one damaged cable or one non-working antenna panel but shall apply in the event of a replacement of an ALLTEL panel array with a replacement antenna array). (4) Subject to Section 36(w) and the installation construction agreement executed by the Parties with respect to a Site for the performance of services by ATC pursuant to this Section 13(b), (A) in the event that the aggregate number of Sites at which ATC materially fails to complete the installation of ALLTEL's equipment to be installed on or before the date specified in the associated installation construction agreement for each Site during any consecutive twelve month period exceeds the greater of (a) twenty five (25) Site or (b) fifteen percent (15%) of the total number of Sites that ATC performed installations services for ALLTEL pursuant to this Section 13(b) during such 12-month period, ATC's exclusive negotiation and right of first refusal under this Section 13(b) shall be suspended for the immediately following consecutive twelve (12) month period but at the expiration of such period ATC's rights hereunder shall resume, and (B) in the event that ATC's rights are suspended twice pursuant to Section 13(b)(4)(A) during any consecutive five (5) year period, 41
ALLTEL may terminate ATC's rights under Section 13(b) for the remainder of the Term by providing ATC with written notice of the termination of this Section 13(b) at anytime thereafter. Notwithstanding the foregoing, in the event that this Section 13(b) is suspended or terminated during the Term, ALLTEL shall pay ATC an inspection fee of three thousand five hundred dollars ($3,500) in the event that ALLTEL installs (or utilizes a third party) to install or modify any ALLTEL Equipment or Additional ALLTEL Equipment that would have otherwise been governed by this Section 13(b) at any Site. SECTION 14. Damage to the Site, Tower or the Improvements. (a) If there occurs a casualty which damages or destroys all or a Substantial Portion of any Site, then either party shall have the right to terminate, as hereinafter provided in this Section 14(a), this Sublease (but, in the case of ALLTEL, only to terminate its use of ALLTEL's Reserved Space, Microwave Reserved Space and/or Additional ALLTEL Space) as to such Site without any further liability or obligation of either party by delivering written notice of termination to the other party within 30 days of the occurrence of the casualty. If ALLTEL exercises its termination right and ATC does not exercise its termination right in accordance with this Section 14, ALLTEL's rights to use the Reserved Space, Microwave Reserved Space and/or Additional ALLTEL Space shall terminate as to the affected Site, ALLTEL's obligation to pay the Site Maintenance Charge and/or any Additional ALLTEL Maintenance Charge, as applicable, shall terminate as of the date of such casualty, and ALLTEL's Reserved Space, Microwave Reserved Space and/or Additional ALLTEL Space, as applicable, on such Site shall become Subleased Property. If ATC exercises its termination right in accordance with this Section 14 (without regard to whether or not ALLTEL exercises its termination right), the Term shall be deemed to have expired as to the affected Site on the date of such casualty, as if such date were the Site Expiration Date as to such Site. (b) If any Site (including the Tower and Site Improvements thereon) is damaged or destroyed by casualty (whether or not the damage or destruction affects a Substantial Portion of the Site), ATC, at its sole cost and expense, shall (i) promptly and diligently proceed with the adjustment of ATC's insurance Claims in respect thereof, and (ii) thereafter, if the damage or destruction affected less than a Substantial Portion of the Site or if both Parties shave elected not to exercise their termination rights under Section 14(a) and to the extent required by this Section 14, promptly commence, and diligently prosecute to completion, the Restoration of the same within a period of two months after the date of receipt of all Governmental Approvals required to repair or reconstruct the Site, if any (it being understood that ATC shall timely file and diligently pursue any such required Governmental Approvals). The Restoration shall be carried on and completed in accordance with the provisions and conditions of this Section 14. (c) All Proceeds of ATC's insurance shall be held by ATC for the mutual benefit of ATC and ALLTEL on account of such damage, shall be applied to the payment of the costs of the Restoration and shall be paid out from time to time as the Restoration 42
progresses. Any portion of the Proceeds of ATC's insurance (excluding those payable with respect to damage to ALLTEL Equipment) applicable to a particular Site remaining after final payment has been made for work performed on such Site shall be retained by and be the property of ALLTEL. If the cost of Restoration exceeds the Proceeds of ATC's insurance, ATC shall pay the excess cost. (d) Without limiting ATC's obligations hereunder in respect of a Site subject to a casualty, in the event ATC is required to cause the Restoration of a Site that has suffered a casualty, ATC shall make available to ALLTEL a portion of the Subleased Property of such Site for the purpose of ALLTEL locating a temporary communications facility, such as a "cell on wheels," and shall give ALLTEL priority over Third Party Tenants at such Site as to the use of such portion; provided, however, that ATC's obligations shall be subject to the following: (i) the placement of such temporary communications facility does not interfere in any material respect with ATC's Restoration and repair of such Improvements; (ii) ALLTEL obtains any permits and approvals, at ALLTEL's cost and expense, required for the location of such temporary communications facility on such Site; and (iii) there is available space on the Site for placing such temporary communications facility. The Site Maintenance Charge and any Additional ALLTEL Maintenance Charge with respect to the affected Site shall be abated during any period that the Site Improvements have not been Restored following a destruction or casualty so long as ALLTEL is unable to conduct its Permitted Use on substantially the same basis and without a material increase in costs from a temporary location at the Site during any period of Restoration. (e) The foregoing provisions of this Section 14 apply only to damage of each Site by fire, casualty, or other cause or event occurring after the applicable Site Commencement Date. (f) If either Party, any Affiliate of either Party, or its contractors, vendors or agents damage any Site as a result of a grossly negligent or intentional act or omission, or failure to perform its obligations under this Sublease, the responsible Party will, at its sole cost and expense, promptly repair and restore the Subleased Property of such Site to its respective condition prior to such damage. (g) If ATC fails to complete the Restoration of the Subleased Property, of any Site required under this Sublease within two months after the receipt of any required Governmental Permits, ALLTEL may terminate this Sublease as to the applicable Site upon giving ATC written notice of its election to terminate within 15 days following the expiration of such time period; provided, however, that if ATC's failure to complete such Restoration within such two-month period is caused by (i) failure to obtain a new permit as long as ATC has timely filed and diligently pursued such permits, or (ii) ATC's inability to have access to the affected Site, such two-month period shall be extended accordingly in order to allow ATC to complete the Restoration. SECTION 15. Interference. 43
(a) Interference With a Pre-Existing Use. Notwithstanding anything to the contrary in this Agreement but subject to Section 15(f), ALLTEL's use of any Sites and its operation of all ALLTEL Equipment, Microwave Equipment and Additional ALLTEL Equipment, as applicable, thereon (including any subsequent modification or alteration thereto) shall be conducted in a manner that does not interfere electrically with any then preexisting use of any Site by ATC or any Third Party Tenant of the Tower ("Pre-Existing Use"; it being understood that no use by ATC or any Third Party Tenant shall be considered a Pre-Existing Use unless, after commencement of such use by ATC or the Third Party Tenant, ALLTEL shall have installed or modified the ALLTEL Equipment or changed frequencies with respect to the ALLTEL Equipment in question). In the event that any Pre-Existing Use experiences interference caused by ALLTEL or ALLTEL Equipment, Microwave Equipment or Additional ALLTEL Equipment, as applicable, ATC shall notify ALLTEL in writing of such interference and ALLTEL shall power down its equipment and/or cease operations in order to correct and eliminate such interference within 72 hours after ALLTEL's receipt of such notice. If ALLTEL does not cease all interfering operation within such 72-hour period, ATC shall have the right to disconnect ALLTEL Equipment, Microwave Equipment or Additional ALLTEL Equipment, as applicable, until such time as ALLTEL can affect repairs to the interfering ALLTEL Equipment, Microwave Equipment or Additional ALLTEL Equipment, as applicable. ALLTEL may continue to operate its equipment intermittently during off-peak hours for testing purposes only during the 30-day period following the initial notice. If ALLTEL is not able to remedy its interference with a Pre- Existing Use within 30 days after the initial notice, ALLTEL shall cease the operations of the objectionable ALLTEL Equipment and stop providing services from the applicable Reserved Space, Microwave Reserved Space or Additional ALLTEL Space at the Site in its entirety (including the Tower and Site Improvements) until the interference problems are resolved. In no event shall ALLTEL be relieved from its obligation to pay the Site Maintenance Charge or Additional ALLTEL Maintenance Charges during any period that it can not and to the extent that it can not operate the ALLTEL Equipment, Microwave Equipment or Additional ALLTEL Equipment, as applicable, under this Section 15(a). Subsequent to a written request by ATC, in ATC's sole discretion and at ALLTEL's sole cost and expense, each ALLTEL transmitter shall have a circulator and harmonic filter installed between the transmitter output and antenna feedline, but only if such ALLTEL Equipment, Microwave Equipment or Additional ALLTEL Equipment, as applicable, is interfering with a Pre-Existing Use at the Site. Also, ATC may, at its option, require ALLTEL to supply, at ALLTEL's sole cost and expense, additional radio frequency interference (RFI) limiting equipment for installation on the equipment of any user whose equipment is experiencing such interference. In the event that ALLTEL is notified of any interference experienced by a Pre-Existing Use on the Site alleged to be caused by ALLTEL's operations thereon, ALLTEL shall cooperate with ATC and any Third Party Tenant to eliminate such interference. (b) Interference by a Subsequent Use. ALLTEL acknowledges and agrees that ATC intends to market to Third Party Tenants space on the same Tower and at the same Sites (including equipment structures and shelters) as are used hereunder by ALLTEL, 44
provided that, subject to Section 15(f), (i) ATC agrees that ATC's and all Third Party Tenants' use of the Tower with respect to equipment that is installed or modified (including, without limitation, a modification of frequency) subsequent to ALLTEL's then-current operation of ALLTEL's Equipment thereon ("Subsequent Use") will not electrically interfere with ALLTEL's then-current operations, and (ii) ATC shall not and shall not permit Third Party Tenants to install or change, alter or improve the frequency, power, or type of Communications Equipment that electrically interferes with ALLTEL's then-current operations or is not authorized by, or violates, any applicable Laws (and ATC shall require any Third Party Tenant who subleases or licenses Available Space on any Tower or Site Improvement to covenant to comply with the foregoing). In the event that ALLTEL experiences interference caused by any Subsequent Use, ALLTEL shall notify ATC in writing of such interference and ATC shall, or shall cause the operator of the interfering Subsequent Use, to power down its equipment and/or cease operations in order to correct and eliminate such interference within 72 hours after ATC's receipt of such notice. If such Third Party Tenant does not cease all interfering operation within such 72-hour period, ATC shall (subject to its rights and obligations under any Third Party Existing Lease) disconnect the Communications Equipment causing such interference until such time as such Third Party Tenant can affect repairs to the interfering Communications Equipment. If such Subsequent Use is unable to operate without causing such interference, or if such interference is not reduced to a level acceptable to ALLTEL, within a period of 30 Days (provided that during such 30-Day period the Subsequent Use may be operated intermittently during off-peak hours for testing purposes only), then ATC shall cause such Third Party Tenant (other than ALLTEL in respect of the Available Space) to cease the operations of the objectionable Communications Equipment until the interference problems are resolved. Except as otherwise provided in Section 15(f), ATC hereby acknowledges that its has an affirmative obligation to ALLTEL to cause any such interfering Subsequent Use to cease any interfering operations in accordance with this Section 15(b). Subsequent to a written request by ALLTEL (but only to the extent that ATC has the right to compel any Third Party Tenant to comply), in ALLTEL's sole discretion and at no cost or expense to ALLTEL, Third Party Tenant transmitters shall have a circulator and harmonic filter installed between the transmitter output and antenna feedline, but only if such equipment is interfering with ALLTEL Equipment, Microwave Equipment and/or Additional ALLTEL Equipment at the Site. In the event that ATC is notified of any interference experienced by ALLTEL alleged to be caused by a Subsequent Use on the Site, ATC shall be obligated to perform (or cause to be performed) whatever actions are commercially reasonable and necessary, at no cost or expense to ALLTEL, to eliminate such interference. The Site Maintenance Charge and any Additional ALLTEL Maintenance Charge with respect to the affected Site shall be abated during any period that, but only to the extent that, ALLTEL is unable to conduct its operations from the Site due to an interference caused by a Subsequent Use in addition to any other rights and remedies available to ALLTEL under this Sublease or at Law. (c) Interference With Lighting and Building Systems. In no event shall ALLTEL's use of any Sites or operation of any of the ALLTEL Equipment, Microwave Equipment and Additional ALLTEL Equipment, as applicable, thereon be conducted in a 45
manner that interferes with the lighting system located on any of the Towers or building systems. (d) Dispute as to Cause of Interference. Any dispute as to the cause of interference under this Section 15 that can not be resolved by the affected parties shall be submitted to a professional engineer mutually agreed to in good faith by the parties and such engineer's decision as to the cause of such interference shall be final and binding upon the parties. If such interference to a Pre-Existing Use is found to be caused by any installation of ALLTEL Equipment, Microwave Equipment and Additional ALLTEL Equipment, as applicable, or any subsequent modification or alteration thereto or by operation of such ALLTEL Equipment, Microwave Equipment and Additional ALLTEL Equipment, as applicable, by ALLTEL, the fees and charges of the engineer to whom the dispute is referred shall be borne by ALLTEL. If such interference is found not to be caused by such installation of ALLTEL Equipment, Microwave Equipment and Additional ALLTEL Equipment, as applicable, or any subsequent modification, alteration or operations thereof, the fees and charges of the engineer to whom the dispute is referred shall be borne by the responsible party, or, if a Third Party Tenant fails to pay, ATC. Notwithstanding anything in this Section 15 to the contrary, in the event any interference occurs in respect of a Site and the source of such interference is not determinable by the foregoing procedures, it shall be assumed (solely for the purposes of determining whether ALLTEL or ATC is responsible for proceeding under this Section 15) that a Third Party Tenant and not ALLTEL is the cause of such interference, ATC shall be responsible for the performance of its obligations under Section 15(b) in respect of such interference, and ALLTEL shall be relieved of any obligations under 15(a) in respect of such interference, unless and until it is determined that ALLTEL is the cause of such interference. (e) No Illegal or Unpermitted Use. Notwithstanding anything to the contrary, nothing in Section 15 shall be deemed or interpreted to authorize ALLTEL to illegally transmit on any frequency, to transmit on a channel or frequency not specified in the Site Designation Supplement (subject to ALLTEL's rights under Section 10(d)), to operate at variance from the specifications in its FCC license or the FCC's rules governing ALLTEL's operation of its ALLTEL Equipment, Microwave Equipment and Additional ALLTEL Equipment, as applicable, or to provide any protection to ALLTEL from interference from parties who are not users of the Towers; provided, for the purposes of this Section 10(e), ATC is considered to be a user of the Tower, and, provided further, if ATC is the owner or manager of any other tower or location which is alleged to be the source of any interference of the type addressed by this Section 15(e), ATC shall be obligated to perform (or cause to be performed) whatever actions are commercially reasonable and necessary and that are within ATC's rights and powers with respect to such other tower, location or tenant, at no cost or expense to ALLTEL, to eliminate such interference. In accordance with and subject to Section 10(d), in no event shall ALLTEL operate on any frequency other than those set forth in the applicable Site Designation Supplement, as mutually amended from time to time in accordance with the terms and conditions of this Sublease. 46
(f) FCC Part 15 Use. In the event that any of ALLTEL's operations from a Site are governed by Part 15 of the FCC's rules and regulations (47 C.F.R. (S) 15.1, et seq.) as updated, amended and/or superseded by any and all Laws ("Part 15"), ALLTEL's rights pursuant to Section 15 with respect to such use shall only be enforceable with respect to interference which is not governed by Part 15. ALLTEL acknowledges and agrees that ALLTEL has an obligation pursuant to Part 15 and pursuant to this Sublease to cooperate, in good faith, with all other users (including Part 15 users) of the Site and ATC, regardless of the frequency utilized by such other user or whether such users began operations from the Site prior to or subsequent to ALLTEL's then-current use, to eliminate any and all interference caused by or experienced by ALLTEL's use of the frequencies pursuant to Part 15. With respect thereto, ALLTEL acknowledges that ATC anticipates that the Site may be or is licensed to and utilized by multiple users sharing the same frequencies under Part 15. Notwithstanding anything to the contrary in this Sublease or any Site Designation Supplement, ATC makes no representations or warranties with respect to whether or not any other users of the Sites are utilizing frequencies governed by Part 15, including without limitation any frequency which ALLTEL intends to utilize at any Site. (g) Limitations; Clarifications. For the purposes of this Section 15, (i) any change, alteration or improvement in the frequency, power, configuration or type of Communications Equipment shall be deemed a "modification"; (ii) each and every use of the defined term "Third Party Tenant" shall exclude ALLTEL and any of its Affiliates and shall exclude any Pre-Existing Tenant to the extent that the provisions of this Section 15 are inconsistent with the terms and conditions of its associated Existing Third Party Lease; and (iii) each and every use of the defined term "Reserved Space" shall include any Additional ALLTEL Space and Microwave Reserved Space. SECTION 16. Regulatory Compliance. (a) FAA and FCC Rules and Regulations. Subject to the terms and conditions of this Sublease and without limiting the generality of Section 16 (c), the Parties hereby agrees with respect to the following matters governed by the Laws promulgated by the FCC and FAA: (i) FCC Form 854 Filings for ATC or Third Party Tenant Work. In the event that any ATC Work at a Site or any installation or modification of any Third Party Tenant Property (but excluding those obligations retained by ALLTEL under Section 16(c)(i)) requires the filing of any FCC Form 854, the Parties shall proceed as follows: (A) ATC shall, at its own cost and expense, provide ALLTEL with all necessary and reasonably appropriate information for the preparation of such FCC Form 854; 47
(B) ALLTEL shall promptly file such FCC Form 854 with the FCC in ALLTEL's name and concurrently provide ATC with verification of such filing; (C) Upon receipt of any antenna structure registration certificate or modification certificate, ALLTEL shall promptly provide a copy of such certificate to ATC; (D) Notwithstanding anything to the contrary in this Section 16(a)(i), as between ATC and ALLTEL, ATC shall be responsible to ALLTEL for (x) the completeness (except for information that can only be provided by ALLTEL) and accuracy of the information provided to the FCC with respect to any FCC Form 854 filed by ALLTEL upon ATC's request and (y) the determination under applicable Law as to whether or not any ATC Work or addition or modification to any Third Party Tenant Property (but excluding those obligations retained by ALLTEL under Section 16(c)(i)) requires the filing of any FCC Form 854 with the FCC or any amendment thereto; and (E) Notwithstanding anything to the contrary in this Section 16(a)(i), as between ATC and ALLTEL, ALLTEL shall be responsible to ATC for filing any FCC Form 854 requested by ATC (x) in a prompt manner in accordance with the procedures developed by the Parties pursuant to Section 16(c)(xi), (y) consistent with the information provided by ATC to be included therein (unless, in each case under clauses (x) and (y), ALLTEL reasonably objects to the accuracy or completion of such information, in which event, ALLTEL shall promptly notify ATC and the Parties shall work together in a diligent and timely manner to resolve any such dispute prior to the filing of such FCC Form 854), and (z) for the completeness and accuracy of the information required by or provided to the FCC with respect to any FCC Form 854 filed by ALLTEL with respect to information that is solely within ALLTEL's knowledge or possession. (F) ATC shall be responsible for all filing fees and expenses imposed by the FCC with respect to any fillings made pursuant to this Section 16(a)(i). (ii) FCC Form 854 Filings for ALLTEL Work. In the event that any ALLTEL Work at a Site requires the filing of any FCC Form 854, the parties shall proceed as follows: (A) ALLTEL shall, at its own cost and expense, prepare and file (in ALLTEL's name) all necessary and reasonably appropriate information for the FCC Form 854; 48
(B) ATC agrees to reasonably cooperate with ALLTEL with respect to any information required by ALLTEL in the preparation of such FCC Form 854, at ALLTEL's sole cost and expense; (C) Concurrently with ALLTEL's filing of the FCC Form 854, ALLTEL shall provide ATC with verification of such filing; (D) Upon receipt of any antenna structure registration certificate or modification certificate, ALLTEL shall promptly provide a copy of such certificate to ATC; and (E) Notwithstanding anything to the contrary in this Section 16(a)(ii), as between ATC and ALLTEL, ALLTEL shall be solely responsible for (x) the completeness and accuracy (except for information that can only be provided by ATC) of the information provided to the FCC with respect to any FCC Form 854 filed by ALLTEL in connection with ALLTEL Work and (y) the determination as to whether or not any ALLTEL Work requires the filing of any FCC Form 854 with the FCC. (F) Notwithstanding anything to the contrary in this Section 16(a)(ii), as between ATC and ALLTEL, ATC shall be responsible to ALLTEL for the completeness and accuracy of the information provided by ATC with respect to any FCC Form 854 filed by ALLTEL hereunder. (G) ALLTEL shall be responsible for all filing fee and expenses imposed by the FCC with respect to any filings made pursuant to this Section 16(a)(ii). (iii) FCC EMF Rules and Regulations. The Parties hereto acknowledge and agree that as of the Effective Date, only FCC licensees (and not tower operators or owners) are responsible under the rules and regulations of the FCC for compliance with guidelines and procedures for evaluating environmental effects of RF emissions from Communications Equipment on or from the Site, in strict compliance with FCC OET Bulletin 65, entitled Evaluating Compliance with FCC Guidelines for Human Exposure to Radio frequency Electromagnetic Fields, Edition 97-01, released August 1997 ("OET Bulletin 65"), including the completion of radio frequency worksheets showing compliance with the guidelines set forth in OET Bulletin 65 and all existing and future Laws related thereto (collectively, "EMF Rules"). Accordingly, subject to the provisions of this Section 16(a)(iii) (including any change in EMF Rules after the Effective Date), ALLTEL shall be solely responsible for ALLTEL's compliance with the EMF Rules at the Site with respect to its operations as an FCC licensee and/or the operation of its transmission equipment thereon and in the event that any remedial or corrective measures are required as a result of the installation, modification, or operation of the ALLTEL Equipment, Microwave Equipment or Additional ALLTEL Equipment at a Site, ALLTEL shall perform any necessary remedial or 49
corrective measure required to be performed by ALLTEL in accordance with applicable Law, including, without limitation, the rules and regulations of the FCC. Notwithstanding anything to the contrary, in no event shall either Party shall have any obligation, responsibility or liability to the other Party with respect to the failure of any Third Party Tenant to comply with the provisions of the EMF Rules at a Site. ATC acknowledges and agrees that ALLTEL may communicate directly with any Third Party Tenant at a Site with respect to compliance with EMF Rules. Notwithstanding anything to the contrary in this Section 16(a)(iii), in the event that the rules and regulations of the FCC subsequently change so that Tower owners or Tower operators are responsible for the compliance with some or all of the EMF Rules, the Parties hereto agree and acknowledge that ATC shall be responsible to ALLTEL for any responsibility, liability, or obligation thereunder to the extent that the then-current EMF Rules impose such responsibility, liability or obligation on Tower owners or Tower operators (except to the extent that such liability, obligation or responsibility is caused by the acts or omissions of ALLTEL or its Affiliates or the installation, operation, or modification of the ALLTEL Equipment, Microwave Equipment or the Additional ALLTEL Equipment). (iv) FAA Rules and Regulations and Other FCC Rules and Regulations. With respect to any obligations under any Laws promulgated by the FCC and FAA other than those specifically set forth in Sections 16(a)(i), 16(a)(ii), 16(a)(iii) and 16(b), (A) To the extent that a Tower owner or operator is responsible under any Laws promulgated by the FCC or FAA (including, without limitation, resulting from ATC Work or Third Party Tenant work at a Site), ATC shall be responsible to ALLTEL for all certificates, permits, licenses, responses, and other approvals required by or imposed by, or required in order to comply with, such Laws relating to any Site, Towers, Site Improvements, and Subleased Property (but excluding those obligations retained by ALLTEL under Section 16(c)(i)) in accordance with the following: (1) ATC shall, at no cost or expense to ALLTEL, provide (or cause the Third Party Tenant to provide) ALLTEL with all necessary and reasonably appropriate information for the preparation of any such certificates, permits, licenses, responses and other approvals; (2) ALLTEL shall, at ATC's or the applicable Third Party Tenant's cost and expense, provide ATC with all necessary and reasonably appropriate information for the preparation of any such certificates, permits, licenses, responses and other approvals that can not be obtained by ATC or the Third Party Tenant and that are in the possession and knowledge of ALLTEL; 50
(3) ALLTEL shall promptly file any such certificate, permit, license, response or other approval required or reasonably desired by ATC with respect to operations at the Site, and ALLTEL shall concurrently provide ATC with verification of such filing or submission; (4) Upon receipt of any correspondence, response, or approval from the FCC or FAA with respect to any of the foregoing, the ALLTEL shall promptly provide a copy of such correspondence, response, or approval to ATC; (5) Notwithstanding anything to the contrary in this Section 16(a)(iv), as between ATC and ALLTEL, (w) each Party shall be responsible to the other Party for the completeness, accuracy and timely filing or submission of the information that was provided to by such Party and submitted (or to be submitted) to the FCC or FAA, (x) ATC shall be responsible to ALLTEL for the determination as to whether or not any certificate, permit, license, response or other approval is required; (y) each Party has the right to reasonably object to the accuracy or completeness of the information provided by the other Party, in which event, the objecting Party shall promptly notify the other Party and the Parties shall work together in a diligent and timely manner to resolve any such dispute prior to the filing or submission to the FCC or FAA (subject to any FCC or FAA required response timeframes); (6) ATC shall be responsible for all filing fees and expenses imposed by the FCC and FAA with respect to any filings made pursuant to this Section 16(a)(iv)(A). (B) To the extent that an FCC licensee or operator of receiving or transmitting equipment is responsible under the FCC or FAA rules and regulations (including, without limitation, FCC Authorizations), ALLTEL shall be solely responsible for all certificates, permits, licenses, responses, and other approvals required by or imposed by and compliance with FCC and FAA regulations relating to the installation, modification, or operation of the ALLTEL Equipment, Microwave Equipment, Additional ALLTEL Equipment, ALLTEL's wireless communication operations from the Site, or ALLTEL's obligations as an FCC licensee) in accordance with the following: (1) ATC shall, at ALLTEL's cost and expense, provide ALLTEL with all necessary and reasonably appropriate information for the preparation of any such certificates, permits, 51
licenses, responses and other approvals that can not be obtained by ALLTEL; (2) Notwithstanding anything to the contrary in this Section 16(a)(iv), as between ATC and ALLTEL, (x) each Party shall be responsible to the other Party for the completeness, accuracy and timely filing or submission of the information that was provided to the other Party to such Party and submitted (or to be submitted) to the FCC or FAA, and (y) ALLTEL shall be solely responsible for the determination as to whether or not any such certificate, permit, license, response or other approval is required. (3) ALLTEL shall be responsible for all filing fees and expenses imposed by the FCC and FAA with respect to any filings made pursuant to this Section 16(a)(iv)(B). (v) FCC Authorizations. Without limiting ATC's obligations under Section 12, this Section 16 and the other provisions of this Sublease, the Parties acknowledge that ALLTEL is licensed by the FCC to provide wireless communications services and that the Sites are used to provide those services. Nothing in this Sublease shall be construed to transfer control of any FCC Authorization held by ALLTEL or the ALLTEL Affiliates to ATC or to limit the right of ALLTEL and the ALLTEL Affiliates to take all necessary actions to comply with their obligations as an FCC licensee or with any other legal obligations to which they are or may become subject and shall not impose upon ATC any such obligation which relates to ALLTEL's or the ALLTEL Affiliate's position as a licensee of the FCC. (vi) Tower Lighting & Marking Obligations. ALLTEL agrees that, subject to this Section 16(a)(vi), all tower lights, associated cables, wires and lines, any other monitoring boxes or devices used to monitor the Tower lighting system (if any) ("Lighting and Monitoring Equipment") are hereby leased or subleased to ATC with each Tower during the Term of and as part of this Sublease, together with ATC's co-terminus right to continued shared use of any associated back-up power or generator for such Lighting and Monitoring Equipment as described below. (A) Maintenance of Tower Equipment and Connections. ATC shall be solely responsible for the repair, maintenance and any required replacement of the Lighting and Monitoring Equipment that is located outside of ALLTEL's locked shelter or compound area and subject to Section 16(a)(vi)(B)(Z), ATC shall be solely responsible for the repair, maintenance and any required replacement of the Lighting and Monitoring Control Devices. 52
(B) Maintenance of Lighting and Monitoring Control Devices - ALLTEL's Options. With respect to any portion of the Lighting and Monitoring Equipment that are located within ALLTEL's locked shelter, building or compound area ("Lighting and Monitoring Control Devices"), ALLTEL may elect any one or more of the following, in its sole discretion, at any time during the Term with respect to a Site: (A) ALLTEL may relocate and weatherproof the Lighting and Monitoring Control Devices outside of the locked area, at ALLTEL's sole cost and expense, at an outdoor location with unrestricted access to ATC, (B) ALLTEL shall provide ATC with prompt access, in accordance with the procedures developed by the Parties pursuant to Section 16 (c)(xi), upon ATC's request, to ALLTEL's shelters or buildings in the event that ATC desires or is required to perform any maintenance, repair or replacement of any of the Lighting and Monitoring Control Devices, at no cost to ATC, (Y) notwithstanding anything to the contrary in this Sublease, ATC shall have no responsibility or obligation (including, without limitation, any indemnification obligations) to ALLTEL in the event that any Loss and Expense or Action is a direct and sole result of ALLTEL's failure to provide timely access to ATC under this Section16(a)(vi) (in accordance with the procedures developed by the Parties pursuant to Section 16(c)(xi)), and (Z) ALLTEL agrees that upon ATC's request, ALLTEL shall perform any specifically requested repair, replacement or maintenance of the Lighting and Monitoring Devices as reasonably requested by ATC, from time to time, at ATC's sole and reasonable cost and expense (payable within 30 days after ATC's receipt of an invoice, together with verifiable documentation with respect to such costs and expenses) or (C) ALLTEL may provide ATC with a key or lockcode for unrestricted access to all of the Internal Lighting and Monitoring Control Devices (it being understood that ATC shall only access such locked shelters, building or compound area to perform its obligations under this Section 16(a)(vi) and not for any other purpose), in which event ATC shall be solely responsible for the repair, maintenance and any required replacement of any of such Lighting and Monitoring Control Devices. (C) Maintenance of Lighting and Monitoring Control Devices - ATC's Options. Notwithstanding anything to the contrary in this Section 16(a)(vi), ATC shall have the right, at its cost and expense and in its sole discretion, to do any one or more of the following at any time during the Term with respect to a Site: (W) ATC may, at its sole cost and expense, install and maintain its own Lighting and Monitoring Control Devices, in which case, ATC shall no longer be responsible for any obligations to ALLTEL with respect to the Lighting and Monitoring Control Devices located within the ALLTEL shelter or building, and ATC's sublease interest in the Lighting and Monitoring Control Devices shall automatically terminate and ALLTEL shall have no further obligation to 53
ATC with pursuant to Section 16(a)(vi)(B) or (E), (X) ATC may request in writing, and ALLTEL shall cooperate with ATC to allow ATC, at its sole cost and expense, to obtain a data feed from all existing Lighting and Monitoring Control Devices, in which case, ALLTEL shall no longer be responsible for any obligations to ATC pursuant to Section 16(a)(vi)(E), (Y) ATC may request in writing, and ALLTEL shall permit ATC access to the contact point box so that ATC may install ,at its sole cost and expense, its own direct links to the Lighting and Monitoring Control Devices in which case, ALLTEL shall no longer be responsible for any obligations to ATC pursuant to Section 16(a)(vi)(E) and ATC shall be responsible for providing its own dedicated telephone lines and any wiring, at ATC's sole cost and expense, installed by ATC, or (Z) ATC may relocate and weatherproof the Lighting and Monitoring Control Devices outside of the locked area, at ATC's sole cost and expense, at location selected by ATC. (D) Maintenance of Back-Up Power. ALLTEL shall be solely responsible for the repair, maintenance and any replacement of any back-up power or generator servicing the Lighting and Monitoring Equipment; provided, that ATC agrees to reimburse ALLTEL for its pro- rata share of use of such generator (including associated fuel) within 30 days after receipt of any invoice together with associated verifiable receipts. Notwithstanding anything to the contrary, ALLTEL shall not be required to provide ATC with access to back-up power or generator in the event that ALLTEL does not or ceases use of a generator at any Site. (E) NOCC Notification. Without in any way affecting ATC's obligations relating to lighting, ALLTEL agrees to monitor the lighting system serving the Towers or the Site Improvements during the Term and to notify ATC promptly of any failure in accordance with the procedures developed by the Parties pursuant to Section 16(c)(xi) at the following telephone number: 800-830-3365 , it being understood that ALLTEL shall perform such monitoring solely as an accommodation to ATC and without incurring any obligation or liability therefor other than responsibility for (A) ALLTEL's NOCC promptly contacting ATC's NOCC as set forth in this Section 16(a)(vi)(E) and in accordance with the procedures developed by the Parties pursuant to Section 16(c)(xi) in the event of any tower lighting failure or alarm problem, and (ii) any other express ALLTEL obligation under this Section 16(a)(vi). (F) Utilities Charges Associated with the Lighting and Monitoring Equipment. In the event that the power utilities servicing the Lighting and Monitoring Equipment are not separately metered from ALLTEL's utilities at a Site, ATC shall pay ALLTEL a fixed fee of forty dollars ($40.00) per month (as increased each year by the CPI Change) or 54
each such Site to compensate ALLTEL for the usage of such power for the Lighting and Monitoring Equipment operation. (G) Tower Marking Obligations. From and after the applicable Site Commencement date, ATC shall be solely responsible for the maintenance of any required Tower marking (including, without limitation, repainting) in accordance with the Laws promulgated by of the FCC and FAA. (H) Responsibility for Tower Lighting Compliance. For each Site where such lighting systems are required to be installed by Law, ATC agrees to monitor and maintain the lighting system serving such Site in accordance with this Section 16(a)(vi) and will notify the appropriate FAA service office and any other applicable Governmental Authority of any lighting failure (or alarm of such failure) upon discovering such failure within the time period required by Law. In addition, ATC agrees, as soon as practicable, to repair the failed lighting on an Emergency basis and to notify ALLTEL and, if required by Law, the applicable Governmental Authorities upon successful completion of the repair or other resolution. Notwithstanding anything to the contrary contained in Section 27, ATC shall use its reasonable best efforts to successfully schedule such repair and repair the failed lighting within the foregoing time periods. Notwithstanding anything to the contrary contained herein, ATC shall indemnify, defend and hold each ALLTEL Indemnitee harmless from and against any and all Loss and Expense paid, suffered, incurred or sustained by any ALLTEL Indemnitee by reason of, arising out of, or in connection with any failed lighting whether or not ATC shall have complied with the provisions of this Section 16(a)(vi) unless such Loss and Expense arise out of or by reason of ALLTEL's Indemnitee's negligence or intentional misconduct. In addition to and not in limitation of Sections 27, if ATC defaults under this Section 16(a)(vi), ALLTEL, in addition to its other remedies pursuant to this Sublease, at Law, or in equity, may elect to take appropriate action to repair or replace lights and invoice ATC for ALLTEL's associated reasonable expenses following written notice of no less than two (2) days to ATC. In addition, ALLTEL may terminate this Sublease as to such Site within fifteen (15) days of the occurrence of such default in the event that such default is not cured within the aforementioned cure period, or such longer period of time as may be reasonably required to complete such cure. (b) Environmental Compliance. (i) ATC shall, at its own expense, provide ALLTEL all necessary and available information concerning hazardous chemicals stored or used at each Site by Third Party Tenants, to permit ALLTEL to complete a Tier I inventory report pursuant to the Emergency Planning and Community Right to Know Programs (42 USC (S)11022). 55
ATC shall provide such hazardous chemical information to ALLTEL on or before January 31 of each year for each Site for which a Tier I inventory report is required. (ii) ALLTEL shall, at its own expense (including, without limitation, filing fees), be responsible for the preparation and filing of any Tier II report pursuant to the Emergency Planning and Community Right to Know Programs (42 USC (S)11022) with respect to any Site at which ALLTEL is the only Person storing or using hazardous chemicals at the Site, other than Pre-Existing Tenants whose storage and use of hazardous chemicals has not changed since the Site Commencement Date with respect to such Site (the "ALLTEL Tier II Sites"; any Site other than an ALLTEL Tier II Site is referred to as an "ATC Tier II Site"). With respect to all ALLTEL Tier II Sites, the Parties agrees to the following procedures: (A) No later than January 31 of each year, ATC shall confirm, at ATC's own expense, in writing to ALLTEL that no ALLTEL Tier II Site has become an ATC Tier II Site during the prior year due to any Third Party Tenant (including any Pre-Existing Tenant) storing or using, or changing levels of storage or use of, hazardous chemicals on the Site. (B) ALLTEL shall provide ATC a copy of any Tier II report with respect to any ALLTEL Tier II Site concurrently with the filing of such report with the applicable Governmental Authority. (C) Upon request to either ALLTEL or ATC by the state or local emergency planning commission or the local fire department, ATC shall, at its own expense, provide to ALLTEL all necessary and available information concerning hazardous chemicals stored or used at specific an ALLTEL Tier II Site by Third Party Tenants to permit ALLTEL to complete a Tier II inventory report. (iii) ATC shall be responsible for the preparation and filing of any Tier II report with respect to any ATC Tier II Site pursuant to the following procedures: (A) ATC shall be responsible for the determination as to whether or not any Tier II report is required with respect to any ATC Tier II Site. (B) No later than January 31 of each year, ALLTEL shall, at its own expense, provide to ATC all necessary and available information concerning hazardous chemicals stored or used at specific Sites by ALLTEL to permit ATC to complete a Tier II inventory report. (C) ATC will be responsible for collecting, at its own cost and expense, all necessary and available information concerning hazardous chemicals stored or used at specific Sites by Third Party Tenants to permit ATC to complete a Tier II inventory report. 56
(D) ATC shall provide ALLTEL a copy of any Tier II report with respect to any ATC Tier II Site concurrently with the filing of such report with the applicable Governmental Authority. (E) ALLTEL agrees to reimburse ATC for the filing fees incurred with respect to any Tier II Report for an ATC Tier II Site for its pro rata portion of such fees based on the total number of Persons storing or using hazardous chemicals at the Site. (F) Upon request to either ALLTEL or ATC by the state or local emergency planning commission or the local fire department, ALLTEL shall, at its own expense, provide to ATC all necessary and available information concerning hazardous chemicals stored or used at an ATC Tier II Site by ALLTEL to permit ATC to complete a Tier II inventory report. (iv) ALLTEL shall be responsible for obtaining hazardous chemical inventory information for all Reserved Space, Microwave Reserved Space, or Additional ALLTEL Space, and ATC shall be responsible for obtaining hazardous chemical inventory information for all Subleased Space (other than with respect to a Pre-Existing Tenants under Pre-Existing Tenant Leases that do not give ATC the right to obtain such information). (v) The Parties agrees as follows with respect to oil storage facilities or tanks installed or operated on a Site during the Term of this Sublease: (A) With respect to any Site at which only oil storage facilities or tanks of ALLTEL or Pre-Existing Tenants are present as of the Site Commencement Date (the "ALLTEL SPCC Sites"; any Site other than an ALLTEL SPCC Site is referred to as an "ATC SPCC Site"), ALLTEL shall, at its own costs and expense, be responsible for maintaining any SPCC (Spill) Plans for any such ALLTEL SPCC Site on or after the Site Commencement Date and performing any annual inspections with respect thereto. Upon request by ALLTEL, ATC shall confirm in writing to ALLTEL that no Site previously designated as an ALLTEL SPCC Site has become an ATC SPCC Site due to any Third Party Tenant (including any Pre-Existing Tenant) expanding, installing or operating an oil storage facility or tank after the Site Commencement Date. (B) ATC shall be responsible for maintaining any SPCC (Spill) Plans for any ATC SPCC Site on or after the Site Commencement Date and performing any annual inspections with respect thereto. ATC shall be responsible for the determination as to whether or not any modifications are required with respect to any SPCC (Spill) Plan and whether or not any new SPCC (Spill) Plans need to be adopted with respect to any ATC SPCC Site after the applicable Site Commencement Date. In making such determination, ATC shall be able to rely solely upon the accuracy and completeness of any information provided by ALLTEL or by any Pre-Existing Tenant (to the extent any Pre-Existing Tenant 57
Lease does not give ATC the right to obtain such information) relating to oil storage facilities or tanks installed or operated at such Sites by those Persons, and ATC shall be responsible for the collection of information from any other Third Party Tenants on such Site. (C) Based upon the determination made pursuant to clause (B) of this Section 16(b)(v), ATC shall notify ALLTEL after the applicable Site Commencement Date when oil storage capacity of any individual aboveground tank installed by any Third Party Tenant exceeds 660 gallons or when the total storage capacity installed at any Site by Third Party Tenants exceeds: (1) 42,000 gallons of underground oil storage capacity or (2) 1,320 gallons of aboveground oil storage capacity. (D) ALLTEL shall, at its own expense, provide all necessary and available information to ATC relating to oil storage facilities or tanks installed and operated by ALLTEL on any Site. Such information shall include tank owner, tank manufacturer, materials of construction, tank location on the Site and storage capacity. (E) ALLTEL agrees to reimburse ATC for its reasonable out-of- pocket costs incurred under this Section 16(b)(v) for ALLTEL's pro rata portion of such expenses based on the total storage capacity maintained by all Persons at the Site. (F) In no event shall ATC be responsible for preparing or filing petroleum storage tank registrations for tanks owned or operated by ALLTEL or any Third Party Tenants. In no event shall ALLTEL be responsible for preparing or filing petroleum storage tank registrations for tanks owned or operated by any Third Party Tenants. (c) General Compliance Obligations. (i) Except as otherwise expressly provided in this Sublease, (X) subject to clause (Y), ATC shall be solely responsible for compliance with all Laws at each Site and with respect to ATC's business, Laws associated with any obligation expressly assumed or reserved by ATC hereunder and the acts and omissions of ATC or its Affiliates and their agents, invitees, contractors or representatives (other than ALLTEL and its Affiliates), and (Y) subject to clause (X), ALLTEL shall be solely responsible for compliance with all Laws (including FCC Authorizations) with respect to its operation and use of the ALLTEL Equipment, Microwave Equipment, Additional ALLTEL Equipment, Laws associated with any obligation expressly reserved to ALLTEL hereunder and the acts or omission of ALLTEL or its Affiliates and their agents, invitees, contractors or representatives (other than ATC or its Affiliates). (ii) In the event that any Party is required to reimburse the other Party under this Section 16, the Parties hereto agree that such reimbursement shall be 58
limited to reasonable out-of-pocket costs and expenses (excluding any attorney fees or costs) plus an administrative charge of five percent (5%) of such costs and expenses; provided, however, that neither Party shall be entitled to any reimbursement under this Section 16(c)(ii) in the event that such Party retains any third party to perform any associated services that such Party or the other Party could have performed in-house . The provisions of this Section 16(c)(ii) shall not apply to any costs or expenses incurred by (x) a Party pursuant to Section 26 or (y) ALLTEL pursuant to Section 16(a)(vi)(H). (iii) Subject to the other provisions contained in this Sublease or the Agreement to Sublease, ATC's duties as to each Site include, without limitation, maintenance of required records and notification to Governmental Authorities (excluding records and notifications required to be kept or provided solely by FCC licensees or antenna equipment operators or with respect to any Communications Equipment and not by a Tower owner or operator), of any failure on ATC's or other responsible Person's (other than ALLTEL or any of its Affiliates) part and repairs and correction of same. ATC assumes all responsibilities, as to each Site, for any fines, levies, and/or other penalties imposed on any ALLTEL Indemnitee as a result of non- compliance by ATC with its obligations in this Section 16 ATC shall cause Third Party Tenants (except to the extent ATC has no right to cause such action under any associated Existing Tenant Lease) to maintain and repair all Communications Equipment on each Site; provided, however, that nothing in this Sublease shall require ATC to maintain the ALLTEL Equipment, Microwave Equipment and Additional ALLTEL Equipment, as applicable. ATC, at its own cost and expense, shall also make (or cause to be made) all ATC Improvements to the Sites (other than the Reserved Space, Microwave Reserved Space, or Additional ALLTEL Space) as may be required from time to time to meet the requirements of applicable Laws (regardless of the Person upon whom such requirements, by their terms, are normally imposed so long as such requirements are applicable only to obligations as a tower owner and not an operator of wireless equipment). (iv) Notwithstanding anything to the contrary in this Sublease, each Party shall be afforded access to all of the other Party's records, books, correspondence, instructions, blueprints, permit files, memoranda and similar data (including, without limitation any data stored or collected by a third party on behalf of ATC or ALLTEL, as applicable, or any of their Affiliates) relating to the compliance of the Site (including the Reserved Space, Microwave Reserved Space, Additional ALLTEL Space, Towers and Site Improvements) with all applicable Laws, except privileged documents or where disclosure is prohibited by Law or Contractual Obligation. Such information shall be open for inspection and copying upon reasonable notice by the requesting party, at its cost, by its authorized representatives at reasonable hours at the applicable principal regional or area offices and shall be retained by each Party for a period of three (3) years after the expiration of this Sublease, or any extension thereof. 59
(v) Notwithstanding anything to the contrary in this Section 16, ATC shall cooperate with ALLTEL in ALLTEL's efforts to obtain any permits or other approvals that may be necessary for ALLTEL's permitted use of or operation from the Reserved Space, Microwave Reserved Space, or any Additional ALLTEL Space; provided, however that, notwithstanding the foregoing, (i) ATC shall not be required to expend any funds or undertake any liability or obligation in connection with the Reserved Space (or any expansions thereof or use of Additional ALLTEL Space) or ALLTEL Equipment, Microwave Equipment or Additional ALLTEL Equipment, as applicable, or ALLTEL's business, unless ATC has expressly agreed to expend such funds or undertake such obligation under this Sublease and (ii) with respect to zoning- related permits, authorizations, or similar rights, in no event may ALLTEL, its Affiliates, representatives, or agents encourage, suggest, participate in or permit the imposition of any restrictions whatsoever on ATC's Permitted Use or other current or future use or ability to sublease space at the Site as part of or in exchange for obtaining any such approval or permit. Notwithstanding anything to the contrary in this Section 16, ALLTEL shall cooperate with ATC in ATC's efforts to provide required information and to comply in all material respects with all Laws required or imposed by Governmental Authorities, including, without limitation, the FCC and FAA, applicable to each Site; provided, however that notwithstanding the foregoing, (i) ALLTEL shall not be required to expend any funds or undertake any liability or obligation in connection with the Subleased Property or any Communications Equipment or business of any Person other than ALLTEL or its Affiliates, unless ALLTEL has expressly agreed to expend such funds or undertake such obligation under this Sublease, , and (ii) with respect to such zoning-related permits, authorizations, or similar rights, in no event may ATC, its Affiliates, representatives, or agents encourage, suggest, participate in or permit the imposition of any restrictions whatsoever on ALLTEL's current use of Reserved Space, Microwave Reserved Space or any then-current Additional ALLTEL Space at the Site as part of or in exchange for obtaining any such approval or permit. (vi) ATC agrees with respect to ATC Work and work by a Third Party Tenant, and ALLTEL agrees with respect to ALLTEL Work, that no such work shall be commenced until such Person has obtained all certificates, licenses, permits, authorizations, consents, and approvals necessary for such work from all Governmental Authorities having jurisdiction with respect to the applicable Site or the applicable work. (vii) Nothing in this Sublease or this Section 16 shall require ATC or ALLTEL to provide any information that such Party is prohibited from disclosing by Law or by any Contractual Obligation existing as of the Effective Date. (viii) In the event that any written filing, report, or response in hard copy form is required to be made with a Governmental Authority under Section 16(a), ATC agrees that it shall be responsible for the preparation and completion of the 60
written filing, report, or response in the form required by the applicable Governmental Authority, except to the extent that certain information required for such filing, report, or response can not be obtained by ATC and is in ALLTEL's possession or knowledge. With respect to any filing, report or response required to be made with a Governmental Authority under Section 16(a) for which a governmental form is not available, ATC and ALLTEL agree to mutually develop a standard form for the provision of such information to the other Party, including, without limitation a summary of the event that triggered the requirement of any filing or response. (ix) In the event that either Party becomes aware of any incorrect information provided to or contained in any report, filing, certificate, permit, or correspondence with a Governmental Authority or any violation of any Laws at a Site with respect to matters covered by this Section 16, such Party shall promptly notify the other Party in writing of such error, discrepancy or violation, and the Party responsible hereunder or the Party who provided the incorrect information, as applicable, shall be responsible for the correction of such error or discrepancy. (x) ATC and ALLTEL agree to mutually develop written procedures and guidelines with respect to the coordination of the compliance, monitoring and maintenance obligations of each Party under this Section 16 (including Sections 16(a)(i), (ii), (iv), and (vi), and 16(b)), as such procedures and guidelines may be mutually amended by the Parties from time to time. SECTION 17. No Liens. (a) Neither ATC nor ALLTEL shall create or permit any Lien against any Site, or any part thereof, other than Permitted Liens. If any Lien (other than a Permitted Lien) is filed against all or any part of any Site, ATC or ALLTEL, respectively, shall cause the same to be discharged by payment, satisfaction or posting of bond within 30 days after receiving knowledge of such Lien. If such party fails to cause any Lien (other than a Permitted Lien) to be discharged within the permitted time, the other party hereto may cause it to be discharged and may pay the amount of such Lien in order to do so. If the other party makes any such payment, all amounts paid shall be payable by the Party hereto causing such Lien upon demand. (b) Either party may, at its sole cost and expense, in its own name and on its own behalf or in the name of and on behalf of the other party hereto, in good faith, contest any claim of Lien and, in the event of any such contest, may permit such claim of Lien so contested to remain unpaid, unsatisfied and undischarged during the period of such contest and any appeal therefrom; provided, however, that, if any Site, the Subleased Property or Reserved Space, Microwave Reserved Space or Additional ALLTEL Space of any Site or any part thereof are subject to imminent danger of loss or forfeiture by virtue of or by reason of such claim of Lien, such claim of Lien shall be complied with forthwith 61
or ATC or ALLTEL (as applicable) shall deposit with the other party hereto a sum of money reasonably required as security to protect the Subleased Property, Reserved Space, Microwave Reserved Space, or Additional ALLTEL Space of such Site from any such loss or forfeiture. Each Party, at the sole cost and expense of the contesting party, shall cooperate fully with the other Party hereto in any such contest. (c) Any Permitted Subleasehold Mortgage and all rights acquired by any Permitted Subleasehold Mortgagee shall be subject to each and every term, covenant, condition, agreement, requirement, restriction and provision set forth in this Sublease and subject to all rights, title and interest of ALLTEL and its Affiliates. (d) ALLTEL shall execute, in favor of a utility for the benefit of ATC or any proposed Third Party Tenant, any necessary easement or right of way for utilities for any Site promptly following any request by ATC, provided such easement or right of way does not have a significant adverse effect on ALLTEL's or its Affiliate's then-current use of the Reserved Space, Microwave Reserved Space or Additional ALLTEL Space of such Site, including, without limitation, the operation of the ALLTEL Equipment, Microwave Equipment or Additional ALLTEL Equipment thereon. (e) Promptly upon ATC's receipt of copies of recorded documents evidencing the recordation of any ATC Permitted Subleasehold Mortgage and bearing the recording information therefor, ATC shall deliver to ALLTEL a copy of such recorded documents. SECTION 18. Condemnation. (a) If there occurs a Taking of all or a Substantial Portion of any Site, other than a Taking for temporary use and duration, then either Party shall have the right to terminate this Sublease as to such Site without any further liability or obligation by written notice to the other Party within 30 days of the occurrence of such Taking. If ALLTEL exercises its termination right and ATC does not exercise its termination right in accordance with this Section 18, ALLTEL's rights to use the Reserved Space shall terminate as to the affected Site, ALLTEL's obligation to pay the Site Maintenance Charge and any Additional ALLTEL Maintenance Charge shall terminate as of the date of such Taking, and ALLTEL's Reserved Space on such Site shall become Subleased Property. If ATC exercises its termination right in accordance with this Section 18 (without regard to whether or not ALLTEL exercises its termination right), the Term shall be deemed to have expired as to the affected Site on the effective date of such termination, as if such date were the Site Expiration Date as to such Site. The Award for any such Taking shall be paid to ATC. (b) If there occurs a Taking of less than a Substantial Portion of any Site, then this Sublease and all duties and obligations of ATC under this Sublease in respect of such Site shall remain unmodified, unaffected and in full force and effect. ATC shall promptly proceed to effect the Restoration of the remaining portion of the Subleased Property of such Site (to the extent feasible) to a condition at least as good as the condition thereof prior to the Taking. ATC shall be entitled to apply the Award received by ATC to the 62
reconstruction, Restoration and repair of any Subleased Property of any Site from time to time as such work progresses. If the cost of the repair work exceeds the Award recovered by ATC, ATC shall pay the excess cost. If the Award exceeds the cost of the repair work, the excess shall be paid to ATC. (c) If there occurs a Taking of any Subleased Property of any Site or any portion thereof, for temporary use, then this Sublease shall remain in full force and effect as to such Site for the remainder of the then current term; provided, however, that during such time as ATC shall be out of possession of such Subleased Property by reason of such Taking, the failure to keep, observe, perform, satisfy, and comply with those terms and conditions of this Sublease compliance with which are effectively impractical or impossible as a result of ATC's being out of possession of such Subleased Property shall not be an event of default hereunder. The Award for any such temporary Taking payable for any period prior to the Site Expiration Date shall be paid to ATC and, for any period thereafter, to ALLTEL. In the event that a Taking occurs with respect to less than a Substantial Portion of any Site that prevents ALLTEL from conducting the ALLTEL Permitted Use, ALLTEL's obligations to pay the Site Maintenance Charge and any Additional ALLTEL Maintenance Charge shall automatically be suspended with respect to such Site until such use can be recommenced to the extent of such prevented use. SECTION 19. Indemnity. (a) ALLTEL shall indemnify, defend and hold each ATC Indemnitee harmless from and against any and all Loss and Expense paid, suffered, incurred or sustained by any ATC Indemnitee on or after the applicable Site Commencement Date by reason of, arising out of, or in connection with (i) any default, breach, performance or nonperformance of ALLTEL's obligations and covenants under this Sublease (including, without limitation, ALLTEL's obligations pursuant to Section 5 with respect to obligations under Ground Leases for which ALLTEL remains expressly liable pursuant to the provisions of this Sublease); (ii) ALLTEL's use, operation, maintenance or occupancy of ALLTEL Equipment, Microwave Equipment, Additional ALLTEL Equipment, Microwave Reserved Space, Additional ALLTEL Space or the Reserved Space, to the extent ATC is not responsible therefor under the terms of this Sublease, (iii) ALLTEL's failure to comply with any applicable Laws or with the directives of FCC and FAA as to ALLTEL Equipment, Microwave Equipment, Additional ALLTEL Equipment, Microwave Reserved Space, Additional ALLTEL Space, Reserved Space, or ALLTEL's wireless communications operations from the Site, except to the extent ATC has expressly agreed to comply with any such Laws or directives pursuant to this Sublease; (iv) any acts or omissions or the negligence or intentional actions or omissions of any of ALLTEL's agents, employees, engineers, contractors, subcontractors, licensees or invitees or except to the extent such failure is due to the material inaccuracy of information provided by ATC or its Affiliates pursuant to Section 16; (v) any other provision of this Sublease which provides that ALLTEL shall indemnify, defend and hold harmless ATC or any Affiliate thereof in respect of the matters contained in such provision; and (vi) any Claims brought against ATC or an ATC Indemnitee arising out of or resulting from any of the foregoing; provided, however, that notwithstanding the 63
foregoing or anything else in this Sublease to the contrary, ALLTEL shall not be required to indemnify, defend or hold harmless ATC or any ATC Indemnitee with respect to any Taxes payable hereunder by ATC or its Affiliates. (b) ATC shall indemnify, defend and hold each ALLTEL Indemnitee harmless from and against any and all Loss and Expense paid, suffered, incurred or sustained by any ALLTEL Indemnitee on or after the applicable Site Commencement Date by reason of, arising out of, or in connection with (i) any default, breach, performance or nonperformance of ATC's obligations and covenants under this Sublease (including, without limitation, ATC's obligations pursuant to Section 5 and with respect to Ground Leases and Subleased Property); (ii) ATC's or any Third Party Tenant's use, operation, maintenance or occupancy of Subleased Property, to the extent ALLTEL is not responsible therefor under the terms of this Sublease, subject to clause (C) below, (iii) ATC's failure to comply with any applicable Laws or, as a Tower owner or operator, with the directives of FCC and FAA as to Sites that ATC is required to comply with pursuant to this Sublease or under applicable Laws, except to the extent ALLTEL has expressly agreed to comply with any such Laws or directives pursuant to this Sublease; (iv) any acts or omissions or the negligence or intentional actions or omissions of any of ATC's or any Third Party Tenant's agents, employees, engineers, contractors, subcontractors, licensees or invitees, except to the extent such failure is due to the material inaccuracy of information provided by ALLTEL or its Affiliates pursuant to Section 16; (v) any other provision of this Sublease which provides that ATC shall indemnify, defend and hold harmless ALLTEL or any Affiliate thereof in respect of the matters contained in such provision; and (vi) any Claims brought against ALLTEL or an ALLTEL Indemnitee arising out of or resulting from any of the foregoing; provided, however, that notwithstanding the foregoing or anything else in this Sublease to the contrary, ATC shall not be required to indemnify, defend or hold harmless ALLTEL or any ALLTEL Indemnitee with respect to (A) any Pre-Existing Condition, (B) any Taxes due and payable hereunder by ALLTEL or its Affiliates, or (C) with respect to clause (ii) of this Section 19(b), for any matters for which ATC is expressly not liable or responsible pursuant to Sections 16 or 21 of this Sublease or for which ATC has no right to compel compliance by a Third Party Tenant under the terms and conditions of an Existing Tenant Lease. (c) NOTWITHSTANDING THE PROVISIONS OF SECTION 19 OR ANY OTHER PROVISION TO THE CONTRARY, EACH PARTY HERETO HEREBY WAIVES THE RIGHT TO RECOVER AND NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL (INCLUDING BUT NOT LIMITED TO LOST PROFITS), PUNITIVE, EXEMPLARY AND SIMILAR DAMAGES AND THE MULTIPLIED PORTION OF DAMAGES, HOWEVER ARISING, EVEN IF A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. (d) If any lawsuit or enforcement action (a "Third Party Action") is filed against a Party hereto entitled to the benefit of indemnity under this Sublease (including, without limitation, Section 21), written notice thereof (the "Third Party Action Notice") shall be 64
given by the claimant to the indemnifying party as promptly as practicable, provided that no failure to give such notice shall relieve the indemnifying party of any liability hereunder (except to the extent the indemnifying party has suffered actual prejudice because of such failure). After receipt of such notice, the indemnifying party shall have ten days to notify the indemnified party (i) whether or not the indemnifying party disputes its liability to with respect to the claim or demand and (ii) whether or not the indemnifying party elects to do each of the following: (A) to take control of the defense and investigation of such Third Party Action, (B) to employ and engage attorneys of its choice to handle and defend the same, at the indemnifying party's cost, risk and expense, provided that the indemnified party may retain counsel (at the indemnified party's expense) to monitor the defense and investigation, and (C) to compromise or settle such Third Party Action, which compromise or settlement shall be made only with the written consent of the indemnified party (such consent not to be unreasonably withheld, conditioned or delayed) unless such compromise or settlement involves only the payment of money damages and does not impose the specific performance or other obligation upon the indemnified party, in which case no such consent shall be required. In no event shall a Third Party Action be compromised or settled without the prior written consent of the indemnifying party, which consent shall not be unreasonably withheld, conditioned or delayed. (e) The provisions of this Section 19 shall survive the expiration or earlier termination of this Sublease with respect to any events occurring on or before expiration or termination whether or not Claims relating thereto are asserted before or after expiration or termination. SECTION 20. Subordination and Attornment. (a) This Sublease and all rights of ATC therein, and all interest or estate of ATC in the Subleased Property of each Site, or any portion thereof, shall be subordinate to any and all Mortgages, which at any time during the Term, may be placed upon the Subleased Property, or any portion thereof, by ALLTEL or any of its Affiliates, and to any replacements, renewals, amendments, modifications, extensions or refinancing thereof, and to each and every advance made under any Mortgage; provided, however, that the subordination and attornment contained herein shall not be effective unless the existing or any future Mortgagee thereunder shall execute and deliver an NDA in favor of ATC, providing that (i) such Mortgagee will at all times fully recognize ATC's rights under this Sublease, and in the event of a foreclosure under any such Mortgage, so long as no event of default shall have occurred and be subsisting hereunder, and so long as ATC shall attorn to the purchaser upon such foreclosure, and so long as ATC continues, in all material respects, to fully and completely keep, observe, satisfy, perform and comply with all agreements, terms, covenants, conditions, requirements, provisions and restrictions of this Sublease, such Mortgagee shall not disturb ATC's possession of the Subleased Property; and (ii) that upon Mortgagee acquiring title to the Subleased Property, ATC shall attorn directly to such Mortgagee. ATC shall agree to such other terms and conditions in the NDA as may be reasonably required by such Mortgagee, provided that 65
such terms and conditions do not affect ATC's rights, nor increase or alter any of ATC's obligations, under this Sublease. (b) Subject to the provision of Section 20(a), ATC shall execute in a timely manner instruments that may be required to evidence this subordination clause, in respect of the Subleased Property of each Site. (c) Upon ATC's request, ALLTEL shall enter into an agreement reasonably acceptable to ALLTEL to provide leasehold mortgagee protections which are then typically required by institutional leasehold mortgagees in connection with leasehold mortgage financing, including, without limitation, the right of a leasehold mortgagee to receive notice of and the opportunity to exercise the cure rights of ATC under this Sublease. SECTION 21. Environmental Covenants. (a) [Reserved]. (b) [Reserved] (c) Subject to Section 21(d), ATC covenants and agrees that as to each Site (i) ATC shall not conduct or allow to be conducted upon any Site any business operations or activities, or employ or use a Site, to generate, manufacture, refine, transport, treat, store, handle, dispose of, transfer, produce, or process Hazardous Materials; provided that ATC shall have the right to bring, use and keep and allow any Third Party Tenant to bring and keep on the Subleased Property of each Site in compliance with all applicable Laws, batteries, generators and associated fuel tanks and other substances commonly used in the industry necessary for the operation and maintenance of each Site; (ii) ATC shall carry on its business and operations at each Site in compliance with, and will remain in compliance with, all applicable Environmental Laws and shall require all Third Party Tenants to do the same; (iii) ATC shall not create or permit to be created any Lien against any Site for any cost of any response, removal or remedial action or clean-up of Hazardous Materials Released by any Person on or after the Site Commencement Date other than ALLTEL, its Affiliates or the Ground Lessor with respect to any Leased Site; (iv) ATC shall promptly conduct and complete, or have conducted and completed, all investigations, studies, sampling and testing, and all remedial, removal, and other actions necessary to clean up and remove all Hazardous Materials released by any Person on or after the Site Commencement Date (other than ALLTEL, its Affiliates or the Ground Lessor or any of their respective officers, directors, employees, agents, engineers, contractors, subcontractors, licensees, or invitees) with respect to any Leased Site on, from or affecting each Site in accordance with all applicable Environmental Laws; and (v) ATC shall promptly notify ALLTEL in writing if ATC receives any notice, letter, citation, order, warning, complaint, claim or demand on or after the applicable Site Commencement Date that: (A) ATC, any Third Party Tenant or any other Person (including ALLTEL and its Affiliates) has violated, or is about to violate, any Environmental Law relating to a Site, (B) there has been a Release or there is a threat of 66
Release, of Hazardous Materials at or from the applicable Site, (C) ATC, any Third Party Tenant or any other Person (including ALLTEL and its Affiliates) may be or is liable, in whole or in part, for the costs of cleaning up, remediating, removing or responding to a Release of Hazardous Materials at or from a Site, or (D) a Site is subject to a Lien in favor of any Governmental Authority for any liability, cost or damages under any Environmental Law. (d) Subject to Section 21(c), ALLTEL covenants and agrees that as to each Site: (i) ALLTEL shall not conduct or allow to be conducted upon any Site any business operations or activities, or employ or use the Site, to generate, manufacture, refine, transport, treat, store, handle, dispose of, transfer, produce, or process Hazardous Materials; provided that ALLTEL shall have the right to bring, use and keep on the Reserved Space of any Site in compliance with all applicable Laws, batteries, generators and associated fuel tanks and other substances commonly used in the industry necessary for the operation and maintenance of each Reserved Space of any Site; (ii) ALLTEL shall carry on its business and operations on the Site in compliance with, and will remain in compliance with, all applicable Environmental Laws; (iii) ALLTEL shall not create or permit to be created any Lien against any Site for the costs of any response, removal or remedial action or clean-up of Hazardous Materials Released by ALLTEL or its Affiliates, agents, vendors, or contractors (other than ATC or its Affiliates); (iv) ALLTEL shall promptly conduct and complete, or have conducted and completed, all investigations, studies, sampling and testing, and all remedial, removal, and other actions necessary to clean up and remove all Hazardous Materials Released by ALLTEL or its Affiliates, agents, vendors, or contractors (other than ATC or its Affiliates) on, from or affecting the Site in accordance with all applicable Environmental Laws; (v) ALLTEL shall promptly notify ATC in writing if ALLTEL receives any notice, letter, citation, order, warning, complaint, claim or demand on or after the applicable Site Commencement Date that (A) any Person has violated any Environmental Law relating to a Site, (B) there has been a Release or there is a threat of Release of Hazardous Materials at or from the Site, (C) any Person may be or is liable, in whole or in part, for the costs of cleaning up, remediating, removing or responding to a Release of Hazardous Materials at or from a Site, or (D) any Site is subject to a Lien in favor of any Governmental Authority for any liability, cost or damages under any Environmental Law. (e) Unless resulting or arising from (i) the acts or omissions of ALLTEL, its Affiliates, or any of their respective officers, directors, employees, agents, engineers, contractors, subcontractors, licensees, or invitees (other than ATC or its Affiliates or any of their respective officers, directors, employees, agents, engineers, contractors, subcontractors, licensees, or invitees) or (ii) any Pre-Existing Condition, ATC (but subject to the provisions of 21(f)) shall indemnify, defend and hold each ALLTEL Indemnitee harmless from and against any and all Loss and Expense paid, suffered, incurred or sustained by any ALLTEL Indemnitee by reason of, arising out of, or in connection with the following: (A) the presence in, on, over or under, or the escape, seepage, leakage, spillage, discharge, emission or Release on or from the Site of any Hazardous Materials caused by ATC or any Third Party (including a Third Party Tenant) or their respective Affiliates, officers, directors, employees, agents, engineers, 67
contractors, subcontractors, licensees or invitees after the Site Commencement Date and, if ATC fails to exercise the purchase option pursuant to Section 31 with respect to any Site, prior to the applicable Site Expiration Date for such Site; (B) the violation of any Environmental Laws by ATC relating to or affecting the Site after the Site Commencement Date and, if ATC fails to exercise the purchase option pursuant to Section 31 with respect to any Site, prior to the applicable Site Expiration Date for such Site; (C) a Release of any Hazardous Materials or the violation of any of the Environmental Laws caused by ATC or any third party (including a Third Party Tenant but excluding the Ground Lessor or any of its respective officers, directors, employees, agents, engineers, contractors, subcontractors, licensees, or invitees) or their respective Affiliates, officers, directors, employees, agents, engineers, contractors, subcontractors, licensees or invitees after the Site Commencement Date and, if ATC fails to exercise the purchase option pursuant to Section 31 with respect to any Site, prior to the applicable Site Expiration Date for such Site in connection with any other property owned, operated or used by or on behalf of ATC, which violation or Release gives or may give rise to any rights whatsoever in any Party with respect to the Site by virtue of any of the Environmental Laws; (D) the violation or breach of, or the failure of ATC to fully and completely keep, observe, satisfy, perform and comply with, any agreement, term, covenant, condition, requirement, provision or restriction of this Section 21; or (E) any Claims brought against ALLTEL or an ALLTEL Indemnitee or the Site arising out of or resulting from any of the foregoing. (f) Unless resulting or arising from the acts or omissions of ATC, its Affiliates or any of their respective officers, directors, employees, agents, engineers, contractors, subcontractors, licensees, or invitees (other than ALLTEL or its Affiliates or any of their respective officers, directors, employees, agents, engineers, contractors, subcontractors, licensees, or invitees), ALLTEL (but subject to the provisions of Section 21(e)) shall indemnify, defend and hold each ATC Indemnitee harmless from and against any and all Loss and Expense paid, suffered, incurred or sustained by any ATC Indemnitee by reason of, arising out of, or in connection with the following: (i) the presence in, on, over or under, or the escape, seepage, leakage, spillage, discharge, emission or Release on or from any Site of any Hazardous Materials caused by ALLTEL or its Affiliates, officer, director, employee, agent, engineer, contractor, subcontractor, licensee, or invitee with respect to any Site; (ii) the violation of any Environmental Laws by ALLTEL or its Affiliates, officer, director, employee, agent, engineer, contractor, subcontractor, licensee or invitee relating to or affecting the Site; (iii) a Release of any Hazardous Materials or the violation of any of the Environmental Laws caused by ALLTEL, its Affiliates or any of their respective officers, directors, employees, agents, engineers, contractors, subcontractors, licensees, or invitees for such Site in connection with any other property owned, operated or used by or on behalf of ALLTEL, any of its Affiliates or any of their respective officers, directors, employees, agents, engineers, contractors, subcontractors, licensees, or invitees, which violation or Release gives or may give rise to any rights whatsoever in any Party with respect to any Site by virtue of any of the Environmental Laws; (iv) the violation or breach of, or the failure of ALLTEL to fully and completely keep, observe, satisfy, perform and comply with, any agreement, term, covenant, 68
condition, requirement, provision or restriction of this Section 21; or (v) any Claims brought against ATC or an ATC Indemnitee or the Reserved Space arising out of or resulting from any of the foregoing. (g) Notwithstanding anything to the contrary, for the purposes of this Section 21 only, each and every reference to the defined term (i) "Third Party Tenant" shall be deemed to exclude ALLTEL or any of its Affiliates that are Third Party Tenants under this Sublease, and (ii) "Reserved Space" shall include any Additional ALLTEL Space and Microwave Reserved Space under this Sublease. (h) The provisions of this Section 21 shall survive the applicable Site Expiration Date or earlier termination of this Sublease. (i) Notwithstanding anything to the contrary, ATC and any existing or proposed Third Party Tenant reserves the right during the Term to perform (or cause the performance of) any environmental assessment or study at any of the Sites so long as ATC provides ALLTEL with a copy of such assessment or study in ATC's possession within thirty (30) days following ATC's receipt of such assessment or study. (j) Notwithstanding anything to the contrary contained herein, ATC shall not be liable for, nor shall ATC be obligated to indemnify, defend or hold harmless ALLTEL or ALLTEL Affiliates for any Pre-Existing Condition. SECTION 22. Insurance. (a) ATC and ALLTEL shall both maintain in full force during the term of this Sublease and any individual Site Designation Supplement insurance policies (on an occurrence and not claims-made basis) in the following amounts and designations: (i) Property insurance for no less than the full replacement cost of the Subleased Property, with respect to ATC (it being understood that ATC has no obligation to insure any ALLTEL Equipment, Microwave Equipment or Additional ALLTEL Equipment); (ii) commercial general public liability insurance insuring against all liability of such Party's officers, employees, agents, licensees and invitees arising out of, by reason of or in connection with the use or occupancy of the Subleased Space or Reserved Space, Microwave Reserved Space, Additional ALLTEL Space, as applicable, of the Sites, if any, in an amount of not less than $1,000,000 for bodily injury or property damage as a result of one occurrence, and not less than $2,000,000 for bodily injury or property damage in the aggregate; (iii) automobile liability policy in an amount of not less than $1,000,000 for bodily injury or property damage as a result of one occurrence; 69
(iv) Workers' Compensation and Employers' Liability Insurance as prescribed by applicable law, including insurance covering liability under the Longshoremen's and Harbor Workers' Act and the Jones Act, if applicable; (v) Comprehensive General Liability Insurance (Bodily Injury and Property Damage but excluding pollution coverage), the limits of liability of which shall not be less than $1,000,000 per occurrence; and (vi) An umbrella policy of not less than $10,000,000. The above insurance shall provide that the other party will receive not less than 30 days' written notice prior to any cancellation of, or material change in coverage and shall contain a waiver of subrogation against the other party and, except with respect to the insurance required by Section 22(a)(iv) above, shall name the other party as additional insured, and contain a standard cross-liability endorsement. In the event that any particular Site is subject to a Ground Lease, each party hereto agrees that the underlying landowner or lessor shall be named as an additional insured with respect to the affected Site (except with respect to the coverage described above in Section 22(a)(i)). The above insurance will provide that if any policies are obtained by ALLTEL and ATC from the same insurance provider, the underlying insurance contracts will not limit the aggregate amount of coverage of the combined policies to anything less than the aggregate amounts of coverage that would have been provided by separate policies. (b) Each Party shall cause any of its contractors or others performing work at any Site, to keep in full force and effect during the term of any ALLTEL Work or ATC Work, respectively, a comprehensive general liability insurance policy, including blanket contractual and completed operations coverage, with limits of liability of at least $1,000,000 with respect to bodily injury, including death, arising from any one occurrence, and $1,000,000 with respect to damage to property arising from any one occurrence and an umbrella of no less than $10,000,000. Said insurance policy shall be endorsed to include ATC and ALLTEL as an additional insured and joint loss payee and shall provide that at least 30 days' prior written notice of any cancellation or material change in such insurance policy. Upon either party's request, each shall furnish to the other a certificate of insurance from the contractor and/or subcontractor confirming that the insurance coverage as specified herein is in full force and effect. (c) Notwithstanding the foregoing insurance requirements, (i) the insolvency, bankruptcy, or failure of any insurance company carrying insurance, or failure of any such insurance company to pay claims accruing, shall not be held to waive any of the provisions of this Sublease or relieve either Party hereto from any obligations under this Sublease, and (ii) each Party hereto reserves the right, from time to time, to increase the required liability limits described above in Section 22(a) in accordance with then-current customary insurance requirements in the tower industry nationally. (d) Nothing in this Section 22 shall prevent ALLTEL or ATC from obtaining insurance of the kind and in the amount provided for under this Section 22 or to satisfy 70
the above coverage limits under a blanket insurance policy or policies (evidence thereof reasonably satisfactory to the other Party shall be delivered to the other Party by the insuring Party) which may cover other properties owned or operated by the insuring Party as well as the Reserved Space, Microwave Reserved Space, Additional ALLTEL Space, Subleased Property or the Available Space; provided, however, that any such policy of blanket insurance shall provide that such policies of blanket insurance shall, as respects the Subleased Property, Reserved Space, Microwave Reserved Space, or Additional ALLTEL Space, as applicable, of each Site, contain the various provisions required of such an insurance policy by the foregoing provisions of this Section 22. (e) All policy amounts set forth in this Section 22 shall be reset every five years during the Term to increase by an amount not less than the CPI Change over the five-year period, except to the extent the Parties otherwise agree. (f) As to the Subleased Property, Reserved Space, Microwave Reserved Space, and Additional ALLTEL Space of each Site, all policies of insurance shall be written on companies rated A:VII by AM Best or a comparable rating and licensed in the State where such Site is located. Certificates evidencing insurance shall be in a form reasonably acceptable to the recipient Party, shall be delivered to such Party upon commencement of the Term and prior to expiration of such policy, new certificates evidencing such insurance, shall be delivered to such Party not less than 20 days prior to the expiration of the then current policy term. The Parties agree that all policies of insurance required by this Section 22 may contain such loss retention provisions or deductibles as is reasonable in light of financial conditions of the Parties. ATC agrees that ALLTEL may self insure with respect to all or a portion of the risks required to be insured against by ALLTEL under this Section 22. If ALLTEL elects to be covered by and participate in its self insurance and risk management programs, it shall notify ATC of such election. From time to time, upon reasonable request by ATC in the event ALLTEL is self-insured under this provision, ALLTEL shall furnish to ATC the information concerning its risk management and self-insurance policies and programs in effect at the time of such request. Section 23. Assignment and Subletting. (a) Without the prior written consent of ATC or ALLTEL Inc., respectively, which consent shall not be unreasonably withheld, conditioned or delayed, no Party nor any ALLTEL Guarantor to this Sublease may assign this Sublease or any of its rights or interests hereunder in whole or in part; provided, however, that each Party hereto may assign its rights or interests hereunder in whole or in part without such consent but upon 30 days' prior written notice, to (i) a successor corporation or entity by way of merger, consolidation or other reorganization, (ii) any Affiliate Assignee of the assignor, (iii) any Person acquiring all or substantially all of the assignor's assets or stock, (iv) any Person acquiring and continuing all of the assignor's business operations (wireless communications business in the case of ALLTEL or any ALLTEL Guarantor and tower business in the case of ATC) conducted at or from all of the Sites within any given Rural Service Area, Metropolitan Statistical Area, Market Trading Area, or Basic Trading Area 71
(as such terms are defined by the FCC as of the Effective Date), (v) Permitted Subleasehold Mortgagee, or (vi) with respect to ALLTEL and subject to Section 23(b), that portion of ALLTEL's rights hereunder that are directly associated with one or more ALLTEL's paging businesses to any Person who acquires all or substantially all of ALLTEL's FCC licenses used for such related paging services within any geographic area covered by such licenses; provided further, however, that (A) ATC may freely sublease Available Space and the Subleased Property to Third Party Tenants, (B) any assignee hereunder must agree in writing to assume all of the assignor's obligations hereunder with respect to the associated Site, (C) in no event may ALLTEL sublease all or any part of its rights hereunder or permit any form of shared use without the prior written consent of ATC, which ATC may withhold in its sole discretion, (D) notwithstanding anything to the contrary, in no event shall ALLTEL transfer or assign, in whole or in part, any of its interests in any Ground Lease (other than a transfer to an Affiliate Assignee of ALLTEL Inc. under clause (ii)) except in connection with a transfer or assignment of all of ALLTEL's FCC cellular licenses related to any Site in accordance with this Section 23(a) and Section 23(b), and (E) in no event shall ATC transfer or assign in part its rights with respect to installations under Section 13(b), it being understood that any transfer of such installation rights pursuant to this Section 23 must be made in whole and not in part to any assignee as to any particular Site. (b) Wherever under or in connection with this Sublease, ATC, ALLTEL or their respective Affiliates assign their right, title or interest, in whole or in part, in or to this Sublease or any Site as permitted under Section 23(a), the assigning party nor ATC Parent or the ALLTEL Guarantors shall not be released from its liability and obligations under this Sublease in respect of the right, title or interest so assigned and under the applicable Ground Lease. At or prior to any partial assignment of this Sublease as permitted in Section 23(a) with respect to an entire Site, the nonassigning party and such assignee shall have entered into one or more agreements, including, without limitation, a sublease and site designation supplements (collectively, the "New Sublease Documents"), that afford both parties hereto and/or the assignee relative rights (including, without limitation, provisions relating to the right to act for the other party), vis-a-vis ATC's or ALLTEL's or one of their Affiliate's rights and obligations under the New Sublease Documents no less favorable than those afforded by the Sublease and the Site Designation Supplements with respect to the rights and obligation of each party hereunder, and are otherwise in form and substance reasonably satisfactory to ALLTEL and ATC; provided, however, that if such assignment is pursuant to Section 23(a)(vi) with respect to ALLTEL's paging business, (i) the assignee and ATC shall have entered into one or more agreements that afford both Parties hereto and/or the assignee economic rights no less favorable than those afforded by the Sublease and the Site Designation Supplements with respect to the rights and obligation of each Party hereunder with respect to the portion of the Reserved Space, Microwave Space and/or Additional ALLTEL Space to be assigned, (ii) ALLTEL's right to occupy and use such portion of the assigned Microwave Reserved Space, Microwave Reserved Space and/or the Additional ALLTEL Space of such Site shall be terminated effective upon the date of 72
such assignment and shall thereafter be part of the Subleased Property, and (iii) the assignee shall be thereafter deemed a Third Party Tenant hereunder. Section 24. Estoppel Certificate. Either Party, from time to time upon 10 days' prior written request by the other Party, shall execute, acknowledge and deliver to the requesting Party, or to a person designated by such requesting Party, a certificate stating that this Sublease is unmodified and in full effect (or, if there have been modifications, that this Sublease is in full effect as modified, and setting forth such modifications) and the dates to which Rent, Site Maintenance Charge, Additional ALLTEL Maintenance Charge and other sums payable under this Sublease have been paid, and either stating that to the knowledge of the signer of such certificate no default exists hereunder or specifying each such default of which the signer has knowledge. The requesting Party, at such Party's cost and expense, shall cause such certificate to be prepared for execution by the requested Party. Any such certificate may be relied upon by any prospective Permitted Subleasehold Mortgagee or permitted assign of the Subleased Property of each Site. Section 25. Holding Over. If ATC remains in possession of the Subleased Property of any Site after expiration or termination of the then current Term as to such Site without any express written agreement by ALLTEL, then ATC shall be and become a tenant at sufferance, and there shall be no renewal or extension of this Sublease by operation of law. Section 26. A Party's Right To Act for the Other Party; ALLTEL Set-Off Right. In addition to and not in limitation of any other remedy any party may have under this Sublease, upon the occurrence of any failure, breach or default by a Party of any agreement, term or provision of this Sublease (including, without limitation, Sections 3, 5, 8, 11, 12, 14, 15, 16, 18 and 27 and Exhibit 4) (and without regard to any cure periods set forth with respect to any such occurrence in Sections 27(a) and (d), as applicable), the other Party shall have the right (but not the obligation) to cure such failure, breach or default as contemplated by this Section 26 upon compliance with the following advance notice provisions: (i) no advance shall be required in the event of an Emergency; (ii) if the breach or failure relates to a circumstance that could constitute an event of default under Sections 27(a) or (d), as applicable, the other Party may take such intended action upon delivery of at least fifteen (15) Days prior written notice to the breaching party, and (iii) if the breach or failure relates to a circumstance that would not constitute an event of default under Sections 27(a) or (d), as applicable (for example, in the event the circumstance does not constitute a default due to materially limitations), the other party may take such intended action upon delivery of at least forty-five (45) Days prior written notice to the breaching party. Any action taken by a Party pursuant to this Section 26 shall not waive or release the breaching Party from any duty, obligation or liability under this Sublease. The actions which ALLTEL or ATC, respectively, may take shall include, but are not limited to, the performance of maintenance or repairs and the making of replacements to the Towers and Site Improvements on each Site or the Reserved Space, Microwave Reserved Space and Additional ALLTEL Space (including full access for such purpose), the payment of insurance premiums which the breaching party is required to pay under this Sublease, the payment of Ground Rents which ATC is required to pay under the Ground Leases, the payment of Taxes which the breaching party is required to pay under this Sublease, or the execution on the other Party's behalf of an amendment or exercise of right under the Ground Lease. The nonbreaching Party may pay all reasonable costs and 73
expenses incurred in exercising its rights hereunder, including, without limitation, reasonable in-house labor, attorneys' fees and expenses, penalties, reinstatement fees, late charges, and interest and shall be reimbursed for an amount equal to 100% of the total amount of the costs and expenses incurred by the nonbreaching Party in accordance with this Section 26. Such reimbursement shall be due and payable upon demand and bear interest at the rate of the lesser of (i) 18% per annum or (ii) the maximum rate permitted by Law, from the date of demand until paid by the breaching Party. The nonbreaching Party shall have the right to set off against any Site Maintenance Charges due under Section 11 (in the case of ALLTEL as the nonbreaching Party) or any other amounts due and owing by the nonbreaching party to the other Party or its Affiliates. Section 27. Defaults and Remedies. (a) The following events shall constitute events of default by ALLTEL: (i) If ALLTEL or an ALLTEL Affiliate fails to timely make any payment or perform any material obligations pursuant to the applicable Ground Lease for a Site that ALLTEL or an ALLTEL Affiliate is expressly required to make or perform pursuant to the terms of this Sublease and shall not cure such failure by the earlier of (A) the expiration of any applicable cure period under the Ground Lease, or (B) 30 days after ATC or the Ground Lessor gives ALLTEL written notice thereof; provided, however, that notwithstanding the foregoing, so long as ALLTEL is reasonably contesting any payment (or amount thereof) or obligation under the Ground Lease in good faith, no such failure to cure shall be deemed a default as between ALLTEL and ATC until the expiration of 10 days after the earlier to occur of (1) ALLTEL's written agreement that an amount is due or payable or (2) it is finally determined by a court of competent jurisdiction that such amount was due and payable, or (ii) If ALLTEL fails to timely pay the Site Maintenance Charge as provided in Section 11, or otherwise fails to make timely payment of any amount due hereunder, and such failure continues for 15 days after the date the ATC notifies ALLTEL in writing of such failure that such payment was due and payable, provided, however, that notwithstanding the foregoing, so long as ALLTEL is reasonably contesting such payment (or amount thereof) in good faith, no such failure to pay shall be deemed a default until the expiration of 10 days after the earlier to occur of (A) ALLTEL's written agreement that an amount is due or payable or (B) it is finally determined by a court of competent jurisdiction that such amount was due and payable, or (iii) if ALLTEL shall materially violate or breach, or shall materially fail to fully and completely observe, keep, satisfy, perform and comply with, any agreement, term, covenant, condition, requirement, restriction or provision of this Sublease with respect to any Site (which violations, breaches or failures may be different for each Site), and shall not cure such violation, breach or failure within 30 days after ATC gives ALLTEL written notice thereof, or, if such failure shall 74
be incapable of cure within 30 days, if ALLTEL shall not commence to cure such failure within 15 days after ATC gives ALLTEL written notice thereof and continuously prosecute the performance of the same with due diligence as soon as reasonably practical under the circumstance (it being understood that this Section is subject to the other party's performance rights under Section 26); or (iv) if ALLTEL or ALLTEL Inc. becomes insolvent as defined in the Uniform Commercial Code under the Laws applicable to this Sublease or makes an assignment for the benefit of creditors; or if any action is brought by ALLTEL seeking its dissolution or liquidation of its assets or seeking the appointment of a trustee, interim trustee, receiver or other custodian for any of its property; or if ALLTEL commences a voluntary proceeding under the Federal Bankruptcy Code; or if any reorganization or arrangement proceeding is instituted by ALLTEL for the settlement, readjustment, composition or extension of any of its debts upon any terms; or if any action or petition is otherwise brought by ALLTEL seeking similar relief or alleging that it is insolvent or unable to pay its debts as they mature; or if any action is brought against ALLTEL seeking its dissolution or liquidation of any of its assets, or seeking the appointment of a trustee, interim trustee, receiver or other custodian for any of its property, and any such action is consented to or acquiesced in by ALLTEL or is not dismissed or stayed within 90 days after the date upon which it was instituted; or if any proceeding under the Federal Bankruptcy Code is instituted against ALLTEL and (A) an order for relief is entered in such proceeding, or (B) such proceeding is consented to or acquiesced in by ALLTEL or is not dismissed or stayed within 90 days after the date upon which it was instituted; or if any reorganization or arrangement proceeding is instituted against ALLTEL for the settlement, readjustment, composition or extension of any of its debts upon any terms, and such proceeding is consented to or acquiesced in by ALLTEL or is not dismissed or stayed within 90 days after the date upon which it was instituted; or if any action or petition is otherwise brought against ALLTEL seeking similar relief or alleging that it is insolvent, unable to pay its debts as they mature or generally not paying its debts as they become due, and such action or petition is consented to or acquiesced in by ALLTEL or is not dismissed or stayed within 90 days after the date upon which it was brought. (b) Upon the occurrence of any event of default by ALLTEL under Section 27(a), ATC may, in its sole discretion, either (i) terminate this Sublease with respect to the affected Site(s) by giving ALLTEL written notice of termination, and this Sublease shall be terminated with respect to such Site(s) at the time designated by ATC in its notice of termination to ALLTEL whereupon ALLTEL shall be obligated to refund to ATC all Rent for the rental periods occurring after the effective date of such termination (computed in a straight line basis until the end of the term of the Sublease, which for the purpose of a Ground Lease is hereby deemed to be the expiration of the Ground Lease as in effect on the date of such termination), or (ii) terminate ALLTEL's right to use the Reserved Space, Microwave Reserved Space and Additional ALLTEL Space as to such Site and ALLTEL's reservation thereof hereunder by giving ALLTEL written notice of 75
termination, and, upon such termination, the Reserved Space, Microwave Reserved Space and/or Additional ALLTEL Space shall become Subleased Property and ALLTEL shall be obligated to comply with the provisions of Section 4(d) as if such termination were a Withdrawal thereunder, effective as of the time designated by ATC in its notice of termination to ALLTEL. (c) Subject to Section 19(c), ATC's remedy stated in Section 27(b) above shall not preclude pursuit of any other remedy or remedies provided in this Sublease or any other remedy or remedies provided for or allowed by law or in equity, separately or concurrently or in any combination, including, without limitation, (i) specific performance or other equitable remedies; (ii) money damages arising out of such default; (iii) the right to perform, on behalf of ALLTEL or its Affiliate, such breaching party's obligations under the terms of this Sublease pursuant to Section 26, in which event ATC shall have the right to set off against any amount that it is required to pay ALLTEL or any of its Affiliates. (d) The following events shall constitute events of default by ATC: (i) If ATC fails to timely pay Ground Rent as provided in Section 5(a), fails to perform any material obligation pursuant to the applicable Ground Lease for a Site for which ATC or an ATC Affiliate is expressly required to perform pursuant to the terms of this Sublease, or otherwise fails to make timely payment of any amount due hereunder by the earlier of (A) the expiration of any applicable cure period under the Ground Lease, or (B) 15 days after the date ALLTEL or the Ground Lessor notifies ATC in writing of such failure that such payment was due and payable, provided, however, that notwithstanding the foregoing, so long as ATC is reasonably contesting such payment (or amount thereof) or obligation in good faith, no such failure to pay shall be deemed a default as between ALLTEL and ATC until the expiration of 10 days after the earlier to occur of (1) ATC's written agreement that an amount is due or payable or (2) it is finally determined by a court of competent jurisdiction that such amount was due and payable, or (ii) If ATC shall materially violate or breach, or shall materially fail to fully and completely observe, keep, satisfy, perform and comply with, any agreement, term, covenant, condition, requirement, restriction or provision of this Sublease with respect to any Site (which violations, breaches or failures may be different for each Site), and shall not cure such violation, breach or failure within 30 days after ALLTEL gives ATC written notice thereof, or, if such failure shall be incapable of cure within 30 days, if ATC shall not commence to cure such failure within 15 days after ALLTEL gives ATC written notice thereof and continuously prosecute the performance of the same with due diligence to completion as soon as reasonably practical under the circumstance (it being understood that this Section is subject to the other party's performance rights under Section 26); or 76
(iii) If ATC or ATC Parent becomes insolvent as defined in the Uniform Commercial Code under the Laws applicable to this Sublease or any Site or makes an assignment for the benefit of creditors; or if any action is brought by ATC seeking its dissolution or liquidation of its assets or seeking the appointment of a trustee, interim trustee, receiver or other custodian for any of its property; or if ATC commences a voluntary proceeding under the Federal Bankruptcy Code; or if any reorganization or arrangement proceeding is instituted by ATC for the settlement, readjustment, composition or extension of any of its debts upon any terms; or if any action or petition is otherwise brought by ATC seeking similar relief or alleging that it is insolvent or unable to pay its debts as they mature; or if any action is brought against ATC seeking its dissolution or liquidation of any of its assets, or seeking the appointment of a trustee, interim trustee, receiver or other custodian for any of its property, and any such action is consented to or acquiesced in by ATC or is not dismissed or stayed within 90 days after the date upon which it was instituted; or if any proceeding under the Federal Bankruptcy Code is instituted against ATC and (A) an order for relief is entered in such proceeding, or (B) such proceeding is consented to or acquiesced in by ATC or is not dismissed or stayed within 90 days after the date upon which it was instituted; or if any reorganization or arrangement proceeding is instituted against ATC for the settlement, readjustment, composition or extension of any of its debts upon any terms, and such proceeding is consented to or acquiesced in by ATC or is not dismissed or stayed within 90 days after the date upon which it was instituted; or if any action or petition is otherwise brought against ATC seeking similar relief or alleging that it is insolvent, unable to pay its debts as they mature or generally not paying its debts as they become due, and such action or petition is consented to or acquiesced in by ATC or is not dismissed or stayed within 90 days after the date upon which it was brought. (iv) the material breach by ATC of any representation or warranties under this Sublease unless ATC shall cure such breach within 30 days after ALLTEL gives ATC written notice thereof, or, if such breach shall be capable of cure but not within 30 days, if ATC shall not commence to cure such breach within 15 days after ALLTEL gives ATC written notice thereof and continuously prosecute the performance of the same with due diligence to as soon as reasonably practical under the circumstances. (e) Upon the occurrence of any event of default by ATC under Section 27(d) in respect of any Site that is not cured in accordance with Section 27(d), ALLTEL may terminate this Sublease as to the applicable Site by giving ATC written notice of termination, and this Sublease shall be terminated as to such Site, at the time designated by ALLTEL in its notice of termination to ATC, unless otherwise provided herein. In the event of any termination of this Sublease by ALLTEL in accordance with this Section 27(e), ATC, for itself and on behalf of any of its Affiliates, hereby (X) acknowledges and agrees that ATC and its Affiliates shall have no right of abatement, reduction, setoff, counterclaim, rescission, refund, defense or deduction or any other rights or claims at Law or in equity with respect to the Rent with respect to the applicable Site, (Y) agrees 77
that ATC and its Affiliates shall have no further rights or claims under this Sublease or at Law or equity with respect to any Site that has been terminated, including, without limitation, any right to purchase such Site pursuant to this Agreement or under any right or Claim at Law or in equity, and (Z) irrevocably waives any rights or claims at Law or in equity with respect to the matters set forth in the foregoing clauses (X) and (Y), including, without limitation, any claims of unjust enrichment, quantum meruit, or equitable estoppel. (f) Subject to Section 19(c), ALLTEL may pursue any other remedy or remedies provided in this Sublease, including without limitation Section 27(e), or any remedy or remedies provided for or allowed by law or in equity, separately or concurrently or in any combination, including, without limitation, (i) specific performance or other equitable remedies; (ii) money damages arising out of such default; (iii) ALLTEL may exercise the Withdrawal Right as to any Site immediately and without further act, pursuant to Section; or (iv) ALLTEL may perform, on behalf of ATC, ATC's obligations under the terms of this Sublease pursuant to Section 26, in which event ALLTEL shall have the right to set off all reimbursable expenses against the Site Maintenance Charges or Additional ALLTEL Maintenance Charges. (g) A Party's pursuit of any one or more of the remedies provided in this Sublease shall not constitute an election of remedies excluding the election of another remedy or other remedies, or a forfeiture or waiver of any amounts payable under this Sublease as to the applicable Site by such Party or waiver of any relief or damages or other sums accruing to such Party by reason of the other Party's failure to fully and completely keep, observe, perform, satisfy and comply with all of the agreements, terms, covenants, conditions, requirements, provisions and restrictions of this Sublease. (h) Either Party's forbearance in pursuing or exercising one or more of its remedies shall not be deemed or construed to constitute a waiver of any event of default or of any remedy. No waiver by either Party of any right or remedy on one occasion shall be construed as a waiver of that right or remedy on any subsequent occasion or as a waiver of any other right or remedy then or thereafter existing. No failure of either Party to pursue or exercise any of its powers, rights or remedies or to insist upon strict and exact compliance by the other Party with any agreement, term, covenant, condition, requirement, provision or restriction of this Sublease, and no custom or practice at variance with the terms of this Sublease, shall constitute a waiver by either Party of the right to demand strict and exact compliance with the terms and conditions of this Sublease. Section 28. Quiet Enjoyment. ATC shall, subject to the terms and conditions of this Sublease, peaceably and quietly hold and enjoy the Subleased Property of each Site during the Term without hindrance or interruption from the ALLTEL Companies or anyone claiming by, through or under the ALLTEL Companies, so long as, with respect to a Site, ATC fully and completely keeps, observes, performs, satisfies and compiles with all of the material agreements, terms, covenants and conditions, requirements, provisions and restrictions of this Sublease to be 78
kept, observed, performed, satisfied and complied with by ATC and pays all Rent and other amounts required to be paid by ATC under this Sublease between ALLTEL and ATC. Section 29. No Merger. There shall be no merger of this Sublease or the subleasehold interest or estate created by this Sublease in any Site with the superior estate held by ALLTEL thereof, by reason of the fact that the same person or entity may acquire, own or hold, directly or indirectly, both the subleasehold interest or estate created by this Sublease in any Site and such superior estate; and this Sublease shall not be terminated, in whole or as to any Site, except as expressly provided herein. Section 30. Recording of Ground Leases and Site Designation Supplement. (a) Subject to the applicable provisions of the Agreement to Sublease, upon the execution of this Sublease, any Party hereto may, at its cost and expense, (i) cause the Ground Leases or memorandum of Ground Leases for the Sites to be filed in the appropriate County property records, unless such Ground Leases expressly prohibit such recording; and (ii) cause any Site Designation Supplement to be filed in the appropriate County property records unless the Ground Lease for the applicable Site prohibits such recording. (b) In addition to and not in limitation of any other provision of this Sublease, the Parties shall have the right to review and make corrections, if necessary, to any and all exhibits hereto or to the Site Designation Supplements after the date hereof. No such change shall be made unless mutually agreed to by the Parties hereto and evidenced by the mutual execution of an amendment to the applicable Site Designation Supplement. After making such amendment, either Party may re-record any such Site Designation Supplements to reflect such amendment, if requested by either Party. Section 31. Purchase Options. (a) Right To Purchase. Provided that this Sublease shall not have been earlier terminated, or an event of default by ATC as referred to in Section 27 shall not have occurred and be continuing at any time after the commencement of the Purchase Option Window Period through the Purchase Option Closing Date for an affected Site, ATC shall have an option, exercisable by delivering to ALLTEL written notice of exercise during the Purchase Option Window Period to elect to purchase all (but not less than all) of the Purchase Option Sites which have as their Site Expiration Date the applicable Purchase Option Trigger Date, for the Purchase Option Consideration for the applicable Sites and on the other terms and subject to the conditions herein specified. ALLTEL shall be obligated to sell, and ATC shall be obligated to buy, all (but not less than all) such Purchase Option Sites at a closing to occur on the date determined pursuant to Section 31(b). Except as provided in this Section 31, ATC shall have no right or option to purchase or obtain a transfer of the Sites subject to this Sublease. (b) Payment of the Purchase Price. ATC shall pay to ALLTEL Inc. (as agent for all of the ALLTEL Companies) the aggregate Purchase Option Consideration for the 79
applicable Purchase Option Sites, which payment shall be made on a date mutually convenient to ALLTEL and ATC occurring not later than the Purchase Option Trigger Date and simultaneously with the transfer of the purchased Sites by ALLTEL to ATC; provided, however in the event that any approvals or filings with any Governmental Authorities to such transfer have not been granted, approved or required waiting periods expired on or before the applicable Purchase Option Trigger Date, then the closing may be extended at the option of either Party for a period not to exceed 12 months after the Purchase Option Trigger Date until all such approvals or consents are obtained; provided, however, that in the event of such an extension, ATC shall be obligated to purchase, in accordance with this Section 31, any Purchase Option Site for which the required Governmental Approvals have been granted, approved or to the extent that required waiting periods have expired. Closings shall take place in Little Rock, Arkansas or such other location as mutually agreed to by the Parties and at such date and time as mutually agreed to by the Parties in good faith. Risk of loss for the Purchase Option Sites purchased pursuant to Section 31 shall pass from the applicable ALLTEL(s) to ATC upon payment of the Purchase Option Consideration therefor. Each party shall pay its own expenses with respect to such transfer and shall share equally in the cost of any recording, transfer or filing Taxes or fees. (c) Transfer by ALLTEL. Any transfer of Sites by ALLTEL or its Affiliates to ATC pursuant to this Sublease shall include the following terms and conditions: (i) an assignment of ALLTEL's interest in and an assumption by ATC of ALLTEL's liabilities and obligations under any Ground Lease for such Site and a transfer of fee simple title to the Land for any Site which is an Owned Site; which transfer and/or assignment of interest shall be of a good, marketable and insurable interest and free and clear of all Liens except for Permitted Liens or any Liens incurred or permitted by ATC or any of its Affiliates or any Third Party Tenant or Ground Lessor; (ii) unless terminated pursuant to Section 27 or withdrawn pursuant to Section 9, (A) ALLTEL or any ALLTEL Affiliate shall be entitled to continue to lease the Reserved Space, Microwave Reserved Space and/or Additional ALLTEL Space on each such Site from ATC for three successive five-year terms in accordance with the economic terms set forth in Sections 11(b) and 11(g) through (j), (B) the applicable ALLTEL Company and ATC shall enter into a site schedule under any then-existing master lease agreement between ATC (or any of its Affiliates) and ALLTEL (or any of its Affiliates) or, in the event there is none, a mutually agreeable form of lease for the lease of the Reserved Space, Microwave Reserved Space and/or Additional ALLTEL Space then leased by ALLTEL hereunder and consistent with the provisions of this subsection (ii); and (C) such Site shall no longer be a Site for the purposes of this Sublease; (iii) to the extent legally transferable, an assignment of all rights of ALLTEL or any applicable ALLTEL Company under or pursuant to warranties, representations and guarantees made by suppliers or manufacturers in connection 80
with such Site, but excluding any rights to receive amounts under such warranties, representations and guarantees representing reimbursements for items paid by ALLTEL; (iv) to the extent legally transferable, an assignment of all known and unknown rights, claims, credits, causes of action, or rights to commence any causes of action or rights of setoff of an ALLTEL Company or any Affiliate against third parties relating to such Site arising on or after the date of transfer, including unliquidated rights under manufacturers' and vendors' warranties, but excluding all amounts representing reimbursements for items paid by ALLTEL or any Affiliate; and (v) Each Party shall use commercially reasonable efforts to effectuate the receipt, transfer and assignment of any Governmental Authorizations required in order to effect any release, transfer or assignment contemplated under this Section 31. Each Party shall cooperate with the other Party and do all such additional and further acts, and shall execute and deliver all such additional and further instruments, certificates and documents, as the other Party may reasonably request to fully vest in and assure to ATC full right, title and interest in and to the Sites, and as ALLTEL may reasonably request to fully effectuate the assumption of (A) all obligations, responsibilities and duties by ATC, (B) the Tower and (C) the Site Improvements, in each case pursuant to this Section 31. (d) Evidence of Transfer. ALLTEL and ATC shall enter into assignments, deeds (with warranties of title as to ALLTEL's actions only), bills of sale and such other documents and instruments as the other may reasonably request to evidence any transfer of such Sites. (e) No Warranties; No Prorations. Any transfer of a Site by ALLTEL or any Affiliate pursuant to this Sublease shall be "AS IS" and without any warranty whatsoever by ALLTEL or ATC, except that in any transfer of a Site by ALLTEL or any Affiliate to ATC pursuant to this Sublease, ALLTEL shall warrant that it has not previously transferred title to such Site that is so transferred and that each such Site is free of Liens created by or through ALLTEL or any Affiliate thereof, except Liens permitted pursuant to Section 31(c)(i). ALLTEL and ATC acknowledge and agree that no prorations for any Tax associated with real or personal property, utilities, third- party rents, and similar expenses shall be required with respect to the Transfer of any of the Purchase Option Sites transferred hereunder. (f) Registration of ATC Class A Common Stock. ATC and ATC Parent agree that, with respect to the Purchase Option Consideration: (i) So long as ATC has the right to exercise any purchase option pursuant to the provisions of Section 31(a) and during any period that any such option has been exercised and the transactions contemplated thereby remain unconsummated, ATC Parent shall reserve and keep available out of its 81
authorized capital stock, solely for the purpose of issuance upon the exercise of its purchase option pursuant to this Section 31, the number of shares of ATC Class A Common Stock comprising the Purchase Option Consideration (as adjusted for changes in capitalization and other events from time to time pursuant to Section 31(g)). (ii) In the event that ALLTEL elects to receive any shares of ATC Class A Common Stock issuable pursuant to the exercise of ATC's purchase option set forth in this Section 31, ATC Parent shall: (A) if permitted by the rules and regulations of the United States Securities and Exchange Commission ("SEC") to do so prior to the Purchase Option Closing Date (unless any failure to be so permitted is due to an act or omission on the part of ATC Parent or any of its Affiliates, in which event such failure shall constitute a breach by ATC under this Sublease), prepare and file with the SEC, no later than forty-five (45) days (30 days in the case of a Form S-3 registration statement) following its receipt of ALLTEL's notice of its election to receive ATC Class A Common Stock, a registration statement on Form S-1 or, if eligible, on Form S-3 (or any successor forms) covering the issuance and sale to ALLTEL of the ATC Class A Common Stock, and ATC Parent shall use its commercially reasonable best efforts to have the Registration Statement declared effective by the SEC under the Securities Act on or prior to the Purchase Option Closing Date, provided, however, that if not so permitted to file prior to the Purchase Option Closing Date (due to no act or omission on the part of ATC Parent or any of its Affiliates), ATC Parent shall: (1) file a registration statement relating to the resale of such ATC Class A Common Stock immediately following the Purchase Option Closing Date and shall use its commercially reasonable best efforts to have such resale registration statement declared effective by the SEC under the Securities Act as soon as possible after the Purchase Option Closing Date; (2) use its commercially reasonable best efforts to keep the registration statement effective until the earlier of all such securities are sold or all such securities may be sold without restriction under Rule 144 of the Securities Act; (3) furnish to ALLTEL such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as ALLTEL may reasonably request in order to facilitate the disposition of the securities owned by ALLTEL, and notify ALLTEL at any time when a prospectus relating to the securities is 82
required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. (B) as soon as practicable use commercially reasonably best efforts to take all such actions as may be reasonably required under applicable state blue sky or securities law; provided, however, that ATC Parent will not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to general service of process or general taxation in any such jurisdiction where it is not then so subject; and (C) promptly prepare and file with the New York Stock Exchange (and/or such other stock exchange on which the shares of ATC Class A Common Stock are listed at the Purchase Option Closing Date) listing applications covering the shares of ATC Class A Common Stock, and use its commercially reasonable best efforts to obtain, prior to the Purchase Option Closing Date, approval for the listing of the ATC Class A Common Stock, subject only to official notice of issuance. Anything in this Section 31(f) to the contrary notwithstanding, ATC Parent shall not be required to file a registration statement if ATC has furnished, to ALLTEL, a certificate signed by the Chief Executive Officer or the Chief Financial Officer of ATC Parent stating that in the good faith judgment of the signer of such certificate the filing of a registration statement would require the disclosure of material information that ATC Parent has a bona fide business purpose for preserving as confidential and that is not then otherwise required to be disclosed; provided, however, that ATC Parent's obligation to use its reasonable business efforts to effect a registration pursuant to this Section 31(f) may not be deferred for more than ninety (90) days from the date of receipt of a written request from ALLTEL; provided further, however, that ATC Parent shall not utilize this right more than once during any twelve (12) month period; and provided further, that ALLTEL shall be able to defer any Purchase Option Closing Date until ATC Parent is able to file the affected registration statement. (g) Adjustment Upon Changes in Capitalization, Etc. In the event of any changes in ATC Class A Common Stock (directly or indirectly) by reason of a stock dividend, stock split, reverse stock split, merger, consolidation, sale (or lease or exchange) of all assets or substantially all assets, liquidation, recapitalization, combination, exchange of shares, spin-off, split-off or similar transaction involving ATC Parent and its Affiliates, taken as a whole ("Capitalization Events"), the type and number of shares or securities that comprise the Purchase Option Consideration will be adjusted appropriately, and proper provision will be made in the agreements governing such 83
transaction, so that ALLTEL will receive upon ATC's exercise of its purchase option and ALLTEL's election to receive shares of ATC Class A Common Stock, the number and class of shares or other securities or property, including cash (or the proceeds, if any, thereof in the event such shares, securities or property are no longer outstanding or in existence as a result of any subsequently occurring Capitalization Event or of any other cause or event) that ALLTEL would have received with respect to ATC Class A Common Stock if the Purchase Option Closing Date for any exercise of the purchase option had occurred immediately prior to such event or the record date therefor, as applicable. Without limiting the generality of the foregoing, adjustments for such changes in capitalization shall include, but not be limited to, the following Capitalization Events: (i) In case ATC Parent shall at any time subdivide its outstanding shares of ATC Class A Common Stock into a greater number of shares, the number of shares comprising the Purchase Option Consideration shall be proportionately increased; and conversely, in case the ATC Class A Common Stock shall be combined into a smaller number of shares, the number of shares that comprise the Purchase Option Consideration shall be proportionately reduced. (ii) If ATC Parent shall declare a dividend on the ATC Class A Common Stock payable in stock or other securities of ATC Parent or of any other corporation, or in property (other than regularly declared cash dividends, to holders of record of ATC Class A Common Stock as of a date prior to any Purchase Option Closing Date), ALLTEL shall, without additional cost, be entitled to receive upon the exercise of ATC's purchase option, and its election to receive shares of ATC Class A Common Stock, in addition to the ATC Class A Common Stock to which ALLTEL is otherwise entitled upon such exercise, the number of shares of stock or other securities or property, including cash (or the proceeds, if any, thereof in the event such shares, securities or property are no longer outstanding or in existence as a result of any subsequently occurring Capitalization Event or of any other cause or event) which ALLTEL would have been entitled to receive if ALLTEL had been a holder of such ATC Class A Common Stock on such record date. (iii) In case of any capital reorganization or reclassification of the ATC Class A Common Stock, a consolidation or merger involving ATC Parent, a "going private transaction" (as defined by Rule 13e-3 of the Securities and Exchange Act of 1934, as amended, or any successor provision) by ATC Parent, any liquidation, dissolution or winding up of ATC Parent, any sale (or lease or exchange) of a all or substantially all of the business, property and assets of ATC Parent and its Subsidiaries, taken as a whole, or any spin-off or split-off of any subsidiary or Affiliate of ATC Parent), ALLTEL shall have the right to receive, upon ATC's exercise of its purchase option and ALLTEL's election to receive shares of ATC Class A Common Stock, the proportionate share of all stock, securities or other property, including cash (or the proceeds, if any, thereof in the event such shares, securities or property are no longer outstanding or in existence as a result of any subsequently occurring Capitalization Event or of any other 84
cause or Event) issued, paid or delivered in any such transaction with respect to the ATC Class A Common Stock as is allocable to the shares of ATC Class A Common Stock then called for by the Purchase Option Consideration (without regard to whether ATC's purchase option is exercisable at such time), which proportionate share will be in addition to any remaining interest of ALLTEL in the ATC Class A Common Stock that remains outstanding after any such transaction. (iv) If any of the Capitalization Events described in this Section 31(g) results in ALLTEL on a Purchase Option Closing Date receiving a cash amount in lieu of shares of ATC Class A Common Stock (or other securities or property into which such ATC Class A Common Stock was previously converted) upon ATC's exercise of its purchase option and ALLTEL's election to receive shares of ATC Class A Common Stock, then, in addition to the right of ALLTEL to receive such cash amount, ALLTEL shall also be entitled to receive an additional cash amount equal to the aggregate Interest Accrual Amount. (v) If any of the Capitalization Events described in this Section 31(g) would result in the issuance of securities or other property in exchange for ATC Class A Common Stock by any party other than ATC Parent, ATC Parent shall cause such third party, as a condition to such Capitalization Event, to expressly assume the obligations of ATC Parent under this Section 31. (vi) Any notice by ATC of its election to exercise its purchase option pursuant to this Section 31 shall also be accompanied by a certificate signed by the Chief Executive Officer or Chief Financial Officer of ATC certifying to ALLTEL (A) the number of shares constituting the ATC Class A Common Stock or other securities, property or cash constituting the Purchase Option Price, along with a detailed reconciliation of such number reconciled to all Capitalization Events that occurred after the Effective Date and the required adjustment for each such Capitalization Event pursuant to Section 31(g) and (B) that, in the good faith judgment of such officer, that ATC will be able to satisfy the conditions precedent set forth in Section 31(f)(ii) with respect to the issuance of any Purchase Option Consideration and that no event of the type described in the last sentence of Section 31(f)(ii) is in existence. At any time during the Term of this Sublease (but no more often than once annually unless a Capitalization Event has occurred subsequent to the last certificate delivered pursuant to this Section), ATC shall deliver to ALLTEL within 30 days of a written request therefore a certificate, signed by the Chief Executive Officer or Chief Financial Officer of ATC, as to the then-current calculation of the Purchase Option Price in accordance with clause (A) of the foregoing sentence. 85
Section 32. [Reserved] Section 33. ATC Parent's Guaranty. (a) ATC Parent unconditionally guarantees to ALLTEL the full and timely payment and performance and observance of all of the terms, provisions, covenants and obligations of ATC under this Sublease and each Site Designation Supplement (the "ATC Obligations"). ATC Parent agrees that if ATC defaults at any time during the Term of this Sublease and any Site Designation Supplement in the performance of any of the ATC Obligations, ATC Parent shall faithfully perform and fulfill all ATC Obligations and shall pay to ALLTEL all reasonable attorneys' fees, court costs, and other expenses, costs and disbursements incurred by ALLTEL on account of any default by ATC and on account of the enforcement of this guaranty. (b) If ATC defaults under this Sublease or any Site Designation Supplement, and ALLTEL elects to enforce the provisions of this Section 33, ALLTEL shall promptly give ATC Parent written notice thereof, which notice shall constitute an exercise of ALLTEL's rights against ATC Parent pursuant to this Section 33. Following the receipt of such notice by ATC Parent, ATC Parent shall have the same period of time as is afforded to ATC under this Sublease or the applicable Site Designation Supplement to cure such default, but no such cure period shall diminish the obligations of ATC Parent under this Section 33. (c) This guaranty obligation of ATC Parent shall be enforceable by ALLTEL in an action against ATC Parent without the necessity of any suit, action, or proceedings by ALLTEL of any kind or nature whatsoever against ATC, without the necessity of any notice to ATC Parent of ATC's default or breach under this Sublease or the applicable Site Designation Supplement, and without the necessity of any other notice or demand to ATC Parent to which ATC Parent might otherwise be entitled, all of which notices ATC Parent hereby expressly waives. ATC Parent hereby agrees that the validity of this guaranty and the obligations of ATC Parent hereunder shall not be terminated, affected, diminished, or impaired by reason of the assertion or the failure to assert by ALLTEL against ATC any of the rights or remedies reserved to ALLTEL pursuant to the provisions of this Sublease or the applicable Site Designation Supplement or any other remedy or right which ALLTEL may have at law or in equity or otherwise. (d) ATC Parent covenants and agrees that this guaranty is an absolute, unconditional, irrevocable and continuing guaranty. The liability of ATC Parent hereunder shall not be affected, modified, or diminished by reason of any assignment, renewal, modification or extension of this Sublease and any Site Designation Supplement or any modification or waiver of or change in any of the covenants and terms of this Sublease or any Site Designation Supplement by agreement of ALLTEL and ATC, or by any unilateral action of either ALLTEL or ATC, or by an extension of time that may be granted by ALLTEL to ATC or any indulgence of any kind granted to ATC, or any dealings or transactions occurring between ALLTEL and ATC, including, without limitation, any adjustment, compromise, settlement, accord and satisfaction, or release, or 86
any bankruptcy, insolvency, reorganization, arrangements, assignment for the benefit of creditors, receivership, or trusteeship affecting ATC. ATC Parent does hereby expressly waive any suretyship defense it may have by virtue of any statute, law, or ordinance of any state or other governmental authority. (e) All of ALLTEL's' rights and remedies under this guaranty are intended to be distinct, separate, and cumulative and no such right and remedy herein is intended to be the exclusion of or a waiver of any other. (f) ATC Parent hereby waives presentment, demand for performance, notice of nonperformance, protest, notice of protest, notice of dishonor, and notice of acceptance. ATC Parent further waives any right to require that an action be brought against ATC or any other person or to require that resort be had by ALLTEL to any security held by ALLTEL. (g) The guaranty provided by this Section is for the benefit of, and is enforceable by each of, ALLTEL and any of its applicable Affiliates and ALLTEL Indemnitees. Section 34. ALLTEL Guaranty. (a) The ALLTEL Guarantors, jointly and severally, unconditionally guarantee to ATC the full and timely payment and performance and observance of all of the terms, provisions, covenants and obligations of ALLTEL and any Affiliate of ALLTEL under this Sublease and each Site Designation Supplement (the "ALLTEL Obligations"). The ALLTEL Guarantors agree that if ALLTEL or any ALLTEL Affiliate default at any time during the Term of this Sublease or any Site Designation Supplement in the performance of any of the ALLTEL Obligations, the ALLTEL Guarantors shall faithfully perform and fulfill all ALLTEL Obligations and shall pay to ATC all Loss and Expense incurred by ATC on account of any default by ALLTEL or an ALLTEL Affiliate and on account of the enforcement of this guaranty. (b) If ALLTEL defaults under this Sublease or any Site Designation Supplement, and ATC elects to enforce the provisions of this Section 34, ATC shall promptly give ALLTEL Inc. written notice thereof, which notice shall constitute an exercise of ATC's rights against the ALLTEL Guarantors pursuant to this Section 34 and shall be deemed notice to all such ALLTEL Guarantors. Following the receipt of such notice by ALLTEL Inc., the ALLTEL Guarantors shall have the same period of time as is afforded to ALLTEL under this Sublease or the applicable Site Designation Supplement to cure such default, but no such cure period shall diminish the obligations of the ALLTEL Guarantors under this Section 34. (c) This guaranty obligation of the ALLTEL Guarantors shall be enforceable, jointly and severally as to each of the ALLTEL Guarantors, by ATC in an action against any or all of the ALLTEL Guarantors without the necessity of any suit, action, or proceedings by ATC of any kind or nature whatsoever against any or all of the ALLTEL Guarantors, without the necessity of any notice to any or all of the ALLTEL Guarantors 87
of ALLTEL's default or breach under this Sublease or the applicable Site Designation Supplement, and without the necessity of any other notice or demand to the ALLTEL Guarantors to which the ALLTEL Guarantors might otherwise be entitled, all of which notices each of the ALLTEL Guarantors hereby expressly waives. The ALLTEL Guarantors hereby agree that the validity of this guaranty and the obligations of the ALLTEL Guarantors hereunder shall not be terminated, affected, diminished, or impaired by reason of the assertion or the failure to assert by ATC against ALLTEL any of the rights or remedies reserved to ATC pursuant to the provisions of this Sublease or the applicable Site Designation Supplement or any other remedy or right which ATC may have at law or in equity or otherwise. (d) Each of the ALLTEL Guarantors covenants and agrees that this guaranty is an absolute, unconditional, irrevocable and continuing guaranty. The liability of the ALLTEL Guarantors hereunder shall not be affected, modified, or diminished by reason of any assignment, renewal, modification or extension of this Sublease and any Site Designation Supplement or any modification or waiver of or change in any of the covenants and terms of this Sublease or any Site Designation Supplement by agreement of ATC and ALLTEL, or by any unilateral action of either ATC or ALLTEL, or by an extension of time that may be granted by ATC to ALLTEL or any indulgence of any kind granted to ALLTEL, or any dealings or transactions occurring between ATC and ALLTEL, including, without limitation, any adjustment, compromise, settlement, accord and satisfaction, or release, or any bankruptcy, insolvency, reorganization, arrangements, assignment for the benefit of creditors, receivership, or trusteeship affecting ALLTEL. Each of the ALLTEL Guarantors does hereby expressly waive any suretyship defense it may have by virtue of any statute, law, or ordinance of any state or other governmental authority. (e) All of ATC's rights and remedies under this guaranty are intended to be distinct, separate, and cumulative and no such right and remedy herein is intended to be the exclusion of or a waiver of any other. (f) Each of the ALLTEL Guarantors hereby waives presentment, demand for performance, notice of nonperformance, protest, notice of protest, notice of dishonor, and notice of acceptance. Each of the ALLTEL Guarantors further waives any right to require that an action be brought against ALLTEL or any other person or to require that resort be had by ATC to any security held by ATC. (g) The guaranty provided by this Section is for the benefit of, and is enforceable by each of, ATC and any of its applicable Affiliates and ATC Indemnitees. Section 35. Taxes. (a) Tax Responsibility. Except as otherwise provided in this Section 35, ATC shall be responsible for and pay in a timely manner, all Taxes (other than income, capital gains, gross receipts, or franchise Taxes, or Taxes in lieu thereof, including without limitation alternative minimum taxes) imposed or levied upon, or incurred in connection 88
with (i) the Sites or any portion thereof, (ii) the sale, financing, construction, purchase, ownership, acquisition, acceptance, rejection, delivery, nondelivery, possession, installation, transportation, transfer of title, lease, sublease, condition, return, abandonment or other application or disposition of the Sites or any portion thereof, (iii) the use, operation, maintenance, repair, modification or alteration of the Sites or any portion thereof, (iv) the Rent or Option Purchase Price Amount payable under this Sublease or any earnings arising from the Sites or this Sublease or any portion of either of them and (v) this Sublease, any related document or otherwise with respect to or in connection with the transactions contemplated hereby and thereby including those Taxes that are imposed, levied or assessed in the name of ALLTEL (collectively "ATC Taxes"). ALLTEL shall prepare all Returns with respect to ATC Taxes that are property taxes in a manner reasonably satisfactory to ATC and shall submit a copy of each such Return (including all relevant work papers) to ATC as soon as practicable prior to filing the Returns, and ATC shall be entitled to review and comment upon each such Return, provided that such review and comment does not delay the timely filing of such Return. ATC shall forward to ALLTEL any bills and all correspondence of any nature that it receives for or concerning any property taxes. ATC shall reimburse ALLTEL for any such property taxes within forty-five (45) days after the later of (i) its receipt from ALLTEL of work papers that provide sufficient supporting information to allow ATC to confirm ALLTEL's determination of the amount of such property taxes owed by ATC, along with a copy of the tax bill, if available, or (ii) ATC's receipt of evidence of ALLTEL's payment of the property taxes to be reimbursed. In the event that such property taxes are assessed in a manner so that they are not readily ascertainable or divisible or capable of being reported on a separate Return (for example if due to ALLTEL being subject to central assessment), ATC's responsibility to reimburse ALLTEL for such property taxes attributable to the Subleased Property shall be calculated in the following manner: (i) a state-wide blended tax rate shall be determined (as a reasonable estimate of separate asset reporting tax rates in all taxing jurisdictions containing Sites taking into account any applicable local supplemental property taxes); (ii) the estimated state-wide blended tax rate computed pursuant to clause (i) shall be multiplied by a property tax valuation using historical cost less applicable depreciation; (iii) for purposes of clause (ii), the applicable depreciation will be calculated by using a 15-year recovery period. If (x) a jurisdiction adopts a method of assessment otherwise described in the preceding sentence that accounts for the value of ATC's leasehold interests in Sites (e.g., by capitalizing ATC's net income from the Site Maintenance Charge, Additional ALLTEL Lease Charges and rent from Third Party Tenants) rather than their depreciated historic cost, and (y) such a method of assessment causes a material detriment to ALLTEL, then ALLTEL and ATC shall review the method determining the amount of such property taxes owed by ATC under this Section 35(a) and shall consider reasonable alternative methods of determining the amount of such property taxes owed by ATC under such methods of assessment. (b) Transfer Taxes. ALLTEL and ATC shall equally share, pay and promptly discharge when due the entire amount of any and all state and local sales and use, documentary, real property transfer and other transfer Taxes, similar Taxes and related 89
amounts (including any penalties, interest and additions to Tax) (the "Transfer Taxes") imposed or levied by reason of the execution and performance of this Sublease, if any, including any taxes triggered by the purchase option exercise under Section 31 and any transfer of any Sites to ATC pursuant to the exercise of ATC's rights in Section 31. The parties will cooperate before and after each closing to minimize Transfer Taxes. Such cooperation will include the provision of resale certificates, other exemption certifications where appropriate or other documentation reasonably requested by ALLTEL. (c) Proration of Taxes. In the years that include the Site Commencement Date or the Site Expiration Date of this Sublease as to any Site, any Tax for which ATC is responsible to ALLTEL under this section of this Sublease and that is calculated or assessed on the basis of a time period (e.g., property taxes assessed annually) shall be prorated proportionately by the number of days in each such period during the time period of assessment that includes the Site Commencement Date or Site Expiration Date, as the case may be. ATC's obligations under Section 35 to ALLTEL with respect to such a time period of assessment shall be limited to that proportionate amount of Taxes attributable to the period during which this Sublease is in effect with respect to such Site. (d) Taxes Related to Use of ALLTEL Equipment. ALLTEL shall be responsible for and pay in a timely manner all sales, use or similar Taxes (including Taxes payable in respect of the payment of rent) that are imposed, levied or arising out of the Site Maintenance Charge or Additional ALLTEL Maintenance Charges. In addition, ALLTEL shall be responsible for and pay in a timely manner all Taxes imposed, levied or arising out of ALLTEL's ownership, use or operation of ALLTEL Equipment, Microwave Equipment, and Additional ALLTEL Equipment. In the event that Taxes for which ALLTEL is responsible under this Section 35(d) are assessed so that they are not readily ascertainable or divisible or capable of being reported on a separate Return, then ALLTEL shall be responsible for a proportionate amount of any such assessment attributable to ALLTEL's payments, ownership, use or operations using as the basis for apportionment the historic gross cost figures used for financial accounting purposes for all properties included in such an assessment. (e) Tax Disputes. To the extent ATC and ALLTEL cannot agree on the amount and manner of paying or reporting any Taxes hereunder, as soon as practicable, they shall submit the dispute for resolution to an accounting firm (or, if appropriate, a nationally recognized firm with expertise in issues of property taxation) acceptable to both, which resolution shall be binding upon both. ATC and ALLTEL shall each bear fifty percent (50%) of the cost of any such determination. (f) Cooperation in Tax Matters. ALLTEL and ALLTEL Parent, on the one hand, and ATC and ATC Parent, on the other hand, and their respective Affiliates shall cooperate fully as and to the extent reasonably requested by the other party in connection with any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other party's request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide 90
additional information and explanation of any material provided hereunder. ALLTEL and ATC agree (i) to retain all books and records with respect to Tax matters pertinent to this Sublease or the Subleased Property relating to all taxable periods until the statute of limitations (including any extensions) as to any taxable period that may be affected thereby shall have run, (ii) to abide by all record retention agreements entered into with any Governmental Authority, and (iii) to give the other party reasonable written notice prior to destroying or discarding any such books and records and, if one party so requests, shall allow the requesting party to take possession of such books and records proposed for destruction or discard (at the requesting party's sole expense). With respect to each Site, ALLTEL shall provide ATC with copies of bills and Returns for prior assessment periods during the year prior to the Site Commencement Date for Taxes that become ATC Taxes for such Site as of the Site Commencement Date. ALLTEL shall provide this information as soon as practicable following the Site Commencement Date for that Site, and in any event no later than ninety (90) days after the Site Commencement Date. (g) Contest Rights. In the event any one of the ALLTEL Companies receives any notice of a claim, potential claim or proposed adjustment of any Tax for which ATC is responsible under this Section 35, such ALLTEL Company shall notify both ATC and ALLTEL thereof no later than five (5) Business Days after the day of receipt of such notice, provided that no failure to give such notice shall relieve ATC of any liability under this Section 35, except to the extent ATC has suffered actual prejudice because of such failure. In addition, from time to time ATC might desire to challenge or seek abatement with respect to the assessment of any Tax against one of the ALLTEL Companies for which ATC is responsible under this Section 35. In either of the foregoing circumstances, upon providing notice to ALLTEL, ATC shall be entitled, if it so elects, (i) to take control of the assertion, defense and investigation for such claim, potential claim, proposed adjustment, or claim of refund or abatement ("Tax Claim"), (ii) to employ and engage attorneys of its choice to handle and defend the same, at ATC's cost, risk and expense, and (iii) to compromise or settle such Tax Claim, which compromise or settlement shall be made only with the written consent of ALLTEL (such consent not to be unreasonably withheld, conditioned or delayed) unless such compromise or settlement involves only the payment of money damages payable by ATC or payment of a refund or abatement to ATC or any of the ALLTEL Companies and does not impose specific performance or other obligation upon any of the ALLTEL Companies, in which case no such consent shall be required. All of the ALLTEL Companies shall cooperate with ATC by providing to ATC as needed any powers of attorney, access to records in their possession, copies of relevant notices received, and such other cooperation that would be necessary for ATC to prosecute or defend a Tax Claim. Any of the ALLTEL Companies that receives payment of a refund or abatement with respect to a Tax for which ATC is responsible under this Section 35 shall immediately pay the amount of such refund or abatement over to ATC by means of cash or immediately available funds. If ATC fails to assume the defense of any Tax Claim within fifteen (15) Business Days after receipt of notice from one of the ALLTEL Companies or within ten (10) days prior to the expiration of any statute of limitations, such ALLTEL Company will (upon delivering notice to such effect to ATC) have the 91
right to undertake the defense, compromise or settlement of such Tax Claim; provided, however, that such Tax Claim shall not be compromised or settled without the prior written consent of ATC, which consent shall not be unreasonably withheld, conditioned or delayed. ATC shall keep ALLTEL informed at all times of the status of the Tax Claim, and ALLTEL or any affected ALLTEL Company may, at its own election and expense, participate in the defense of any such Tax Claim. In the event ALLTEL or an ALLTEL Company assumes the defense of the Tax Claim, such ALLTEL Company will keep ATC timely informed of the progress of any such defense, compromise or settlement. (h) Income Tax Reporting. For purposes of filing any Tax Return with respect to Taxes on income (net, gross or other, including recapture of any Tax items such as investment Tax credits, and any alternative or add-on minimum Tax, gross income, gross receipts, gains, or franchise Tax), ATC, ATC Parent, ALLTEL and ALLTEL Inc., along with their affiliates, (i) agree that with respect to each Site the rent paid as set forth in Section 11(a) of this Sublease represents rent expense for each month of the Term of such Sublease in an amount equal to the Rent designated for such Site divided by the number of months in the Term for such Site; and (ii) shall report the transactions contemplated by this Sublease consistently with the provisions of Section 467 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations in effect thereunder, which shall include treating ALLTEL's transfer of leasehold and subleasehold interests to ATC under this Sublease as a series of Section 467 rental agreements. Section 36. General Provisions. (a) Notices. Except as otherwise expressly provided in Section 13(b), all notices and other communications which by any provision of this Sublease are required or permitted to be given shall be given in writing and shall be deemed to have been delivered (i) five business days after being mailed by first-class or express mail, postage prepaid, (ii) the next day when sent overnight by recognized courier service, (iii) upon confirmation when sent by telex, telegram, telecopy or other form of rapid transmission, confirmed by mailing (by first-class or express mail, postage prepaid, or by recognized courier service) written confirmation at substantially the same time as such rapid transmission, or (iv) upon delivery when personally delivered to the receiving party (which if other than an individual shall be an officer or other responsible party of the receiving party). All such notices and communications shall be mailed, sent or delivered as set forth below or to such other person(s), telex or facsimile number(s) or address(es) as the party to receive any such communication or notice may have designated by written notice to the other party. Any notice, demand or request not received because of changed address or facsimile number of which no notice was given as hereinabove provided or because of refusal to accept delivery by the Party to whom addressed shall be deemed received and delivered upon the expiration of the foregoing time periods. If to ATC and ATC Parent: American Tower 116 Huntington Avenue Boston, MA 02116 92
Attention: General Counsel Facsimile: (617) 375-7575 with a copy to: Sullivan & Worcester One Post Office Square Boston, MA 02109 Attention: Norman A. Bikales, Esq. Facsimile: (617) 338-2880 If to ALLTEL, ALLTEL Inc., ALLTEL Guarantors or any ALLTEL Affiliate: ALLTEL Communications, Inc. One Allied Drive Little Rock, AR 72203 Attention: President and General Counsel Facsimile: (501) 905-0962 (b) Facsimile as Writing. The Parties expressly acknowledge and agree that, notwithstanding any statutory or decisional law to the contrary, the printed product of a facsimile transmittal shall be deemed to be "written" and a "writing" for all purposes of this Sublease. (c) Binding Effect. This Sublease shall be binding upon and enforceable against, and shall inure to the benefit of, the Parties hereto and their respective heirs, legal representatives, successors and permitted assigns. (d) Headings. The headings contained in this Sublease are for reference purposes only and shall not in any way affect the meaning or interpretation of this Sublease. (e) Exhibits. Each and every exhibit referred to or otherwise mentioned in this Sublease is attached to this Sublease and is and shall be construed to be made a part of this Sublease by such reference or other mention at each point at which such reference or other mention occurs, in the same manner and with the same effect as if each exhibit were set forth in full and at length every time it is referred to or otherwise mentioned. (f) Defined Terms. Capitalized terms used in this Sublease shall have the meanings ascribed to them at the point where first defined, irrespective of where their use occurs, with the same effect as if the definitions of such terms were set forth in full and at length every time such terms are used. (g) Pronouns. Wherever appropriate in this Sublease, personal pronouns shall be deemed to include the other genders and the singular to include the plural. (h) Severability. If any term or provision of this Sublease shall be held or deemed to be, or shall in fact be, invalid, inoperative, illegal or unenforceable as applied to any particular case in any jurisdiction or jurisdictions, or in all jurisdictions or in all cases, because of the conflicting of any provision with any constitution or statute or rule of 93
public policy or for any other reason, such circumstance shall not have the effect of rendering the provision or provisions in question invalid, inoperative, illegal or unenforceable in any other jurisdiction or in any other case or circumstance or of rendering any other provision or provisions herein contained invalid, inoperative, illegal or unenforceable to the extent that such other provisions are not themselves actually in conflict with such constitution, statute or rule of public policy, but this Sublease shall be reformed and construed in any such jurisdiction or case as if such invalid, inoperative, illegal or unenforceable provision had never been contained herein and such provision reformed so that it would be valid, operative and enforceable to the maximum extent permitted in such jurisdiction or in such case. (i) Waivers; Amendments. Changes in or additions to this Sublease may be made, or compliance with any term, covenant, agreement, condition or provision set forth herein may be omitted or waived (either generally or in a particular instance and either retroactively or prospectively) with, but only with, the consent in writing of the Parties hereto. No delay on the part of either Party at any time or times in the exercise of any right or remedy shall operate as a waiver thereof. Any consent may be given subject to satisfaction of conditions stated therein. The failure to insist upon the strict provisions of any covenant, term, condition or other provision of this Sublease or to exercise any right or remedy hereunder shall not constitute a waiver of any such covenant, term, condition or other provision thereof or default in connection therewith. The waiver of any covenant, term, condition or other provision hereof or default hereunder shall not affect or alter this Sublease in any other respect, and each and every covenant, term, condition or other provision of this Sublease shall, in such event, continue in full force and effect, except as so waived, and shall be operative with respect to any other then existing or subsequent default in connection herewith. (j) Rights Cumulative. All rights, remedies, powers and privileges conferred under this Sublease on the Parties shall be cumulative of and in addition to, but not restrictive of or in lieu of, those conferred by Law. NOTWITHSTANDING THE PROVISIONS OF THIS SECTION 36(j) OR ANY OTHER PROVISION TO THE CONTRARY, EACH PARTY HERETO HEREBY WAIVES THE RIGHT TO RECOVER AND NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL (INCLUDING BUT NOT LIMITED TO LOST PROFITS), PUNITIVE, EXEMPLARY AND SIMILAR DAMAGES AND THE MULTIPLIED PORTION OF DAMAGES, HOWEVER ARISING, EVEN IF A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. (k) Applicable Law. The validity, interpretation, construction and performance of this Sublease shall be governed by, and construed in accordance with the applicable law of the State of Delaware, applicable to contracts made and performed in such state without regard to conflicts of law. (l) Entire Agreement. This Sublease (together with the Exhibits hereto, the Site Designation Supplements and the other documents delivered or to be delivered in 94
connection herewith) constitute the entire agreement of the parties with respect to the subject matter hereof and supersede all prior agreements, arrangements, covenants, promises, conditions, undertakings, inducements, representations, warranties and negotiations, expressed or implied, oral or written, between the parties, with respect to the subject matter hereof; provided, however, that the foregoing is not intended to affect the provisions of the Agreement to Sublease, the Build-to-Suit Agreement, the Site Management Agreement or the MLA, each of which shall continue in full force and effect in accordance with its respective terms and provisions. Each of the Parties is a sophisticated Person that was advised by experienced counsel and, to the extent it deemed necessary, other advisors in connection with this Sublease. Each of the Parties hereby acknowledges that (i) none of the parties has relied or will rely in respect of this Sublease or the transactions contemplated hereby upon any document or written or oral information previously furnished to or discovered by it or its representatives, other than this Sublease, the Build-to-Suit Agreement, the Site Management Agreement, the MLA and the Agreement to Sublease, (ii) there are no covenants or agreements by or on behalf of any party or any of its respective Affiliates or representatives with respect to the subject matter of this Sublease other than those expressly set forth in this Sublease and the Agreement to Sublease, and (iii) the parties' respective rights and obligations with respect to this Sublease and the events giving rise thereto will be solely as set forth in this Sublease and the Agreement to Sublease. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING AND EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN THE AGREEMENT TO SUBLEASE, EACH PARTY HERETO AGREES THAT, NONE OF THE PARTIES HAS MADE ANY REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED OR AT COMMON LAW, BY STATUTE, OR OTHERWISE RELATING TO ANY PORTION OF THE SITE, TOWER OR SITE IMPROVEMENTS INCLUDING, WITHOUT LIMITATION, THE CONDITION OF THE TOWER OR SITE IMPROVEMENTS (INCLUDING, WITHOUT LIMITATION, ANY IMPLIED OR EXPRESSED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, ENVIRONMENTAL CONDITION, OR GEOLOGIC CONDITION). IN FURTHERANCE OF THE FOREGOING AND EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN THE AGREEMENT TO SUBLEASE, EACH PARTY EXPRESSLY DISCLAIMS AND NEGATES AND HEREBY WAIVES (A) ANY IMPLIED OR EXPRESSED WARRANTY OF MERCHANTABILITY, (B) ANY IMPLIED OR EXPRESSED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (C) ANY IMPLIED OR EXPRESSED WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, (D) ANY CLAIM FOR DAMAGES BECAUSE OF ANY LATENT OR PATENT DEFECTS OR OTHER DEFECTS, WHETHER KNOWN OR UNKNOWN AND (E) ANY AND ALL IMPLIED WARRANTIES EXISTING UNDER APPLICABLE LAW, WHETHER MADE BY ITSELF OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER REPRESENTATIVES. IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH SITE, TOWER AND ANY SITE IMPROVEMENTS BE LEASED UNDER THIS SUBLEASE ON AN AS IS, WHERE IS BASIS, EXCEPT AS EXPRESSLY SET FORTH HEREIN 95
OR IN THE AGREEMENT TO SUBLEASE. THE PARTIES HERETO AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE LAW TO BE EFFECTIVE, THE DISCLAIMERS OF CERTAIN WARRANTIES CONTAINED IN THIS SECTION ARE CONSPICUOUS DISCLAIMERS. (m) Counterparts. This Sublease may be executed in several counterparts, each of which shall be deemed an original, and all of such counterparts together shall constitute one and the same instrument, binding upon all of the Parties. In pleading or proving any provision of this Sublease, it shall not be necessary to produce more than one set of such counterparts. (n) Attorneys' Fees. In the event of any litigation arising under or in connection with this Sublease, the prevailing Party shall be entitled to recover from the other Party the expenses of litigation (including reasonable attorneys' fees, expenses and disbursements) incurred by the prevailing Party. (o) Authority. Each Party hereto warrants and represents that such Party has full and complete authority to enter into this Sublease and each individual executing this Sublease on behalf of a Party warrants and represents that he has been fully authorized to execute this Sublease on behalf of such Party and that such Party is bound by the signature of such representative. (p) Counsel. Each Party hereto warrants and represents that such Party has been afforded the opportunity to be represented by counsel of its choice in connection with the execution of this Sublease and has had ample opportunity to read, review, and understand the provisions of this Sublease. (q) Mutual Drafting. This Sublease is the result of the joint efforts of ALLTEL and ATC, and each provision hereof has been subject to the mutual consultation, negotiation and agreement of the Parties and there shall be no construction against any Party based on any presumption of that Party's involvement in the drafting thereof. (r) Power of Attorney by ALLTEL; Authorization. Each and every one of the ALLTEL Companies and the ALLTEL Guarantors other than ALLTEL Inc. hereby irrevocably constitutes and appoints ALLTEL Inc. (the "Agent") as its and their agent and attorney-in-fact to modify, amend or otherwise change or waive any and all terms, conditions and other provisions of this Sublease or any Site Designation Supplement, to exercise on behalf of the ALLTEL Companies and the ALLTEL Guarantors any options or elections granted to ALLTEL hereunder, to take all actions and to execute all documents necessary or desirable to effect the terms of this Sublease, and to take all actions and execute all documents which may be necessary or desirable in connection therewith, to give and receive all consents and all notices hereunder, to negotiate, settle and compromise Claims for indemnification hereunder, and to perform any other act arising under or pertaining to the Sublease and the Site Designation Supplements. The Agent hereby accepts the foregoing appointment. Nothing herein shall be deemed to make the Agent liable to any of the ALLTEL Companies or the ALLTEL Guarantors 96
because of service in its capacity as agent and attorney-in-fact. In performing any of its duties hereunder, the Agent shall not incur any Liability (as defined in the Agreement to Sublease) whatsoever to any of the ALLTEL Companies, the ALLTEL Guarantors or their Affiliates. It is expressly understood and agreed that this power of attorney and the agency created hereby is coupled with an interest of the respective Parties hereto and shall be binding and enforceable on and against the respective successors and assigns of ALLTEL, and each of them, and this power of attorney shall not be revoked or terminated and shall continue to be binding and enforceable in the manner provided herein. (s) Labeling; Signage. (i) ALLTEL shall identify all ALLTEL Equipment, Microwave Equipment, and Additional ALLTEL Equipment, and equipment cabinets (unless such cabinet is located in a building owned by ALLTEL) owned or utilized by ALLTEL or any of its Affiliates by labels identifying ALLTEL's name, contact phone number and installation date and shall permanently identify its coaxial cable at the top and bottom. Failure by ALLTEL to so identify such Communications Equipment may cause an interruption in service of its operation. In the event that ALLTEL fails to comply with this Section and following prior written notice to ALLTEL of no less than 30 days, ATC reserves the right, in addition to any other rights it may have hereunder, to label such ALLTEL Equipment, Microwave Equipment, and Additional ALLTEL Equipment and assess a fee for ATC's associated cost and expenses, which shall be payable to ATC upon receipt of an invoice. (ii) ALLTEL acknowledges and agrees that ATC may, from time to time, post signage at each Site that ATC deems reasonable appropriate identifying, among other things, ATC as the contact for subleasing or operational information relating to the Site. (iii) ATC acknowledges and agrees that ALLTEL may, from time to time, post signage at each Site with respect to radio frequency emissions at a Site in furtherance of its obligations under Section 16 and pursuant to the rules and regulations of the FCC. (t) [Reserved]. (u) Time of Essence. Time is of the essence of this Sublease. Anywhere a day certain is stated for payment or for performance of any obligation, the day certain so stated enters into and becomes part of the consideration for this Sublease. If any date set forth in this Sublease shall fall on, or any time period set forth in this Sublease shall expire on, a day which is a Saturday, Sunday or federal or state holiday, such date shall be automatically be extended to, and the expiration of such time period shall automatically be extended to, the next day which is not a Saturday, Sunday, federal or state holiday or other nonbusiness day. The final day of any time period under this Sublease or any 97
deadline under this Sublease shall be the specified day or date, and shall include the period of time through and including such specified day or date. (v) Several Liability. Notwithstanding any other provision of this Sublease to the contrary, and notwithstanding any liability or obligation that ALLTEL would have as a general partner of any of the other ALLTEL Companies under this Sublease or any Site Designation Supplement (in each case, whether or not expressly set forth herein or therein), by operation or law or otherwise, (i) the obligations of any ALLTEL Company (other than the ALLTEL Guarantors pursuant to Section 34) under this Sublease are several and not joint, and (ii) each of the ALLTEL Companies (other than the ALLTEL Guarantors pursuant to Section 34) will have no personal liability for the payment or performance of any obligation of any of the other ALLTEL Companies under this Sublease. (w) Excusable Delay. Neither party shall assume responsibility for any losses or damages caused by any event beyond the reasonable control of a Party, including, but not limited to, acts of God, rain, extreme temperatures, lightning, earthquake, floods, riots, insurrection, war, unforeseen soil conditions after reasonable inquiry, acts or omissions of third parties who are not employees of such Party, strikes, lock-outs or labor troubles of employees of third parties, governmental actions or inaction (including but not limited to those related to zoning approvals, permits or related appeals) or Laws, or any delay caused by the acts or omissions of the other Party or any of their subcontractors, consultants, agents or vendors. In the event that either Party shall be delayed, hindered in or prevented from the performance of any act required hereunder by reason of any such event, then the performance of such act shall be excused for the period of delay and the period for performance of any such act shall be extended for a period equivalent to the period required to perform as a result of such delay. The Party whose performance is prevented shall give written notice to the other Party, and the Parties shall promptly confer, in good faith, to agree upon an equitable, reasonable course of action to minimize the impact of such conditions on the Sites and the performance of this Agreement. (x) Inspection of Books and Records. In addition to ALLTEL's inspection rights under Section 16(c), ALLTEL and ATC shall be afforded reasonable access to all of ATC's and ALLTEL's books and records (including, without limitation any data stored or collected by a third party on its or its Affiliates behalf) relating to the accounting and tax records associated with the Ground Rent, or any payments owed or claimed to be owed by either party under this Agreement, except privileged documents or where disclosure is prohibited by Law or Contractual Obligation. Such information shall be open for inspection and copying upon reasonable notice by the requesting party, at its cost, by its authorized representatives at reasonable hours at the applicable principal regional or area offices and shall be retained by each party for three consecutive years. (y) Expenses. The phrase "ATC and ALLTEL shall each bear 50% of the cost" and other similar expressions that appear throughout this Sublease shall mean that ATC, on the one hand, bears 50% of the applicable cost, and ALLTEL, on the other hand, bears 50% of such cost. 98
(z) Agents. Except as set forth in Section 26, in no event will either Party to this Sublease be deemed to be or constitute the agent or representative of the other Party to this Sublease. (aa) No Third Party Beneficiaries. This Sublease shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns. (bb) State Legends. (i) Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county public health unit. (ii) WAIVER OF TEXAS DECEPTIVE TRADE PRACTICES ACT. ATC AND ALLTEL, RESPECTIVELY, SPECIFICALLY ACKNOWLEDGE AND AGREE THAT IT HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT ENABLE IT TO EVALUATE THE MERITS AND RISKS OF THIS TRANSACTION, AND THAT IT IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION WITH THE OTHER PARTY. ATC AND ALLTEL EACH HEREBY WAIVE ALL ITS RIGHTS UNDER THE TEXAS DECEPTIVE TRADE PRACTICES -CONSUMER PROTECTION ACT, SECTION 741 ET SEQ. OF THE TEXAS BUSINESS AND COMMERCE CODE (THE "DTPA"), A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF SUCH PARTY'S OWN SELECTION, ATC AND ALLTEL VOLUNTARILY CONSENT TO THIS WAIVER. (iii) Prior to the commencement of any Work to be performed in the State of North Carolina by any contractor or subcontractor retained by ATC or ALLTEL, respectively, (directly or indirectly), the contracting Party is solely responsible and liable to the other Party for the delivery to the other Party of a certificate from the North Carolina Industrial Commission stating that such contractor and subcontractor have each complied with G.S. 97-93 of the North Carolina General Statutes. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 99
IN WITNESS WHEREOF, the Parties have caused this Sublease to be executed by their duly authorized representatives, all effective as of the day and year first written above. ATC: American Towers, Inc., a Delaware corporation By:____________________________________________________ Name: James S. Eisenstein Title: Executive Vice President and Chief Development Officer ATC PARENT: American Tower Corporation, a Delaware corporation By:____________________________________________________ Name: James S. Eisenstein Title: Executive Vice President and Chief Development Officer ALLTEL INC.: ALLTEL Communications, Inc., a Delaware corporation By:____________________________________________________ Name: Scott T. Ford Title: President ALLTEL ENTITIES: 360 (degree) Communications Company 360 (degree) Communications Company of Charlottesville 360 (degree) Communications Company of Florida 360 (degree) Communications Company of Ft. Walton Beach Limited Partnership, by 360 (degree) Communications Company of Florida, its general partner 360 (degree) Communications Company of Hickory Limited Partnership by 360 (degree) Communications Company of Hickory No. 1, its general partner 360 (degree) Communications Company of Lynchburg 360 (degree) Communications Company of Nevada Limited Partnership by ALLTEL Communications, Inc., its general partner 360 (degree) Communications Company of New Mexico 360 (degree) Communications Company of North Carolina No. 1 100
360 (degree) Communications Company of Ohio No. 4 360 (degree) Communications Company of South Carolina No. 1 360 (degree) Communications Company of Texas Limited Partnership by 360 (degree) Communications Company, its general partner 360 (degree) Communications Company of Virginia 360 (degree) Communications Company Tennessee No. 2 Aliant Cellular, Inc. ALLTEL Alabama Limited Partnership by ALLTEL Corporate Services, Inc., its general partner ALLTEL Mobile Communications of the Carolinas, Inc. ALLTEL Ohio Limited Partnership by 360 (degree) Communications Company of Petersburg, its general partner ALLTEL Wireless Holdings, L.L.C. Florida RSA 9 Limited Partnership by ALLTEL Communications, Inc., its general partner Georgia RSA 14 Cellular Partnership by ALLTEL Communications, Inc., its general partner Greenville MSA Limited Partnership by TeleSpectrum, Inc., its general partner Kansas RSA 15 Limited Partnership by 360 (degree) Communications Company of Nebraska, its general partner Liberty Cellular, Inc. New York NewCo Subsidiary, Inc. North Carolina RSA 15 North Sector Limited Partnership by 360 (degree) Communications Company, its general partner North Carolina RSA 6 Limited Partnership by 360 (degree) Communications Company of North Carolina No. 1, its general partner Ohio Cellular RSA Limited Partnership by 360 (degree) Communications Company of Ohio No. 3, its general partner Radiofone, Inc. RCTC Wholesale Corporation TeleSpectrum, Inc. TeleSpecturm of Virginia, Inc. Tennessee RSA 8 Limited Partnership by 360 (degree) Communications Company of Tennessee No. 1, its general partner Texas RSA #10B-2 Limited Partnership by 360 (degree) Communications Company of Texas No. 2, its general partner 101
Texas RSA 10B4 Limited Partnership by 360 (degree) Communications Company, its general partner Texas RSA 9B3 Limited Partnership by 360 (degree) Communications Company, its general partner Virginia Metronet, Inc. Virginia RSA 1 Limited Partnership by 360 (degree) Communications Company of Virginia No. 1, its general partner By:_________________________________________________________ Name: Scott T. Ford Title: President ALLTEL GUARANTORS: Each of the undersigned Affiliates of ALLTEL Inc. hereby executes and delivers this Agreement as an ALLTEL Guarantor for the sole purpose of guaranteeing, jointly and severally, the ALLTEL Obligations in accordance with the terms and conditions of Sections 23(b), 34 and 36(r), and each agrees to be bound by the provisions of Section 23(b), 34 and 36(r) with the same force and effect as if each were specifically named as an ALLTEL Guarantor in the above Agreement, such guaranty being in addition to its rights and obligations as an ALLTEL Entity, if applicable. 360 (degree) Communications Company 360 (degree) Communications Company of Charlottesville 360 (degree) Communications Company of Florida 360 (degree) Communications Company of Ft. Walton Beach Limited Partnership, by 360 (degree) Communications Company of Florida, its general partner 360 (degree) Communications Company of Hickory Limited Partnership by 360 (degree) Communications Company of Hickory No. 1, its general partner 360 (degree) Communications Company of Nevada Limited Partnership by ALLTEL Communications, Inc., its general partner 360 (degree) Communications Company of New Mexico 360 (degree) Communications Company of North Carolina No. 1 360 (degree) Communications Company of Ohio No. 4 102
360 (degree) Communications Company of South Carolina No. 1 360 (degree) Communications Company of Texas Limited Partnership by 360 (degree) Communications Company, its general partner 360 (degree) Communications Company of Virginia 360 (degree) Communications Company Tennessee No. 2 Aliant Cellular, Inc. ALLTEL Alabama Limited Partnership by ALLTEL Corporate Services, Inc., its general partner ALLTEL Mobile Communications of the Carolinas, Inc. ALLTEL Ohio Limited Partnership by 360 (degree) Communications Company of Petersburg, its general partner ALLTEL Wireless Holdings, L.L.C. Florida RSA 9 Limited Partnership by ALLTEL Communications, Inc., its general partner Georgia RSA 14 Cellular Partnership by ALLTEL Communications, Inc., its general partner Greenville MSA Limited Partnership by TeleSpectrum, Inc., its general partner Kansas RSA 15 Limited Partnership by 360 (degree) Communications Company of Nebraska, its general partner Liberty Cellular, Inc. New York NewCo Subsidiary, Inc. North Carolina RSA 15 North Sector Limited Partnership by 360 Communications Company, its general partner North Carolina RSA 6 Limited Partnership by 360 (degree) Communications Company of North Carolina No. 1, its general partner Ohio Cellular RSA Limited Partnership by 360 (degree) Communications Company of Ohio No. 3, its general partner Radiofone, Inc. (a Louisiana corporation) Radiofone, Inc. (a Tennessee corporation) RCTC Wholesale Corporation TeleSpectrum, Inc. TeleSpecturm of Virginia, Inc. Tennessee RSA 8 Limited Partnership by 360 (degree) Communications Company of Tennessee No. 1, its general partner Texas RSA #10B-2 Limited Partnership by 360 (degree) Communications Company of Texas No. 2, its general partner 103
Texas RSA 10B4 Limited Partnership by 360 (degree) Communications Company, its general partner Texas RSA 9B3 Limited Partnership by 360 (degree) Communications Company, its general partner Virginia Metronet, Inc. Virginia RSA 1 Limited Partnership by 360 (degree) Communications Company of Virginia No. 1, its general partner 360 (degree) Communications Company of Ohio No. 1 360 (degree) Communications Company of Ohio No. 2 360 (degree) Communications Company of Ohio No. 3 360 (degree) Communications Company of Pennsylvania No. 1 Petersburg Cellular Telephone Company, Inc. 360 (degree) Communications Company of South Carolina No. 2 360 (degree) Communications Company of Texas No. 1 360 (degree) Communications Company of Texas No. 3 360 (degree) Communications Company of Virginia No. 1 By:______________________________________________________ Name: Scott T. Ford Title: President 104
EXHIBIT 1 FORM OF JOINDER TO AGREEMENT THIS JOINDER to that certain Lease and Sublease dated___________________by and among_________________________________________________, and________________ __________________________________ ("Agreement") is executed by the undersigned in accordance with the provisions of the Agreement. The undersigned hereby joins in the execution and delivery of the Agreement, and agrees that the undersigned shall be deemed to be an ALLTEL Company for all purposes under the Agreement. The undersigned agrees to be bound by all terms, covenants and conditions contained in the Agreement, as an ALLTEL Company as defined therein, as if the undersigned were an original party to the Agreement. Dated______________________ By_________________________________ Name_______________________________ Title______________________________ AGREED TO AND ACKNOWLEDGED BY: By_________________________________ Name_______________________________ Title______________________________ By_________________________________ Name_______________________________ Title______________________________ 105
EXHIBIT 2 SITE DESIGNATION SUPPLEMENT AND TOWER LEASE AGREEMENT THIS SITE DESIGNATION SUPPLEMENT, made and entered into as of this_______ day of ____________________________, 2000 by and between______________________ ___________________________________ ("ATC"), and _____________________________ _____________________________ ("ALLTEL"). 1. Pursuant to this Site Designation Supplement number ________________, which is governed by the terms and conditions of that certain Lease and Sublease entered into between ATC, ALLTEL and the other parties identified therein on _______________________ ("Master Sublease"), which is incorporated herein by this reference, ALLTEL hereby subleases to ATC, and ATC hereby subleases from ALLTEL, the Subleased Property located at the Site commonly known as _____________________________________ in the _________________________ of _________________________, a legal description of which is attached hereto as Exhibit C. ATC Site Name: ____________, ATC Site Number: _________, and Coordinates: _______________ 2. Pursuant to this Site Designation Supplement, ALLTEL's Reserved Space and Microwave Reserved Space for this Site is described in Exhibit A attached --------- hereto and the Additional ALLTEL Space is described in Exhibit B attached --------- hereto. 3. [This Site Designation Supplement is subject to that certain __________________________________ [GROUND LEASE]]. 4. The Site Commencement Date for this Site Designation Supplement shall be ______________________________________________. 5. The Site Expiration Date for this Site Designation Supplement shall be ______________________________________________. 6. The Site Maintenance Charge during the Term for the Reserved Space and Microwave Reserved Space shall be $_____________________, and the Additional ALLTEL Maintenance Charge during the Term for the Additional ALLTEL Equipment shall be $__________, subject to the Annual Escalator on each anniversary of the Escalation Date. 6. The Purchase Option Trigger Date for this Site is ______________, ________. 7. The Purchase Option Price for this Site is, at ALLTEL's election in accordance with the procedures described in and subject to Section 31 of the Master Sublease, either (a) the Purchase Option Floor amount of $ _____________, or (b) _____ shares of ATC Parent Class A Common Stock.
8. Notices to ATC with respect to this Site Designation Supplement shall be, in addition to the notice address in the Master Sublease, directed to: [INSERT ADDRESS OF APPROPRIATE REGIONAL OFFICE] 9. Notices to ALLTEL with respect to this Site Designation Supplement shall be in addition to the notice address in the Master Sublease, directed to: [INSERT MARKET OR REGIONAL ALLTEL REAL ESTATE MANAGER] 10. The remittance address for the Site Maintenance Charge shall be: [INSERT ADDRESS OF APPROPRIATE REMITTANCE ADDRESS] 11. Drawings of the location of ALLTEL's ground, building and/or tower installations and the applicable utility and access easements are attached hereto as Exhibit D. --------- 12. A copy of the Memorandum of Sublease is attached hereto as Exhibit E. --------- 13. Drawings of the ground, building and/or Tower installations and all utility and access easements (including, without limitation, the outlines of the Subleased Property) are attached hereto as Exhibit F. --------- 14. In addition to the terms and conditions in the Master Sublease, with respect to the Subleased Property and this Site Designation Supplement, ATC and ALLTEL hereby agree to the conditions set forth in Exhibit G attached hereto and --------- incorporated herein. 15. In the event of any conflict between this Site Designation Supplement and the Master Sublease, the terms of the Master Sublease shall control. IN WITNESS WHEREOF, ATC and ALLTEL have duly executed this Site Designation Supplement as of the day and year first above written. ALLTEL: ________________________________, By_________________________________ Name_______________________________ Title______________________________ ATC: 2-2
______________________________, Name ____________________________________ Vice President Sworn to and subscribed before me this _________ day of __________________, 2000, by ___________________, _________________ of ______________, a ___________ corporation. Sworn to and subscribed before me this _________ day of _________________, 2000, by ________________, _________________ of _______________, a _____________ corporation. 2-3
EXHIBIT A TO SITE DESIGNATION SUPPLEMENT DESCRIPTION OF RESERVED SPACE AND MICROWAVE RESERVED SPACE (ALLTEL Maximum Equipment and Microwave Equipment) [SEE ATTACHED]
EXHIBIT B TO SITE DESIGNATION SUPPLEMENT DESCRIPTION OF ADDITIONAL ALLTEL SPACE (Additional ALLTEL Equipment) [SEE ATTACHED]
EXHIBIT C TO SITE DESIGNATION SUPPLEMENT LEGAL DESCRIPTION OF REAL PROPERTY The real property of which the Subleased Property is a part is legally described as follows: Street address:_______________________________ City, State, Zip:_____________________________ All that real property located in the State of _________, County of____________ described as follows: Example: "Known as being Sublot No. 8 in Settlement One Subdivision of part of Original Bainsbridge Township Lot Nos. 45 and 46, Tract no. 1, as shown by the recorded plat I Volume 12 of Maps, Pages 143 of Geauga County Records." 2-ii
EXHIBIT D TO SITE DESIGNATION SUPPLEMENT SITE DRAWINGS
EXHIBIT E TO SITE DESIGNATION SUPPLEMENT MEMORANDUM OF LEASE RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: _________________________________________ Street Address City, State, Zip MEMORANDUM OF TOWER LEASE AGREEMENT THIS MEMORANDUM OF TOWER LEASE AGREEMENT, made and entered into as of _______ day of ________________________, 2000, by and between _____________, a ___________________ corporation ("ATC"), and [INSERT APPROPRIATE LEGAL ALLTEL ENTITY] ("ALLTEL"). ALLTEL, on the terms and conditions set forth in an unrecorded document dated ____________________________________, and entitled "Site Designation Supplement and Tower Lease Agreement" executed pursuant to that certain unrecorded document dated ________________________, and entitled "Lease and Sublease," which terms and conditions are incorporated herein by reference, and in consideration of the rent and covenants therein provided, does hereby lease to ATC, and ATC hereby rents and accepts from ALLTEL, certain real property ("Property") located in the City of _______________________, County of _______________________, State of ____________________________, within the property of ALLTEL which is described in Exhibit "A1" attached hereto ("ALLTEL's Property"), together with a right of access and to install and maintain utilities, for an initial term of fifteen (15) years commencing on _____________________________, which term is subject to certain rights to purchase ALLTEL's interest in ALLTEL's Property pursuant to a purchase option with respect to the Property exercisable by ATC at the end of the term. The Property consists of ALLTEL's Property, less and except certain property with respect to which ALLTEL has reserved and retained certain rights, as more fully described in the Lease and Sublease, and such property is as described on Exhibit "A2" attached hereto (the "Reserved Space", "Microwave Space" and Additional ALLTEL Space").
IN WITNESS WHEREOF, ATC and ALLTEL have duly executed this Memorandum of Tower Lease Agreement as of the day and year first above written. ALLTEL: _________________________, By_______________________________ Name_____________________________ Title____________________________ ATC: _________________________, Name_____________________________ Vice President D-2
EXHIBIT F TO SITE DESIGNATION SUPPLEMENT SUBLEASED PROPERTY DRAWING
EXHIBIT G TO SITE DESIGNATION SUPPLEMENT OTHER PROVISIONS [If appropriate, additional provisions can be added on a site specific basis upon mutual written agreement of ATC and ALLTEL.]
EXHIBIT 3 FORM OF RIGHT OF FIRST REFUSAL NOTICE Date Transmitted To: ALLTEL ______________ ___________________ ___________________ Attention:_________ THIRD PARTY OFFER NOTICE FOR LAST AVAILABLE SPACE Notice of Intent to Sublease: [SITE NUMBER/SITE NAME] American Tower ("ATC") intends to sublease space on the above tower. Attached is a copy of the bona-fide Third Party Offer summary and antenna information for the above carrier. As per Section 8 and Exhibit 4 of the Lease and Sublease dated _______ between ALLTEL __________, (including the Wholly Owned Entities and Other ALLTEL Entities, as defined in the herein referenced Sublease) ("ALLTEL") and ATC, ALLTEL has five (5) business days to exercise its Right of Substitution or Right of First Refusal with respect to the space referenced herein. By____________________________ Print Name____________________ Title_________________________ Attachment: (1) Bona-fide Third Party Offer summary cc: ALLTEL: ALLTEL Regional Manager (as designated on the SDS) [STREET CITY, STATE, ZIP] with a copy to: ________________________ ________________________ ATC: American Tower Corporation ________________________ ________________________
BONA FIDE THIRD PARTY OFFER SUMMARY Description of Space to be Subleased: See attachment [ATC's application form, redacted with respect to carrier's name] Description of Maximum Equipment to be Installed: See attachment [ATC's application form, redacted with respect to carrier's name] Term of Sublease (including renewal options): _________________________________ Lease Rate: ___________________ Annual Escalator: _____________ Other Charges: ________________ Other Terms and Conditions: _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ Certified by: Signature __________________ Name _______________________ Title ______________________ Address ______
EXHIBIT 4 [To be Provided]
(cc) EXHIBIT 5 LIST OF alltel entities 360(degrees) Communications Company 360(degrees) Communications Company of Charlottesville 360(degrees) Communications Company of Florida 360(degrees) Communications Company of Ft. Walton Beach Limited Partnership 360(degrees) Communications Company of Hickory Limited Partnership 360(degrees) Communications Company of Lynchburg 360(degrees) Communications Company of Nevada Limited Partnership 360(degrees) Communications Company of New Mexico 360(degrees) Communications Company of North Carolina No. 1 360(degrees) Communications Company of Ohio No. 4 360(degrees) Communications Company of South Carolina No. 1 360(degrees) Communications Company of Texas Limited Partnership 360(degrees) Communications Company of Virginia 360(degrees) Communications Company Tennessee No. 2 Aliant Cellular, Inc. ALLTEL Alabama Limited Partnership ALLTEL Mobile Communications of the Carolinas, Inc. ALLTEL Ohio Limited Partnership ALLTEL Wireless Holdings, L.L.C. Florida RSA 9 Limited Partnership Georgia RSA 14 Cellular Partnership Greenville MSA Limited Partnership Kansas RSA 15 Limited Partnership Liberty Cellular, Inc. New York NewCo Subsidiary, Inc. North Carolina RSA 15 North Sector Limited Partnership North Carolina RSA 6 Limited Partnership Ohio Cellular RSA Limited Partnership Radiofone, Inc. RCTC Wholesale Corporation TeleSpectrum, Inc. TeleSpecturm of Virginia, Inc. Tennessee RSA 8 Limited Partnership Texas RSA #10B-2 Limited Partnership Texas RSA 10B4 Limited Partnership Texas RSA 9B3 Limited Partnership Virginia Metronet, Inc. Virginia RSA 1 Limited Partnership
360(degrees) Communications Company of North Carolina Limited Partnership ALLTEL Cellular Associates of Arkansas Limited Partnership ALLTEL Cellular Associates of South Carolina Limited Partnership ALLTEL Central Arkansas Cellular Limited Partnership ALLTEL Missouri RSA #14 Limited Partnership ALLTEL Northern Arkansas RSA Limited Partnership Arkansas RSA #2 (Searcy County) Cellular Limited Partnership Baton Rouge Cellular Telephone Company Charleston-North Charleston MSA Limited Partnership Fayetteville MSA Limited Partnership Florida RSA #1B (Naples) Limited Partnership Georgia RSA 12 Cellular Partnership Georgia RSA 8 Cellular Partnership Las Cruces Cellular Telephone Company Missouri RSA #15 Limited Partnership Missouri RSA #2 Partnership Missouri RSA #4 Limited Partnership North Carolina RSA #15 Limited Partnership North Carolina RSA #5 Cellular Partnership Northwest Arkansas RSA Limited Partnership Ohio RSA #3 Limited Partnership Ohio RSA 2 Limited Partnership Ohio RSA 5 Limited Partnership Ohio RSA 6 Limited Partnership Oklahoma RSA #4 South Partnership Pennsylvania RSA No. 6(1) Limited Partnership Petersburg Cellular Partnership Raleigh-Durham MSA Limited Partnership South Carolina RSA #3 Cellular General Partnership South Carolina RSA #7 Cellular General Partnership South Carolina RSA #9 Cellular General Partnership South Carolina RSA No. 2 Cellular General Partnership South Carolina RSA No. 4 Cellular General Partnership South Carolina RSA No. 5 Cellular General Partnership South Carolina RSA No. 6 Cellular General Partnership South Carolina RSA No. 8 Cellular General Partnership Texas RSA #11B Limited Partnership Texas RSA 7B2 Limited Partnership Toledo MSA Limited Partnership Tuscon 21 Limited Partnership Tyler/Longview/Marshall MSA Limited Partnership Virginia RSA 2 Limited Partnership Youngstown-Warren MSA Limited Partnership
Exhibit 2.2 ----------- AGREEMENT TO SUBLEASE by and among ALLTEL COMMUNICATIONS, INC. THE ALLTEL ENTITIES and AMERICAN TOWERS, INC. and AMERICAN TOWER CORPORATION December 19, 2000
TABLE OF CONTENTS Page ARTICLE I DEFINITIONS SECTION 1.1. Definitions.................................................. 2 SECTION 1.2. Other Capitalized Terms...................................... 15 ARTICLE II AGREEMENT DOCUMENTS........................................................ 15 ARTICLE III CONVEYANCE AND CONSIDERATION SECTION 3.1. Conveyance................................................... 16 SECTION 3.2. Consideration................................................ 17 SECTION 3.3. Consents and Approvals....................................... 17 ARTICLE IV CLOSINGS SECTION 4.1. Closings..................................................... 18 SECTION 4.2. Transactions and Documents at the Closings................... 19 SECTION 4.3. Costs of Closing............................................. 20 SECTION 4.4. Further Assurances........................................... 20 SECTION 4.5. Site Designation Supplements and MLA Schedules............... 21 SECTION 4.6. Deferral of Closings; Updating of Representations; Excluded Sites............................................... 23 SECTION 4.7. Prorations................................................... 26 ARTICLE V ADDITIONAL AGREEMENTS; COVENANTS SECTION 5.1. Expenses..................................................... 27 SECTION 5.2. Access to Information; Confidentiality....................... 28 SECTION 5.3. Agreement to Cooperate; Certain Other Covenants.............. 29 SECTION 5.4. Public Announcements......................................... 30 SECTION 5.5. Notification of Certain Matters.............................. 31 SECTION 5.6. Other Offers; Non-Solicitation............................... 31 SECTION 5.7. Preliminary Title Reports.................................... 32 SECTION 5.8. Environmental Site Assessments............................... 32
SECTION 5.9. Structural Assessments...................................... 32 SECTION 5.10. Risk of Loss and Insurance.................................. 32 SECTION 5.11. Condemnation................................................ 32 SECTION 5.12. Recordation of Site Designation Supplements................. 33 SECTION 5.13. Additional Sites; In Progress Sites; Zoned Sites............ 33 SECTION 5.14. ATC Parent's Guaranty....................................... 35 SECTION 5.15. ALLTEL Guaranty............................................. 36 SECTION 5.16. Delivery of Tower Files..................................... 37 SECTION 5.17. Conduct of Business by ALLTEL............................... 38 ARTICLE VI REPRESENTATIONS, WARRANTIES AND COVENANTS OF ALLTEL SECTION 6.1. Organization and Business; Power and Authority; Effect of Transaction................................................. 39 SECTION 6.2. [RESERVED].................................................. 41 SECTION 6.3. Title to Properties; Leases................................. 41 SECTION 6.4. Compliance with Private Authorizations...................... 43 SECTION 6.5. Compliance with Governmental Authorizations and Applicable Law......................................................... 43 SECTION 6.6. Related Transactions........................................ 44 SECTION 6.7. Insurance................................................... 45 SECTION 6.8. Tax Matters................................................. 45 SECTION 6.9. Material Agreements......................................... 45 SECTION 6.10. Broker or Finder............................................ 46 SECTION 6.11. Operating and Maintenance................................... 46 SECTION 6.12. Environmental Matters....................................... 46 SECTION 6.13. Copies of Documents......................................... 47 ARTICLE VII REPRESENTATIONS, WARRANTIES AND COVENANTS OF ATC SECTION 7.1. Organization and Business; Power and Authority; Effect of Transaction................................................. 47 SECTION 7.2. [RESERVED].................................................. 48 SECTION 7.3. Compliance with Governmental Authorizations and Applicable Law......................................................... 48 SECTION 7.4. Broker or Finder............................................ 49 SECTION 7.5. Sufficient Funding.......................................... 49 ARTICLE VIII REPRESENTATIONS, WARRANTIES AND COVENANTS OF ATC PARENT SECTION 8.1. Organization and Business; Power and Authority; Effect of Transaction................................................. 49 ii
SECTION 8.2. [RESERVED].................................................. 50 SECTION 8.3. Compliance with Governmental Authorizations and Applicable Law......................................................... 50 SECTION 8.4. Broker or Finder............................................ 51 SECTION 8.5. Sufficient Funding.......................................... 51 SECTION 8.6. ATC Representations and Warranties.......................... 51 ARTICLE IX [INTENTIONALLY OMITTED]................................................... 51 ARTICLE X CONDITIONS TO OBLIGATIONS OF ALLTEL AND ATC SECTION 10.1. Conditions to Obligations of Each Party..................... 51 SECTION 10.2. Conditions to Obligations of ATC............................ 52 SECTION 10.3. Conditions to Obligations of ALLTEL......................... 53 ARTICLE XI INDEMNIFICATION SECTION 11.1. Survival................................................... 54 SECTION 11.2. Indemnification............................................ 55 SECTION 11.3. Limitation of Liability.................................... 55 SECTION 11.4. Notice of Claims........................................... 56 SECTION 11.5. Defense of Third Party Claims.............................. 56 SECTION 11.6. Exclusive Remedy........................................... 56 ARTICLE XII TERMINATION, AMENDMENT AND WAIVER SECTION 12.1. Termination................................................ 57 SECTION 12.2. Effect of Termination...................................... 58 ARTICLE XIII GENERAL PROVISIONS SECTION 13.1. Waivers; Amendments........................................ 59 SECTION 13.2. ALLTEL References.......................................... 59 SECTION 13.3. Notices.................................................... 59 SECTION 13.4. Power of Attorney.......................................... 60 SECTION 13.5. Specific Performance; Other Rights and Remedies............ 60 SECTION 13.7. Counterparts............................................... 61 SECTION 13.8. Section Headings........................................... 61 iii
SECTION 13.9. Governing Law............................................... 61 SECTION 13.10. Further Acts................................................ 61 SECTION 13.11. Entire Agreement............................................ 61 SECTION 13.12. Assignment.................................................. 62 SECTION 13.13. Parties in Interest......................................... 63 SECTION 13.14. Mutual Drafting............................................. 63 SECTION 13.15. [RESERVED].................................................. 63 SECTION 13.16. Excluded Damages............................................ 63 SECTION 13.17. Expenses.................................................... 63 SECTION 13.18. Agents...................................................... 63 SECTION 13.19. Several Liability........................................... 63 Exhibits - -------- Exhibit A-1 - List of Existing Sites Exhibit A-2 - List of Potential Existing Sites Exhibit B - List of ALLTEL Entities Exhibit C - Form of Joinder to Agreement Exhibit D - Form of Sublease Exhibit E - Form of Assignment of Ground Leases Exhibit F - Form of Assignment of Existing Tenant Leases Exhibit G - Opinion Letter from ALLTEL's Counsel Exhibit H - Opinion Letter from ATC's Counsel Exhibit I - Form of Required Oasis Information Exhibit J - Form of Assumption of Contractual Obligations Exhibit K - Notice of Modification or Addition to ALLTEL Equipment Exhibit L - Excluded Sites Exhibit M - [RESERVED] Exhibit N - 1 -Sites to be Completed by ALLTEL (Zoned Sites) Exhibit N - 2 - Potential Sites to be Completed by ALLTEL (Zoned Sites) Exhibit O-1 -List of In-Progress Sites Exhibit O-2 -- List of Potential In Progress Sites iv
AGREEMENT TO SUBLEASE THIS AGREEMENT TO SUBLEASE ("Agreement"), made and entered into this 19/th/ day of December, 2000 ("Effective Date"), by and among ALLTEL COMMUNICATIONS, INC., a Delaware corporation ("ALLTEL Inc."), and the ALLTEL Entities (ALLTEL Inc., and the ALLTEL Entities being each referred to herein individually as "ALLTEL," and collectively as the "ALLTEL Companies"), and AMERICAN TOWERS, INC., a Delaware corporation ("ATC") and AMERICAN TOWER CORPORATION, a Delaware corporation ("ATC Parent"). W I T N E S S E T H: ------------------- WHEREAS, the ALLTEL Companies own or lease tower site locations used in connection with their operations or the operation by their Affiliates of a wireless communications network; and WHEREAS, ATC Parent directly and through its Affiliates, including ATC, is engaged in the business of, among other things, developing, constructing, managing, maintaining, marketing, operating and leasing networks of communications tower facilities, including the management of wireless communications sites; and WHEREAS, ATC Parent and the ALLTEL Companies desire to enter into an agreement relating to: (i) the lease or sublease of certain cell site locations, by the ALLTEL Companies, on the one hand, and ATC and ATC Parent, on the other hand, pursuant to the terms and conditions of the Lease and Sublease in the form attached hereto as Exhibit D (the "Sublease"); (ii) the design, construction and installation by ATC of certain tower structures pursuant to the terms and conditions of that certain Build to Suit Agreement of even date herewith among the ALLTEL Companies and ATC and ATC Parent (the "Build-to-Suit Agreement"); (iii) with respect to tower sites constructed pursuant to the Build-to-Suit Agreement, In Progress Sites and sites owned or leased by ATC or its Affiliates, the license of space on such sites which may be licensed to the ALLTEL Companies, on the one hand, from ATC or an Affiliate thereof, on the other hand, pursuant to that certain Master Tower Space License Agreement of even date herewith among ALLTEL Inc. and ATC (the "MLA"); (iv) leasing, marketing, and management services pending the closing of the transactions contemplated hereby pursuant to that certain Site Management Agreement of even date herewith among ATC and ATC Parent and the ALLTEL Companies (the "Site Management Agreement"), and (v) various other agreements with respect to the respective rights, duties and obligations of the parties relating to the subject matter hereof, all as more particularly described in and subject to the terms and conditions of this Agreement. NOW, THEREFORE, for and 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:
2 ARTICLE I DEFINITIONS SECTION 1.1. Definitions. - ------------------------- For purposes of this Agreement, the following capitalized terms have the following respective meanings: "Acquired Interests" has the meaning given to such term in Section 3.1(a). "Action" means any action, suit, litigation, complaint, counterclaim, claim, petition, mediation contest, or administrative proceeding, or request for material information by or pursuant to the order of any Governmental Authority, whether at law, in equity, in arbitration or otherwise, and whether conducted by or before any Governmental Authority or other Person. "Additional ALLTEL Equipment" has the meaning given to such term in the Sublease. "Additional ALLTEL Space" has the meaning given to such term in the Sublease. "Additional Sites" has the meaning given to such term in Section 5.13. "Affiliate(s)" or "Affiliated" of a Person means any Person which, whether directly or indirectly, Controls, is Controlled by or is under common Control with the subject Party. "AGL" has the meaning given to such term in Section 4.6(e)(i). "Agreement" has the meaning given to such term in the preamble. "ALLTEL" has the meaning given to such term in the preamble and shall mean one, some or all of the ALLTEL Companies, as the context may require. "ALLTEL Business" has the meaning given to such term in Section 6.3(a). "ALLTEL Disclosure Schedule(s)" means those schedules prepared by ALLTEL and to be attached hereto containing the information required to be disclosed to ATC pursuant to the terms and conditions of this Agreement. "ALLTEL Equipment" has the meaning given to such term in the Sublease. "ALLTEL Entities" means those partnerships, limited liability companies, and corporations that are listed on Exhibit B attached hereto and which (i) are signatories to this Agreement on the date hereof, or (ii) have joined in the execution and delivery of this Agreement by executing and delivering to ATC and ALLTEL Inc., after the Effective
3 Date but on or before the ninetieth (90/th/) day after the Effective Date, a Joinder to Agreement in the form attached hereto as Exhibit C. The Agreement shall automatically be deemed amended to include any of the ALLTEL Entities that executes and delivers to ATC and ALLTEL Inc. within the time frame set forth above a Joinder to Agreement in the form attached hereto as Exhibit C without any other action or approval of any other Party hereto. "ALLTEL Guarantors" means, individually and in the aggregate, ALLTEL Inc. and those Affiliates of ALLTEL Inc. listed under the heading "ALLTEL Guarantors" on the signature pages hereto, each of whom have agreed to jointly and severally guarantee the ALLTEL Obligations in accordance with the terms and conditions set forth in Sections 5.15, 6.1(d), and 13.19. "ALLTEL Inc." has the meaning given to such term in the preamble. "ALLTEL Indemnitee" means ALLTEL, its Affiliates, and the respective directors, officers, partners, members, employees, representatives and agents of ALLTEL or any Affiliate (excluding ATC, its Affiliates and any of their agents). "ALLTEL Material Adverse Effect" means as to any Site, any Event or Events that (a) has had or is reasonably likely to have a material adverse effect on the Acquired Interests or Sublease Interests in respect of such Site, or (b) has materially adversely affected or is reasonably likely to materially adversely affect the validity or enforceability of, or ability of ALLTEL or any of its Affiliates to perform, this Agreement or any of the Transaction Documents, or the likelihood of consummation of the Transactions. Notwithstanding the foregoing, and anything in this Agreement to the contrary notwithstanding, any Event (i) generally affecting the economy, the wireless communications industry, the tower ownership, operation, leasing, management and construction business or (ii) arising out of the execution or public announcement of this Agreement, shall not be deemed to constitute such a material adverse effect for the purposes of this definition. "ALLTEL Obligations" has the meaning given to such term in Section 5.15(a). "Alternative Transaction" shall mean any proposal or offer relating to a sale, assignment, lease, transfer, or disposition of, or similar transaction involving, all or any substantial portion of the Sites or any series of related transactions of the foregoing nature. "ATC" has the meaning given to such term in the preamble. "ATC Class A Common Stock" has the meaning given to such term in the Sublease. "ATC Delivery Date" has the meaning given to such term in Section 4.5(a).
4 "ATC Indemnitees" means ATC, its Affiliates, and the respective directors, officers, partners, members, employees, representatives and agents of ATC or its Affiliates. "ATC Material Adverse Effect" shall mean any Event or Events that has materially adversely affected or is reasonably likely to materially adversely affect the validity or enforceability of, or ability of ATC or any ATC Affiliate, to perform this Agreement or any of the Transaction Documents, or the likelihood of consummation of the Transactions. Notwithstanding the foregoing, and anything in this Agreement to the contrary notwithstanding, any Event (i) generally affecting the economy, the wireless communications industry, the tower ownership, operation, leasing, management and construction business, or the business of providing satellite-based communications services, or (ii) arising out of the execution or public announcement of this Agreement shall not be deemed to constitute such a material effect for the purposes of this definition. "ATC Obligations" has the meaning given to such term in Section 5.14(a). "ATC Parent" has the meaning given to such term in the preamble. "ATC Parent Indenture" means the Amended and Restated Loan Agreement, by and among, certain Subsidiaries (as defined therein) of ATC Parent, the Financial Institutions named therein and the Agents named therein, dated as of January 6, 2000, as heretofore amended. "Broadband Carrier" means an FCC licensee providing Broadband Services. "Broadband Equivalent Tenant" means the following minimum space and capacity requirements for use by one (1) Broadband Carrier tenant at a Site: (a) available space on the Tower for one twelve (12) panel antenna array (up to 25 lbs. per antenna) and twelve (12) lines (up to a diameter of 1 5/8" each) and associated mounts at a location on the Tower that is technologically suitable (with respect to height of location) for the transmission of wireless broadband services of a Broadband Carrier (but in no event less than ten consecutive vertical feet of space), and (b) 12 feet by 28 feet of available ground space to accommodate a shelter or cabinets (including associated grounding and overhangs). "Broadband Services" means (a) commercial mobile radio services provided in the A or B 800 MHz band of spectrum for use in cellular services, (b) personal communications services provided in the A-through-F 1900 MHz band of spectrum for use in PCS services, or (c) LMDS or MMDS (as such terms are defined by the FCC) licensed issued by the FCC. "Build-to-Suit Agreement" has the meaning given to such term in the third Whereas clause. "Claims" shall mean any and all debts, liabilities, obligations, losses, damages,
5 claims, refunds, credits, deficiencies, assessments and penalties, together with all Actions, pending or, to a Party's Knowledge, threatened, claims and judgments of whatever kind and nature relating thereto, and all fees, costs, expenses and disbursements (including without limitation reasonable attorneys' and other legal fees, costs and expenses) relating to any of the foregoing. "Closing(s)" has the meaning given to such term in Section 4.1(a). "Closing Date(s)" has the meaning given to such term in Section 4.1(a). "Code" shall mean the Internal Revenue Code of 1986, and the rules and regulations thereunder, all as from time to time in effect, or any successor Law, rules or regulations, and any reference to any statutory or regulatory provision shall be deemed to be a reference to any successor statutory or regulatory provision. "Confidential Information" has the meaning given to such term in Section 5.2(b). "Confidentiality Agreement" means that certain confidentiality agreement between American Tower Corporation and Salomon Smith Barney on behalf of ALLTEL Corporation dated as of September 22, 2000. "Contract" or "Contractual Obligation" shall mean any agreement, arrangement, commitment, contract, covenant, indemnity, undertaking or other obligation or liability to which ALLTEL or ATC, as applicable, is a party or to which it or any of the Sublease Interests or Acquired Interests is subject. "Control" (including the terms "controlled," "controlled by" and "under common control with") means the possession, directly or indirectly or as trustee or executor, of the power to direct or cause the direction of the management or policies of a Person, or the disposition of such Person's assets or properties, whether through the ownership of stock, equity or other ownership, by contract, arrangement or understanding, or as trustee or executor, by contract or credit arrangement or otherwise. The sole general partner of any Person that is a partnership will be deemed to control such Person and the sole manager(s) of any Person that is a limited liability company shall be deemed to control such Person. "Distribution(s)" shall mean, with respect to any Person, (a) the declaration or payment of any dividend (except dividends payable in common stock of such Person) on or in respect of any shares of any class of capital stock of such Person or any shares of capital stock of any Affiliate of such Person owned by a Person other than such Person or an Affiliate of such Person, (b) the purchase, redemption or other retirement of any shares of any class of capital stock of such Person or any shares of capital stock of any Affiliate of such Person owned by a Person other than such Person or an Affiliate of such Person, and (c) any other distribution on or in respect of any shares of any class of capital stock of such Person or any shares of capital stock of any Affiliate of such Person owned by a Person other than such Person or an Affiliate of such Person.
6 "Effective Date" has the meaning given to such term in the preamble. "Environmental Conditions" means, as to each Site, any conditions or circumstances, including without limitation, the presence of any unregistered above or below ground storage tank for Hazardous Materials or the presence of Hazardous Materials, that (i) require abatement or correction under the Environmental Laws, (ii) give rise to any civil or criminal Liability under any Environmental Law relating to the use or occupancy of any Site or (iii) constitute a public or private nuisance. "Environmental Exclusion Criteria" has the meaning given to such term in Section 4.6(a). "Environmental Law" shall mean any Law relating to or otherwise imposing Liability or standards of conduct concerning pollution or protection of the environment, including without limitation Laws relating to Releases or threatened Releases of Hazardous Materials or other chemicals or industrial pollutants, substances, materials or wastes into the environment (including, without limitation, ambient air, surface water, ground water, mining or reclamation or mined land, land surface or subsurface strata), Environmental Conditions, or otherwise relating to the manufacture, processing, generation, distribution, use, treatment, storage, disposal, cleanup, transport or handling of Hazardous Materials and other pollutants, contaminants or chemicals. Environmental Laws shall include without limitation the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 6901 et seq.) ("CERCLA"), the -- --- Hazardous Material Transportation Act (49 U.S.C. Section 1801 et seq.), the -- --- Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), -- --- the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), -- --- the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances -- --- Control Act (15 U.S.C. Section 2601 et seq.), the Occupational Safety and -- --- Health Act (29 U.S.C. Section 651 et seq.), the National Historic -- --- Preservation Act (16 U.S.C. Section 470 et seq.), the Federal Insecticide -- --- Fungicide and Rodenticide Act (7 U.S.C. Section 136 et seq.), and the -- --- Surface Mining Control and Reclamation Act of 1977 (30 U.S.C. Section 1201 et seq.), and any analogous Laws, and the rules and regulations promulgated -- --- thereunder all as from time to time in effect, and any reference to any statutory or regulatory provision shall be deemed to be a reference to any successor statutory or regulatory provision. "Environmental Permit" shall mean any Governmental Authorization required by or pursuant to any Environmental Law. "Environmental Report" shall mean a Phase I environmental site assessment report. "Event" shall mean the existence or occurrence of any act, action, activity, circumstance, condition, event, fact, failure to act, omission, incident or practice, or any set or combination of any of the foregoing. "Excluded Sites" means any Site excluded from this Agreement pursuant to the
7 terms of this Agreement. "Exhibits" means the exhibits listed in Article II(b). "Existing Sites" means the Sites that are listed in Exhibit A-1 attached hereto and, in the event that and to the extent that the applicable ALLTEL Entity executes a Joinder to Agreement, Exhibit A-2 attached hereto, each as may be amended from time to time in accordance with Section 5.13 (including, without limitation, the subsequent addition of In Progress Sites and Zoned Sites). ALLTEL has used its good faith efforts to list all Sites appropriately between Exhibits A-1 and A-2. Notwithstanding the exercise of such efforts, in the event the Parties discover that any Site(s) has been incorrectly listed in Exhibit A-1 (because it is not owned by one of the ALLTEL Entities that is a signatory to this Agreement on the Effective Date) or in Exhibit A-2 (because it is owned by one of the ALLTEL Entities that is a signatory to this Agreement on the Effective Date), such Site(s) shall be removed from Exhibit A-1 or Exhibit A-2, as the case may be, and added to Exhibit A-1 or Exhibit A-2, as the case may be, upon written notice to ATC by ALLTEL no less than thirty (30) days prior to the applicable Closing Date of such Site(s). "Existing Tenant Leases" means, collectively, the lease, license or subleases agreements between ALLTEL and any third party for the use of any Included Site that was executed on or before the Effective Date or the applicable Closing Date. "FAA" means the Federal Aviation Administration or any successor Governmental Authority. "FCC" means the Federal Communications Commission or any successor Governmental Authority. "FCC Authorizations" has the meaning given to such term in the Sublease. "Final Closing" has the meaning given to such term in Section 4.1(b). "Forum" means any federal, state, territorial, county, local, municipal, foreign or other court, governmental agency, administrative body or agency, tribunal, authority, private alternative dispute resolution system, or arbitration panel. "GAAP" means generally accepted accounting principles, consistently applied. "Governmental Authority(ies)" means any federal, state, territorial, county, municipal, local, or other government or governmental agency, authority or body or any other type of regulatory agency, authority or body, whether domestic or foreign, whether administrative, executive, judicial or legislative, including without limitation the FCC and the FAA. "Governmental Authorizations" shall mean all approvals, concessions, consents, franchises, licenses, permits, plans, certificates of occupancy, registrations and other
8 authorizations, including, without limitations, Site Permits, of all Governmental Authorities, in connection with the ownership, or operation of Sites. "Governmental Filings" shall mean all filings, including franchise and similar Tax filings, and the payment of all fees, assessments, interest and penalties associated with such filings, with all Governmental Authorities. "Ground Lease" means the ground lease, easement, right of way, or other right of use agreement, pursuant to which ALLTEL holds a leasehold interest, leasehold estate or other real property interest or other right of use agreement for any Site (other than Excluded Sites), including, without limitation, associated access easements and rights of way. "Ground Lessor" means the "grantor" or "lessor" or "landlord" or "licensor" under a Ground Lease. "Ground Rent" has the meaning given to such term in the Sublease. "Hart-Scott-Rodino Act" means the Hart Scott Rodino Antitrust Improvement Act of 1976, as amended. "Hazardous Materials" means and includes any substance, material, waste, constituent, compound, chemical, natural or man-made element or force (in whatever state of matter): (a) the presence of which requires investigation or remediation under any Environmental Law; or (b) that is defined as a "hazardous waste" or "hazardous substance" or "hazardous material" under any Environmental Law; or (c) that is toxic, explosive, corrosive, etiologic, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and is regulated by any applicable Governmental Authority or subject to any Environmental Law; or (d) the presence of which on the real property owned or leased by such Person poses or threatens to pose a hazard to the health or safety of persons on or about any such real property; or (e) that contains gasoline, diesel fuel or other petroleum hydrocarbons, or any by-products or fractions thereof, natural gas, polychlorinated biphenyls ("PCBs") and PCB-containing equipment, radon or other radioactive elements, ionizing radiation, electromagnetic field radiation and other non-ionizing radiation, sonic forces, lead, asbestos or asbestos-containing materials, or urea formaldehyde foam insulation. "Immediate Family" shall mean, with respect to any individual, his or her spouses, past or present, children, parents and siblings, and any of the spouses of the foregoing, past or present, in all cases whether related by blood, by adoption or by marriage. "Included Sites" means any Site that becomes subject to the Sublease or any In Progress Sites that becomes subject to the MLA, in accordance with the terms and conditions of this Agreement.
9 "Indemnity Period" means has the meaning given to such term in Section 11.1. "Initial Closing" has the meaning given to such term in Section 4.1(b). "Initial Closing Date" has the meaning given to such term in Section 4.1(b). "In Progress Sites" means any Site (other than any Site subject to a build-to-suit or other similar Contract between ALLTEL and a third party as of the Effective Date) which (a) was not listed on Exhibit A-1, Exhibit A- 2, Exhibit L, Exhibit N-1, or Exhibit N-2 attached hereto, (b) is completed or in progress by or on behalf of any of the ALLTEL Companies after the Effective Date and before the Termination Date, and (c) in accordance with Section 5.13, is acquired by ATC and subleased to ALLTEL pursuant to the MLA in consideration for the Purchase Price. In Progress Sites are listed in Exhibit O-1 attached hereto and, in the event that and to the extent that the applicable ALLTEL Entity executes a Joinder to Agreement, Exhibit O-2 attached hereto. "Intellectual Property" means all of ALLTEL's and its Affiliates' rights in and to, (a) copyrights, patents, trademarks, trade names, service marks, URLs and applications for the foregoing, and software, firmware, trade secrets, proprietary technologies, know-how, inventions, processes and formulas (secret or otherwise, whether patentable or unpatentable and whether or not reduced to practice), (b) all applications, registrations, renewals in connection with the foregoing, and all improvements and goodwill associated therewith; and (c) all copies and tangible embodiments thereof (in whatever form or medium) provided, however, that notwithstanding the foregoing, Intellectual Property shall not include, and the Sublease Interests or Acquired Interests (as applicable) shall include, the Required Co-Location Documents, the Tower File Data and the Required Oasis Information, it being understood that both ALLTEL and ATC shall have the right to have copies of and to use the Required Co-Location Documents, the Tower File Data and the Required Oasis Information. "Joinder to Agreement" means a Joinder to Agreement in the form attached hereto as Exhibit C pursuant to which certain ALLTEL Entities may join in the execution and delivery of this Agreement. "Lighting & Monitoring Equipment" has the meaning given to such term in the Sublease. "known," "to the best knowledge of," "to the knowledge of," or words of similar import means, as to each Party hereto, the actual knowledge of (or words of similar import) any director or executive officer of ATC or ALLTEL, respectively, as of the Effective Date, as such knowledge exists as of the Effective Date, (or, in the case of the ALLTEL Disclosure Schedule, as of the date of such addition), after reasonable review and reasonable inquiry of appropriate employees. "Laws" means (a) all administrative, judicial, legislative or other actions, codes consent decrees, constitutions, decrees, directives, enactments, laws, injunctions,
10 judgments, orders, ordinances, promulgations, regulations, requirements, rules, settlement agreements, statutes, or writs of any Governmental Authority, domestic or foreign; (b) the common law, or other legal precedent; or (c) all arbitrator's, mediator's or referee's final, binding and non-appealable awards, decisions, findings or recommendations. "Leased Site" shall have the meaning given such term in the Sublease. "Liability" means any liability or obligation whether asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated and whether due or to become due. "Lien" shall mean any of the following: mortgage; lien (statutory or other including, without limitation, any Tax lien); or other security agreement, arrangement or interest; hypothecation, pledge or other deposit arrangement; assignment; charge; levy; executory seizure; attachment; garnishment; encumbrance (including any easement, exception, reservation or limitation, right of way, and the like); conditional sale, title retention or other similar agreement, arrangement, device or restriction; preemptive or similar right; any financing lease involving substantially the same economic effect as any of the foregoing; the filing of any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction; restriction on sale, transfer, assignment, disposition or other alienation; or any option, equity, claim or right of or obligation to, any other Person, of whatever kind and character. "Loss and Expense" shall have the meaning given to it in Section 11.2(a). "Material Adverse Effect" means, respectively, an ALLTEL Material Adverse Effect or an ATC Material Adverse Effect. "Material Agreement" shall mean, (a) with respect to ALLTEL any Ground Lease, Swap Agreement or Existing Tenant Lease, and (b) with respect to each Party, but in the case of ALLTEL only with respect to an Included Site, any material Contractual Obligation that (i) was not entered into in the ordinary course of business, (ii) was entered into in the ordinary course of business which (A) involved the purchase, sale or lease of goods or materials, or purchase or sale of services, aggregating more than $50,000.00 per Contract for which such Party has continuing obligations thereunder, except for warranty obligations pursuant to standard warranties, or (B) is not terminable on one-hundred eighty (180) days or less notice without penalty or other payment, (iii) is or otherwise constitutes a written agency, broker, dealer, license, distributorship, sales representative or similar written agreement, (iv) is with any Governmental Authority (other than individual Site or tenant lease agreements), or (v) whose termination or non-performance would reasonably likely have an ALLTEL Material Adverse Effect or an ATC Material Adverse Effect, as the case may be. "Microwave Equipment" has the meaning given to such term in the Sublease. "Microwave Reserved Space" has the meaning given to such term in the
11 Sublease. "Microwave Site(s)" has the meaning given to such term in Section 4.6(e). "MLA" has the meaning given to such term in the third Whereas clause. "Orders" means all applicable orders, writs, judgments, decrees, rulings, consent agreements, and awards of or by any Forum or entered by consent of the party to be bound. "Organic Document" shall mean, with respect to a Person which is a corporation, its charter, its by-laws and all shareholder agreements, voting trusts and similar arrangements applicable to any of its capital stock; with respect to a Person which is a partnership, its agreement and certificate of partnership (if any), any agreements among partners, and any management and similar agreements between the partnership and any general partners (or any Affiliate thereof); and with respect to any other Person, its organizational filings with any Governmental Authority and all agreements among it and/or one or more of its owners or beneficiaries, relating to the Person's governance, operations, and/or Distributions. "Owned Site" shall have the meaning given to such term in the Sublease. "Party" means each of the ALLTEL Companies, ATC and ATC Parent, as appropriate. "Parties" means the ALLTEL Companies, ATC and ATC Parent together. "Permitted Liens" means: (a) Liens for current Taxes not yet due and payable, (b) worker's, carrier's and materialman's Liens incurred in the ordinary course of business related to obligations not yet due and payable, (c) Existing Tenant Leases, and (d) such imperfections of title, easements, rights of way, encumbrances or other Liens, if any, which are not, individually or in the aggregate, substantial in character, amount or extent and do not materially detract from the value, or materially interfere with the present use, of the property subject thereto or affected thereby, or otherwise materially impair the Permitted Use thereof, provided, however, that in no event shall Permitted Liens include any Liens affecting any of the Towers or Sites (other than the Reserved Space, Microwave Reserved Space, Additional ALLTEL Space, Microwave Equipment, Additional ALLTEL Equipment and the ALLTEL Equipment), Sublease Interest, or Acquired Interest securing any indebtedness for money borrowed or capitalized lease obligations of any of the ALLTEL Companies (or any of their Affiliates) or otherwise for the benefit of any creditor of any ALLTEL Company (or any of their Affiliates). "Permitted Use" has the meaning given to such term in the Sublease. "Person" means an individual, partnership, joint venture, limited liability company, association, corporation, trust or any other legal entity.
12 "Private Authorizations" shall mean all approvals, concessions, consents, franchises, licenses, permits, and other authorizations of all Persons (other than Governmental Authorities) including without limitation Required Consents. "Purchase Price" means, at any given Closing, ATC shall pay to ALLTEL for each In Progress Site deemed to be an Included Site, in accordance with the terms and conditions of Section 5.13(b) and (c), for such Closing, an aggregate amount of cash equal to ALLTEL's out-of-pocket costs and expenses (as set forth in a reasonably detailed description thereof furnished to ATC not less than twenty (20) days following substantial completion of such In Progress Site) as of the applicable Closing Date associated with or directly related to the identification, acquisition, development and construction of such In Progress Site. "Purchase Option Consideration" shall have the meaning given to such term in the Sublease. "Purchase Option Floor" has the meaning given to such term in the Sublease. "Purchase Option Price" has the meaning given to such term in the Sublease. "Release" shall have the meaning given to such term, or any term of similar import, in the Environmental Laws, including, without limitation, Section 101(14) of CERCLA. "Rent" has the meaning given to such term in the Sublease. "Required Co-Location Documents" means a complete set of complete copies of all of the following for each Site (other than Excluded Sites) that are prepared by, for, on behalf of, or otherwise in the possession of ALLTEL (including any prepared after the date hereof in order to satisfy ALLTEL's obligation to obtain complete copies): (a) fully executed Ground Lease, together with any amendments or modifications and any oral promises made (if any) or, if applicable, a deed, (b) chain of all applicable assignments of Ground Leases, (c) Environmental Report that affects the Site; (d) a real property boundary survey (including, without limitation, all access and utility easements); provided, however, that notwithstanding anything to the contrary in this Agreement, such boundary survey (if not in ALLTEL's possession) may be delivered by ALLTEL no more than forty-five (45) days after the applicable Closing or may be performed by ATC at ALLTEL's sole but reasonable cost and expense, (e) either a 1A or 2C Site Survey (or both if in ALLTEL's possession), (f) all easements and the chain of applicable assignments of such easements, (g) NEPA checklist, (h) title reports, commitments or policies of ALLTEL's leasehold or fee simple interest in the Site, (i) Site plans, Tower drawings, and foundation plans, (j) all Existing Tenant Leases that were executed on or before the Effective Date, and (k) final zoning approval/determination, conditional use permits, or a letter (signed by ALLTEL) stating that no zoning was required and the basis thereof.
13 "Required Consent" has the meaning given to such term in Section 3.3(a). "Required Oasis Information" means the completion of all information in the tower site data form attached hereto as Exhibit I. "Reserved Space" has the meaning given to such term in the Sublease. "Restricted Items" has the meaning given to such term in Section 3.3(a). "Site(s)" means all wireless communication sites with a Tower located thereon that is owned or leased by ALLTEL and is now or hereafter subject to the Transaction Documents (other than any Tower site which is owned by a third party where ALLTEL merely collocates on such site). Sites shall include Additional Sites, Existing Sites, Included Sites, In Progress Sites, Zoned Sites and Excluded Sites, as applicable. "Site Exclusion Criteria" has the meaning given to such term in Section 4.6(a). "Site Designation Supplement" has the meaning given to such term in the Sublease. "Site Improvements" means, as to each Included Site, (i) Towers, (ii) grounding rings (other than those for the ALLTEL Equipment, Microwave Equipment or Additional ALLTEL Equipment); (iii) fencing; (iv) signage; (v) connections for utility service; (vi) hardware constituting tower platforms; (vii) access road improvements; (viii) common shelters, if any; and (ix) such other equipment, alterations, replacements, modifications, additions, and improvements as may be installed on or made to all or any component of an Included Site. Notwithstanding anything to the contrary, Site Improvements do not include the ALLTEL Equipment, Microwave Equipment, Additional ALLTEL Equipment or personal property owned by third party tenants. "Site Maintenance Agreements" means a Contract associated with the operations or maintenance of any Included Site (or any portion thereof) that ALLTEL is a party to so long as such Contract is not associated with the operations or maintenance of the Reserved Space, Microwave Reserved Space, Additional ALLTEL Space, Microwave Equipment, Additional ALLTEL Equipment or the ALLTEL Equipment. "Site Management Agreement" has the meaning given to such term in the third Whereas clause. "Site Permits" means any and all Governmental Authorizations other than those associated directly and solely with the ownership or operation of any of the ALLTEL Equipment, Microwave Equipment, Additional ALLTEL Equipment or FCC Authorizations. "Structural Reports" means a report related to the structure of the Tower and its structural capacity or other improvements on a Site (other than Excluded Sites).
14 "Sublease" has the meaning given to such term in the third Whereas clause. "Sublease Interests" has the meaning given to such term in Section 3.1(a). "Subleased Property" has the meaning given to such term in the Sublease. "Substantial Portion of Site" means, as to a Site, so much of such Site (including the Land, Tower and Site Improvements thereof, or any portion thereof) as, when subject to a Taking or damage as a result of a casualty, leaves the untaken or undamaged portion unsuitable for the continued feasible and economic operation of such Site for the Permitted Use. "Swap Agreements" means any Contractual Obligation between any of the ALLTEL Companies and any other provider of wireless communications services, local public safety organization, Governmental Authority (including without limitation post offices and law enforcement organizations), or operator of remote monitoring systems for commercial purposes, whereby any of the ALLTEL Companies (or any of their Affiliates) receives a favorable lease rate or right to co-locate on a site owned or operated by such third party for each (or some exchange rate for each) Site upon which such third party co-located(s) upon or vice versa. "Taking" means, as to any Site, any condemnation or exercise of the power of eminent domain by any Governmental Authority vested with such power, or any taking in any other manner for public use, including a private purchase, in lieu of condemnation, by a public authority vested with the power of eminent domain. "Tax (and "Taxable", which shall mean subject to Tax), shall mean, with respect to any Person, (a) all taxes (domestic or foreign), including without limitation any income (net, gross or other including recapture of any Tax items such as investment Tax credits), alternative or add-on minimum Tax, gross income, gross receipts, gains, sales, use, leasing, lease, user, ad valorem, transfer, recording, franchise, profits, property (real or personal, tangible or intangible), fuel, license, withholding on amounts paid to or by such Person, payroll, employment, unemployment, social security, excise, severance, stamp, occupation, premium, environmental or windfall profit Tax, custom, duty or other Tax, or other like assessment or charge of any kind whatsoever, together with any interest, levies, assessments, charges, penalties, additions to Tax or additional amount imposed by any Taxing Authority, (b) any joint or several liability of such Person with any other Person for the payment of any amounts of the type described in (a), and (c) any liability of such Person for the payment of any amounts of the type described in (a) as a result of any express or implied obligation to indemnify any other Person. "Tax Return" or "Returns" shall mean all returns, reports, summaries or information, consolidated or otherwise (including without limitation information returns), required to be filed with any Governmental Authority with respect to Taxes. "Taxing Authority" shall mean any Governmental Authority responsible for the
15 imposition, assessment or collection of any Tax. "Termination Date" has the meaning given to such term in Section 12.1. "Termination Fee" has the meaning given to such term in Section 12.1. "Tower" means a wireless communication tower structure with an engineered foundation. "Tower File Data" means (a) the Required Co-Location Documents, and (b) complete copies of all of the following, but only to the extent existing as of the Effective Date or prepared thereafter in the ordinary course of business applicable to a particular Site (other than Excluded Sites) and in the possession of any of the ALLTEL Companies or any third party retained by any of the ALLTEL Companies to store such information on their behalf as of the applicable Site Commencement Date: (i) FAA determination, (ii) State or Local Tall Structure Permits, (iii) FCC antenna registration, (iv) Geotech Soils Report, (v) "Haz Mat" certificates, (vi) copy of any recorded memorandum of Ground Lease, if any, (vii) copies of releases of (X) all material third party judgment Liens/Tax Liens Clearances and all judgment Liens/Tax Liens, and (Y) deed restrictions, covenants, and zoning violations that affect the ability to utilize the property as co-locatable tower facility during the term of the Ground Lease, (viii) copy of local zoning ordinance(s), approved zoning drawings or letter stating that no zoning is required (if applicable), (ix) copy of zoning application, (x) application for building (or similar) permit, (xi) copy of certificate of occupancy, (xi) approved construction drawings from the applicable local jurisdiction, (xii) building permit and other local and State permits required for construction of the access, Site and Tower, (xiii) approved zoning drawings, (xiv) site plan, as built, and other site drawings, and (xv) concurrence letter from the state historic preservation office. "Transactions" shall mean the transactions contemplated by this Agreement, including without limitation the execution, delivery and performance of the Transaction Documents. "Transaction Documents" means collectively this Agreement, the Sublease, the Build-to-Suit Agreement, the Site Management Agreement, the MLA and each of the other documents and agreements listed in Articles IV and X. "Zoned Site(s)" means any Site listed in Exhibit N-1 attached hereto, and, in the event that and to the extent that the applicable ALLTEL Entity executes a Joinder to Agreement, the applicable Sites listed in Exhibit N-2 attached hereto. SECTION 1.2. Other Capitalized Terms. ------------------------------------ (a) Any other capitalized terms used in this Agreement shall have the respective meanings given to them elsewhere in this Agreement.
16 ARTICLE II AGREEMENT DOCUMENTS This Agreement shall consist of the following documents, as amended from time to time as provided herein: (a) this Agreement document; (b) the following Exhibits: Exhibit A-1 - List of Existing Sites Exhibit A-2 - List of Potential Existing Sites Exhibit B - List of ALLTEL Entities Exhibit C - Form of Joinder to Agreement Exhibit D - Form of Sublease Exhibit E - Form of Assignment of Ground Leases Exhibit F - Form of Assignment of Existing Tenant Leases Exhibit G - Opinion Letter from ALLTEL's Counsel Exhibit H - Opinion Letter from ATC's Counsel Exhibit I - Form of Required Oasis Information Exhibit J - Form of Assumption of Contractual Obligations Exhibit K - Notice of Modification or Addition to ALLTEL Equipment Exhibit L - Excluded Sites Exhibit M - [Reserved] Exhibit N-1 -- Sites to be Completed by ALLTEL (Zoned Sites) Exhibit N-2 -- Potential Sites to be Completed by ALLTEL (Zoned Sites) Exhibit O-1 -List of In Progress Sites Exhibit O-2 -- List of Potential In Progress Sites (c) the ALLTEL Disclosure Schedules attached hereto or to be attached hereto in accordance with Section 4.6(b). If any of the foregoing is inconsistent, this Agreement shall prevail over Exhibits and the ALLTEL Disclosure Schedules. ARTICLE III CONVEYANCE AND CONSIDERATION SECTION 3.1. Conveyance. ----------------------- (a) Subject to the terms and conditions of this Agreement, ALLTEL agrees to grant, convey and deliver to ATC, and ATC agrees to take and accept from ALLTEL, at the Closings, (i) a leasehold, subleasehold interest, or other interest consistent with the terms of the Sublease in
17 and to the Subleased Property, as more particularly described in the Site Designation Supplement and an assignment and assumption of the Existing Tenant Leases for each of the Included Sites in the form attached hereto as Exhibit F (collectively, the "Sublease Interests"), and (ii) a bill of sale and/or assignment and assumption, as applicable, for all Site Improvements, Ground Leases or other real property interest and Site Permits, with respect to certain of the In-Progress Sites in accordance with Section 5.13 ("Acquired Interests"). Each grant, transfer and/or assignment of interest shall be pursuant to the instruments contemplated by this Agreement and free and clear of all Liens except for Permitted Liens. (b) Notwithstanding anything to the contrary contained in Section 3.1(a), the Sublease Interests and Acquired Interests shall not include any of ALLTEL's right, title or interest in or to the following: (i) the ALLTEL Equipment, Microwave Equipment, and Additional ALLTEL Equipment; (ii) any equipment or transmissions systems used for the remote monitoring of the Sites (other than the Lighting and Monitoring Equipment); (iii) any and all rights that accrue or will accrue to ALLTEL under the Transaction Documents, including, without limitation, the Rent payments due to ALLTEL under the Sublease; (iv) any and all rights retained by and/or granted to ALLTEL pursuant to the Transaction Documents; (v) any Governmental Authorizations relating to the ALLTEL Equipment, Microwave Equipment, Additional ALLTEL Equipment or the provision of wireless telecommunication services, including, without limitation, the FCC Authorizations, (vi) any Intellectual Property, (vii) the Excluded Sites, (viii) any receivables under any Existing Tenant Leases accrued with respect to periods ending on or before the applicable Closing Date; and (ix) all Claims with respect to periods ending on or prior to the applicable Closing Date. SECTION 3.2. Consideration. -------------------------- Subject to the adjustments set forth in this Section 4.7, the aggregate consideration payable by ATC to ALLTEL for entering into the Transaction Documents shall be (a) the Rent provided for in Section 11 of the Sublease and the Purchase Option Consideration, if applicable, and (b) the Purchase Price with respect to the In Progress Sites. SECTION 3.3. Consents and Approvals. ----------------------------------- (a) Nothing in this Agreement shall be construed as an attempt by ALLTEL to lease or sublease to ATC pursuant to the Sublease, or otherwise make subject to the Sublease, or to transfer pursuant to any Material Contract, Governmental Authorizations, or Private Authorization relating to Ground Leases or Existing Tenant Leases included in the Sublease Interests or Acquired Interests which is unable by its terms or by Law to be so leased, subleased, transferred or made subject without the consent of any other Person (including any Governmental Authority), ("Required Consent"), unless such Required Consent shall have been given. Notwithstanding anything to the contrary, Required Consent shall include, without limitation, (i) a consent, approval or new permit from the Ground Lessor under a Ground Lease necessary for (x) an assignment of the Ground Lease to ATC in the case of Acquired Interests in accordance with the terms and conditions of this Agreement, and (y) a sublease and an assignment (contingent on exercise of the purchase option provided for in the Sublease) of the Ground Lease to ATC in the case of Sublease Interests in accordance with the terms and conditions of this
18 Agreement and the Sublease, (ii) a consent or approval under any Ground Lease or Existing Tenant Lease necessary for ATC to further sublease Available Space (as defined in the Sublease) in accordance with the terms and conditions of the Sublease, or (iii) a consent under any Ground Lease necessary to remove any limit or restriction on the right to install or permit the installation or modification of tenant equipment, towers (including height and number), and buildings at the applicable Site. (b) ALLTEL shall use commercially reasonable efforts to obtain the relevant written Required Consent without making any concessions to a Ground Lessor that would result in any increase in the Ground Rent, creation or increase in any form of revenue sharing arrangements, or any other term or condition that would be reasonably deemed less favorable to ATC as compared to the terms and conditions under the applicable Ground Lease as of the Effective Date. Such efforts may include, without limitation, contacts with the Ground Lessor of each Site by letter, telephone and in person. ATC agrees to cooperate with ALLTEL in its efforts to obtain any Required Consent; provided however, that in no event shall ATC be obligated to incur any out-of-pocket expense or additional obligation with respect to such cooperation. If ALLTEL is unable, at anytime prior to the Final Closing, to obtain any Required Consent by the applicable Closing, ALLTEL shall continue using commercially reasonable efforts to obtain such Required Consent; provided, that if the Parties subsequently obtain such Required Consent as to any Site, the Closing for such Site shall take place at the Closing next succeeding the date on which such Required Consent is obtained until the Final Closing has occurred; provided further, that to the extent that ALLTEL has not obtained any such Required Consent on or before the expiration of six (6) months following the Effective Date, ATC reserves the right, at its sole expense and in its sole discretion, to attempt to directly obtain any such Required Consent for a Site. (c) If any such Required Consent is obtained prior to the Final Closing, the related Site shall be subjected to the Sublease or MLA, as applicable, at the next practicable subsequent Closing. Pending the obtainment of the Required Consent, such Required Consent and the related Site shall not be deemed an Included Site unless the Parties otherwise agree in writing to include such Site in any Closing. Any Site subject to a Required Consent (other than with respect to any Included Site subject to a prior Closing) that has not been obtained by the Final Closing, shall be deemed an Excluded Site unless the Parties otherwise agree in writing to include such Site in the Final Closing. ARTICLE IV CLOSINGS SECTION 4.1. Closings. --------------------- (a) Subject to prior termination of this Agreement by ALLTEL or ATC pursuant to Article XII, the consummation of the transfer and conveyance of the Sublease Interests, Acquired Interests and other Transactions shall occur in multiple closings (individually, a "Closing", and collectively, the "Closings"), and each such Closing shall take place in Little Rock, Arkansas and at such times mutually agreed to by the Parties and on such dates (each, the "Closing Date") as set forth in this Article IV.
19 (b) Notwithstanding anything to the contrary contained herein, the parties acknowledge and agree that each Closing shall be subject to the provisions of Article X and shall take place after all the conditions set forth in Article X have been satisfied or waived. The parties agree to use commercially reasonable efforts to cause the initial Closing (the "Initial Closing") to take place on April 2, 2001 (the "Initial Closing Date"), and thereafter each Closing shall take place on the first day of the calendar month upon no less than fifteen (15) days prior written notice from ALLTEL, which notice shall identify those Sites selected by ALLTEL, consistent generally with the agreement of the Parties contemplated by the last sentence of this Section 4.1(b) and that are ready to close in accordance with the provisions of this Agreement, including, without limitation, the right of ATC to exclude Sites from a Closing pursuant to Sections 4.5, 4.6 and 5.13 and the Closing of any Site shall not occur prior to the applicable ATC Delivery Date for such Site (unless expressly waived by ATC in writing on a Site-by-Site basis or in the event that ATC has delivered an unchallenged Site Designation Supplement to ALLTEL with respect to such Site); provided, however, that in no event shall the final Closing (the "Final Closing") occur later than the Termination Date. ALLTEL and ATC shall, within twenty (20) days of the Effective Date, use reasonable efforts to agree generally as to which particular geographic areas of Sites are to be included in which Closings. (c) The parties hereto shall use reasonable good faith efforts to include at least two hundred fifty (250) Included Sites in the Initial Closing and each subsequent Closing shall include at least two hundred fifty (250) Included Sites, including, without limitation, any Sites deferred pursuant to Section 4.6 from the previous Closings; provided, however, that no minimum number of Included Sites shall be applicable to the Final Closing. SECTION 4.2. Transactions and Documents at the Closings. ------------------------------------------------------- (a) At each Closing: (i) ATC shall pay to ALLTEL by wire transfer of immediately available funds to an account in the United States designated in writing by ALLTEL the Rent in respect of all of the Subleased Property of each Included Site being leased or subleased at such Closing and the Purchase Price in respect of all of the Acquired Interests being acquired at such Closing; (ii) ATC shall execute and deliver to ALLTEL (A) Site Designation Supplements with respect to Sublease Interests of the Included Sites being leased or subleased at such Closing, (B) an assignment and assumption agreement relating to the assignment of the Existing Tenant Leases affecting the Included Sites and Ground Leases with respect to In Progress Sites subject to such Closing in the forms attached hereto as Exhibits E and F; (C) a site schedule under the MLA for each In Progress Site acquired at such Closing, (D) an assumption agreement relating to the assumption of the Contractual Obligations associated with the operations or maintenance of the Included Sites subject to such Closing in the form attached hereto as Exhibit J, and (E) such other documents, certificates and other papers as set forth in Section 10.3 or may be reasonably necessary to effectuate the consummation of the Transactions.
20 (iii) ALLTEL shall execute and deliver to ATC (A) all Required Consents in respect of the Included Sites at such Closing; (B) an assignment and assumption agreement relating to the assignment of the Existing Tenant Leases affecting the Included Sites and Ground Leases with respect to In Progress Sites subject to such Closing in the forms attached hereto as Exhibits E and F; (C) a site schedule under the MLA for each In Progress Site acquired at such Closing, and (D) Site Designation Supplements with respect to the Sublease Interests of Included Sites being leased or subleased at such Closing; (E) a receipt for the Rent and Purchase Price delivered to it at such Closing, (F) an assumption agreement relating to the assumption of the Contractual Obligations associated with the operations or maintenance of the Included Sites subject to such Closing in the form attached hereto as Exhibit J; and (G) such other documents, certificates and other papers as set forth in Section 10.2 or may be reasonably necessary to effectuate the consummation of the Transactions. (b) In addition to and not in limitation of Section 4.2(a), at the Initial Closing, ATC and ALLTEL shall execute and deliver the Sublease and the opinion letters in the form attached hereto as Exhibits G and H, respectively. SECTION 4.3. Costs of Closing. ----------------------------- ALLTEL and ATC shall equally share and be responsible for and pay any and all transfer and recording taxes and routine closing costs and expenses, including, without limitation, any transfer Tax payable on the Sublease Interests or Acquired Interests or the Purchase Option Consideration; provided, however, that ALLTEL shall be responsible for and pay all recording costs relating to any title clearance matters existing on or before to the applicable Closing Date. Notwithstanding anything to the contrary contained herein, (i) any fees, costs and expenses incurred by or on behalf of ATC for the services ordered or requested by ATC for which ALLTEL is not liable under the Transaction Documents shall be the responsibility of and shall be paid for by ATC and (ii) any fees, costs and expenses incurred by or on behalf of ALLTEL for services ordered or requested by ALLTEL for which ATC is not liable under the Transaction Documents shall be the responsibility of and shall be paid for by ALLTEL. SECTION 4.4. Further Assurances. ------------------------------- (a) At each Closing, and from time to time thereafter, ALLTEL shall do all such additional and further acts, and shall execute and deliver all such additional and further instruments, certificates and documents, as ATC may reasonably request to fully vest in and assure to ATC full right, title and interest in and to the Sublease Interests and Acquired Interests to the full extent contemplated by this Agreement and otherwise to effectuate the consummation of the Transactions. Each of the Parties hereto will cooperate with the others and execute and deliver to the other Parties such other instruments and documents and take such other actions as may be reasonably requested from time to time by any other Party as necessary to carry out, evidence and confirm the intended purposes of the Transaction Documents and such obligation shall survive any Closing without limitation.
21 (b) If after any Closing any Party discovers that the name of the ALLTEL Company as set forth in any Site Designation Supplement is incorrect, the applicable ALLTEL Company shall re-execute such Site Designation Supplement in such a manner as to correct such name, and ALLTEL shall re-record such Site Designation Supplement, unless the Parties agree that such re-recordation is not necessary. The foregoing obligation shall survive all Closings. (c) ALLTEL and ATC shall have the right, at the requesting Party's sole expense, to cause any amendment to the Site Designation Supplement to be recorded. SECTION 4.5. Site Designation Supplements; Required Co-Location Documents ------------------------------------------------------------------------- and MLA Schedules. - ----------------- (a) Following ATC's receipt of the Required Co-Location Documents for a Site (other than In Progress Sites) in accordance with Section 5.16, ATC shall, at its sole expense, collect the data relating to such Site, adequately describe such Site (including, without limitation, the Reserved Space, the Microwave Space, the Additional ALLTEL Space, the ALLTEL Equipment, the Microwave Equipment, and the Additional ALLTEL Equipment) and prepare and deliver to ALLTEL, within sixty (60) days following ATC's receipt of the associated Required Co-Location Documents (provided, however, that in the event that ALLTEL delivers Required Co-Location Documents for more than two hundred fifty (250) Sites or fifty (50) Sites within any given market within any consecutive fourteen (14) day period, ATC shall be entitled to an additional fourteen (14) days for each group (but only such group(s)) of up to fifty (50) additional deliveries (or twenty-five (25) within any given market) of Required Co-Location Documents for the associated additional Sites during any such consecutive fourteen (14) day period) (the applicable delivery date by ATC for a particular Site is hereinafter referred to as the "ATC Delivery Date"), the Site Designation Supplement and exhibits attached thereto for all Site Designation Supplements relating to such Site, all in accordance with the terms thereof; provided, however, that notwithstanding anything to the contrary, the foregoing shall in no way alter ATC or ALLTEL's rights or obligations with respect to Section 8 and Exhibit 4 of the Sublease or the representations and warranties of ALLTEL set forth in Article VI. In no event shall ALLTEL deliver Required Co- Location Documents for less than one hundred (100) Sites in any given delivery to ATC. In the event that ALLTEL notifies ATC of a reasonable discrepancy or inaccuracy in a Site Designation Supplement, together with what ALLTEL believes to be a correct Site Designation Supplement for such Site, ALLTEL and ATC shall cooperate, in good faith, to resolve any such dispute as to the accurate descriptions to be listed therein; provided, however that if ALLTEL fails to notify ATC of its disagreement with the information contained in any Site Designation Supplement within fifteen (15) days of ALLTEL's receipt of such Site Designation Supplement, ALLTEL's approval of such Site Designation Supplement shall be deemed granted by ALLTEL. Subject to terms and conditions to this Section 4.5(a), ALLTEL shall promptly reimburse ATC for all reasonable out-of- pocket costs and expenses associated with investigating, correcting and resolving any such alleged inaccuracy or dispute following receipt of an invoice together with verifiable receipts and documentation; provided, however, if such investigation reveals that ATC provided inaccurate information with respect to the description of the ALLTEL Equipment, Microwave Equipment, and/or Additional ALLTEL Equipment quantity, type and/or location, ALLTEL shall not be responsible for any such out-of-
22 pocket costs and expenses associated with the applicable Site as long as ALLTEL retained a third party to perform such investigation and such third party is the same retained by ATC to initially perform the associated incorrect work. Notwithstanding the foregoing, in all events, ALLTEL shall reimburse ATC for all reasonable costs and expenses associated with ATC's in-house efforts in investigating, correcting and resolving any such alleged inaccuracy or dispute (including, without limitation, ATC's in-house labor costs and reasonable travel expenses) following receipt of an invoice together with verifiable receipts and documentation. In addition, ALLTEL agrees that it will use its reasonable efforts to provide ATC with copies of its annual tower equipment audits, if any, for each Site no less than ten (10) days prior to ATC's performance of an on- site tower audit in connection with ATC's preparation of a Site Designation Supplement and in the event that ALLTEL fails to provide ATC such copy by such date, ALLTEL agrees that it may not use any such annual tower equipment audit as the basis for a challenge of the accuracy of the associated information contained in the Site Designation Supplement delivered by ATC. In the event that the Parties are unable to resolve the dispute, the Parties shall mutually agree to the appointment of an independent expert with a national firm experienced in these matters, which expert shall resolve the dispute in accordance with common industry practice and both parties hereto agree to be bound by such decision. The costs associated with such independent expert shall be borne equally by the Parties. The Parties agree that neither Party shall be obligated to execute a Site Designation Supplement that is in dispute in accordance with the terms and conditions of this Section 4.5 and any Site affected by such dispute shall be deferred, if necessary, to a subsequent Closing until such dispute is resolved, except as otherwise provided in Section 10.2(d)(ii) and 10.3(d). The commencement date for each Site Designation Supplement with respect to an Included Site shall be the applicable Closing Date. (b) ALLTEL shall collect the data relating to the In Progress Sites, adequately describe such In Progress Sites (including, without limitation, the ALLTEL Equipment, Additional ALLTEL Equipment and Microwave Equipment that ALLTEL has or intends to install at the In Progress Site) and prepare and deliver to ATC no less than sixty (60) days prior to the applicable Closing Date, the site schedule and associated exhibits pursuant to the MLA relating to such In Progress Sites, all in accordance with the terms thereof. In the event that ATC notifies ALLTEL of a reasonable discrepancy or inaccuracy in such site schedules and ATC provides what it believes to be a correct site schedule for such In Progress Site to ALLTEL, ALLTEL and ATC shall cooperate, in good faith, to resolve any such dispute provided, however that if ATC fails to notify ALLTEL of its disagreement with the information contained in any site schedule within forty-five (45) days of ATC's receipt of such site schedule, ATC's approval of such site schedule shall be deemed granted by ATC. In addition, where any such inaccuracy requires verification, including without limitation verification as to the number of antennas, height of antennas, location of antennas or location of antenna mounting hardware, the Parties shall provide adequate resources and personnel to resolve such dispute as to the alleged inaccuracy as soon as reasonably practical and all reasonable costs and expenses associated thereto shall be at ATC's sole cost and expense; provided, however, if such investigation reveals that ALLTEL provided inaccurate information with respect to the description of the ALLTEL Equipment, Microwave Equipment, and Additional ALLTEL Equipment quantity, type and/or location, ALLTEL shall be responsible for such costs and expenses associated with the applicable Site. In the event that the
23 Parties are unable to resolve the dispute, the Parties shall mutually agree to the appointment of an independent expert with a national firm experienced in these matters, which expert shall resolve the dispute in accordance with common industry practice and both parties hereto agree to be bound by such decision. The costs associated with such independent expert shall be borne equally by both Parties. The Parties agree that neither Party shall be obligated to execute a site schedule that is in dispute in accordance with the terms and conditions of this Section 4.5(b) and any Site affected by such dispute shall be deferred, if necessary, to a subsequent Closing until such dispute is resolved, except as otherwise provided in Section 10.2(d)(ii) and 10.3(d). SECTION 4.6. Deferral of Closings; Updating of Representations;Excluded ----------------------------------------------------------------------- Sites. - ----- (a) Subject to the provisions of this Agreement, ALLTEL or ATC will have the right to defer the Closing as to any Site (other than any Included Site subject to a prior Closing) to a later Closing by virtue of (i) the failure of such Site to satisfy any condition set forth in Article X applicable to such Party respecting such Site (including, without limitation, the failure to obtain any Required Consent or the documents and information referred to in Section 10.2(d)), (ii) any Sites for which an Environmental Report or an environmental assessment performed pursuant to Section 5.8 raises questions of potential liability that has had or is reasonably likely to have an ALLTEL Material Adverse Effect ("Environmental Exclusion Criteria"), (iii) any Sites for which a Structural Report reasonably indicates the Tower on such Site can not structurally accommodate in accordance with Law, Governmental Authorizations, and sound engineering practices the equipment owned by third parties installed on or before the Effective Date and the ALLTEL Equipment and Microwave Equipment existing on the Effective Date or installed by ALLTEL on or after the Effective Date but prior to the applicable Closing Date and the structural modification of such Tower to accommodate such installations would result in capital expenditures aggregating more than $25,000.00, (iv) any Sites associated with a Ground Lease with a term (after giving effect to all renewal options of the tenant thereunder) expiring within five (5) years following the Effective Date, (v) Sites associated with a Ground Lease that contains a revenue-sharing mechanism or payment to the Ground Lessor of twenty-five percent (25%) or more of the revenues derived from a third party tenant and (vi) in the case of Sites subject to a Ground Lease, the Ground Lessor and underlying landowner (if not the Ground Lessor), as the case may be, does not have good indefeasible (subject to the terms and conditions of the associated Ground Lease, if applicable) and insurable leasehold interest or fee title, as applicable, free and clear of any Lien that materially impairs the Permitted Use of the applicable Site, (subsections (i) through (vi) above, collectively, the "Site Exclusion Criteria"). Notwithstanding anything to the contrary, ATC must notify ALLTEL in writing not later than the applicable ATC Delivery Date with respect to a Site (that such Site (other than an Included Site subject to a prior Closing) meets the Site Exclusion Criteria (except for Events occurring or arising after such ATC Delivery Date with respect to such Site, in which case ATC shall notify ALLTEL within ten (10) days of actual knowledge of such Event), and provide a reasonable description explaining how such Site meets the applicable Site Exclusion Criteria. For all Sites that ATC fails to notify ALLTEL that such Sites meet the Site Exclusion Criteria by the applicable ATC Delivery Date, such Sites shall be deemed to not meet the Site Exclusion Criteria. For those Sites (other than any Included Sites subject to a prior Closing) that ALLTEL does receive notice from ATC that such Sites meet the Site Exclusion Criteria by the applicable
24 ATC Delivery Date, and if, by the Final Closing, ALLTEL fails, after the exercise of commercially reasonable efforts, to cause such Site to not meet the applicable Site Exclusion Criteria, such Site shall be deemed an Excluded Site. ALLTEL shall, at its sole cost and expense, use its commercially reasonable efforts to remove, satisfy or otherwise cure the matter(s) that cause any Site to satisfy a Site Exclusion Criteria known to ALLTEL. (b) No more than sixty (60) days following the Effective Date, ALLTEL shall deliver to ATC the ALLTEL Disclosure Schedule. Any Existing Site in respect of which ALLTEL makes any disclosure that qualifies a representation of ALLTEL in Sections 6.3(a) (other than the listing of Owned Sites), 6.3(b) (other than the listing of Ground Leases), 6.3(c) (other than the listing of Existing Tenant Leases), 6.3(e), 6.4 (with respect only to failures to obtain Private Authorizations), 6.5 (other than the listing of Governmental Authorizations in Section 6.5(a) or Actions under Section 6.5(c) which are subject to a final, nonappealable and binding order of a Governmental Authority or full settlement and release as of the Effective Date), 6.11 and 6.12 (other than the listing of above ground or underground tanks under Section 6.12(e)) (including without limitation any such failure disclosed in the ALLTEL Disclosure Schedule) as to such Site, ATC may, at ATC's option not later than the applicable ATC Delivery Date with respect to a Site (or within twenty (20) days following a subsequent written disclosure to ATC, if disclosed to ATC after the applicable ATC Delivery Date with respect to a Site), elect to defer such Site to a later Closing Date pursuant to Section 4.6(a) or designate it as an Excluded Site. The sole remedy of ATC in respect of any such disclosure as to any Site shall be to cause such Site, at its option, to be an Excluded Site hereunder or to defer the Closing for such Site to a later Closing Date. ATC shall have the right, at its option, by written notice to ALLTEL delivered on or before the applicable ATC Delivery Date with respect to a Site (or within twenty (20) days following a subsequent written disclosure to ATC, if disclosed to ATC after the applicable ATC Delivery Date with respect to a Site), to elect to defer one or more particular Sites to a later Closing Date or designate it as an Excluded Site if the ALLTEL Disclosure Schedule makes any disclosure that qualifies such Sites with respect to one or more of the representations of ALLTEL in Article VI (other than those referred to in the second sentence of this Section 4.6(b)) and that, individually or in the aggregate, has had or is reasonably likely to have an ALLTEL Material Adverse Effect. (c) The Sites listed in Exhibit L attached hereto are hereby designated by the Parties as Excluded Sites. (d) In the event that the aggregate number of proposed Included Sites exceeds two thousand one hundred ninety-three (2,193), ATC shall have the right (but not the obligation) to designate all Sites (other than Excluded Sites) in excess of the initial 2,193 Included Sites as Included Sites by providing ALLTEL with written notice hereunder not less than fifteen (15) days prior to the applicable Closing Date of ATC's intention to include such excess Site(s) as an Included Site(s). In the event that ATC does not so notify ALLTEL within the foregoing time period with respect to such excess Site, such Site(s) shall be deemed an Excluded Site(s) for all purposes hereunder. (e) With respect to the following Sites (other than Excluded Sites):
25 (i) In the event that a Site has a Tower located thereon that (x) is greater than or equal to 200 feet above ground level ("AGL"), (y) has more than three (3) microwave antennas installed on such Tower and (z) has less than three thousand dollars ($3,000) in monthly rent receivables under Existing Tenant Leases with Broadband Carrier tenants associated with such Tower operating Broadband Services from the Site, ALLTEL shall perform or shall caused to be performed, at ALLTEL's sole cost and expense, a structural analysis by engineers reasonably acceptable to ATC to determine whether such Tower can accommodate two (2) additional Broadband Equivalent Tenants (other than ALLTEL and Existing Third Party Tenants). (ii) In the event that a Site has a Tower located thereon that (x) is less than 200 feet AGL, (y) has (A) more than one (1) microwave antenna installed on such Tower or (B) an ALLTEL microwave antenna having a diameter in excess of eight (8) feet installed on such Tower and (z) has less than three thousand dollars ($3,000) in monthly rent receivables under Existing Tenant Leases with Broadband Carrier tenants associated with such Tower operating Broadband Services from the Site, ALLTEL shall perform or shall caused to be performed, at ALLTEL's sole cost and expense, a structural analysis by engineers reasonably acceptable to ATC to determine whether such Tower can accommodate two (2) additional Broadband Equivalent Tenants (other than ALLTEL and Existing Third Party Tenants). (iii) In the event that any structural analysis referred to in subsections (i) and (ii) above, reasonably indicates that the applicable Tower is unable to accommodate two (2) additional Broadband Equivalent Tenants (other than ALLTEL and Existing Third Party Tenants), the corresponding Site shall be deemed to be an Excluded Site unless: (x) the Parties mutually agree in writing to include such Site ("Microwave Site") as an Included Site and mutually agree in writing to reduce the Rent, Purchase Option Floor and number of shares of ATC Class A Common Stock associated with the Purchase Option Price to a market rate with respect to such Microwave Site, and such agreement shall be reflected in the applicable Site Designation Supplement, or (y) ALLTEL elects, in its sole discretion and at its sole cost and expense, to modify or reinforce such Tower, if necessary in accordance with the terms and conditions of this Section 4.6(e)(iii)(y), in a manner necessary for the applicable Tower to accommodate the following: (1) two (2) Broadband Equivalent Tenants (other than ALLTEL and Existing Third Party Tenants), in the event that the monthly rent receivable payable under Existing Tenant Leases with Broadband Carriers associated with such Tower operating Broadband Services from the Site, in the aggregate, is less seven hundred fifty dollars ($750); (2) one (1) Broadband Equivalent Tenant (other than ALLTEL and Existing Third Party Tenants), in the event that the monthly rent
26 receivable payable under Existing Tenant Leases with Broadband Carriers associated with such Tower operating Broadband Services from the Site, in the aggregate, is greater than or equal to seven hundred fifty dollars ($750) but less than two thousand two hundred fifty dollars ($2,250); and (3) no modification or reinforcement of such Tower by ALLTEL shall be required in the event that the monthly rent receivable payable under Existing Tenant Leases with Broadband Carriers associated with such Tower operating Broadband Services from the Site, in the aggregate, is greater than two thousand two hundred fifty dollars ($2,250). (iv) In the event that ALLTEL elects to modify or reinforce a Tower in accordance with Section 4.6(e)(iii)(y), the associated Site shall not be an Included Site unless and until all required modifications or reinforcements are completed. In the event that ALLTEL elects to modify or reinforce a Tower in accordance with Section 4.6(e)(iv)(y), ALLTEL shall notify ATC in writing of such election, together with a complete set of the Required Co-Location Documents for the associated Site, and ATC may, in its sole discretion, require that ALLTEL modify or reinforce such Tower in excess of that required of ALLTEL hereunder, provided, however, that (x) ATC shall be solely responsible for all reasonable costs and expenses associated with any such excess modification or reinforcement and shall promptly reimburse ALLTEL for such amounts upon receipt of an invoice accompanied by reasonably verifiable documentation, (y) ATC notifies ALLTEL in writing of such election no more than thirty (30) days following ATC's receipt of the later of (i) ALLTEL's notice of election to modify or reinforce a Tower, and (ii) associated Required Co-Location Documents to ATC and (z) such excess modification or reinforcement requested by ATC will not unreasonably delay ALLTEL's efforts to modify or reinforce a Tower in accordance with Section 4.6(e)(y)(iii). SECTION 4.7. Prorations. ----------------------- (a) Appropriate prorations shall be made on a daily basis as of the close of business on the applicable Closing Date with respect to the Included Sites at such Closing relating to Existing Tenant Leases and Ground Lease payments, utilities, and all other items of income and expense due or payable under any Ground Lease, Existing Tenant Lease or Site Maintenance Agreement, in each case, of a nature ordinarily prorated as of closing in real estate transactions (and not separately addressed elsewhere in this Agreement) including all items of income and expense that are prepaid or payable in arrears, any unbilled costs and fees and related accounts, notes and other receivables, in each case, of a nature ordinarily prorated as of closing in real estate transactions (and not separately addressed elsewhere in this Agreement) with ALLTEL being entitled to all such income and responsible for all such expenses relating to all periods on or prior to the applicable Closing Date and ATC being entitled to all such income and responsible for all such expenses relating to all periods subsequent to the Closing Date. Such prorations shall be
27 calculated by ALLTEL and submitted to ATC for approval (which shall not be unreasonably withheld, delayed or conditioned), promptly after each Closing (and, in any event, within forty-five (45) days after the applicable Closing), and shall be settled in cash within thirty (30) days thereafter. To the extent that any relevant bills or other documentation necessary to effect such prorations are not available during such 45-day period, the parties shall make such prorations based on reasonable estimates and shall adjust the relevant prorations as soon as the relevant bills or other documentation becomes available. (b) If ATC disputes ALLTEL's determination of prorations, ATC shall give ALLTEL written notice of such dispute within such thirty (30) day period after ATC has received the applicable proration notice, which notice of dispute shall specify in reasonable detail the basis for such dispute as well as ATC's determination of prorations. If ATC does not give ALLTEL such notice of dispute within such 30-day period, ALLTEL's calculation of the prorations shall be binding and conclusive on the Parties. If the Parties are unable to resolve such dispute within thirty (30) days after such notice of dispute is given, or such longer period as the Parties may from time to time mutually agree, such dispute shall be resolved by arbitration as hereinafter provided. Either Party may request arbitration by giving written notice thereof to the other party after such 30-day (or longer if mutually agreed upon) period. If, within ten (10) days after such notice of arbitration, the Parties cannot agree on a single impartial qualified arbitrator, such arbitrator shall be selected by the American Arbitration Association in the City of New York. The arbitrator may, but shall not be obligated to, select either ALLTEL's or ATC's determination of prorations. Arbitration proceedings shall be conducted pursuant to the rules, regulations and procedures from time to time in effect as promulgated by the American Arbitration Association. The decision of the arbitrator shall be binding and conclusive, and judgment upon the award or decision of the arbitrator may be entered in the applicable court. The Parties consent to the jurisdiction of such court and further agree that any process or notice of motion or other application to the court or a judge thereof may be served outside of the State of New York by registered mail or by personal service, provided a reasonable time for appearance is allowed. The costs and expenses of each arbitration hereunder and their apportionment between the parties shall be determined by the arbitrator in his award or decision. Within five (5) business days after the final determination of the prorations in accordance with the provisions of this Section 4.7(b), the Party owing money shall pay all such amounts owed by wire transfer of immediately available funds to such account in the United States as the other Party shall designate together with, if applicable, interest from the date any dispute was submitted to arbitration to the date of payment at a rate equal to the "Prime Rate" set forth in the "Money Rates" table of the Wall Street Journal on such date immediately prior to ------------------- payment plus two percent (2%). (c) ALLTEL agrees, on behalf of ATC and as an administrative convenience only, to pay the Ground Rent for the payment due on the first day of the month following the applicable Closing Date and (i) such failure by ATC shall not be deemed a default hereunder, and (ii) ALLTEL shall be reimbursed for such initial payment by ATC pursuant to proration adjustments in accordance with this Section 4.7.
28 ARTICLE V ADDITIONAL AGREEMENTS; COVENANTS SECTION 5.1. Expenses. --------------------- (a) Except as otherwise provided herein, all expenses incurred by ATC or ATC Parent in connection with the negotiations among the parties, and the authorization, preparation, execution and performance of the Transaction Documents and the Transactions shall be paid by ATC. (b) Except as otherwise provided herein, all expenses incurred by any of the ALLTEL Companies in connection with the negotiations among the parties, and the authorization, preparation, execution and performance of the Transaction Documents and the Transactions shall be paid by ALLTEL. SECTION 5.2. Access to Information; Confidentiality. --------------------------------------------------- (a) Each Party shall afford to the other Party and its accountants, counsel, financial advisors and other representatives (the "Representatives") full access during normal business hours throughout the period prior to the Closing Date to all of its (and its Affiliates') properties, books, contracts, insurance policies, studies and reports, environmental studies and reports, commitments and records (including without limitation Tax Returns) relating to the Sites and, during such period, shall promptly upon written request make available for inspection by the requesting Party (i) each report, schedule and other document filed or received by any Party pursuant to the requirements of any applicable Law or filed by it with any Governmental Authority in connection with the Transactions, and (ii) such other information concerning any of the foregoing as ATC or ALLTEL shall reasonably request. (b) All Confidential Information furnished pursuant to the provisions of this Agreement, including without limitation this Section, will be kept confidential and shall not, without the prior written consent of the Party disclosing such Confidential Information, be disclosed by the other Party in any manner whatsoever, in whole or in part, and, except as required by applicable Law (including without limitation in connection with any registration, proxy or information statement or similar document filed pursuant to any federal or state securities Law) shall not be used for any purposes, other than in connection with the Transactions. Except as otherwise herein provided, each Party agrees to reveal such Confidential Information only to those of its Representatives whom it believes need to know such Confidential Information for the purpose of evaluating and consummating the Transactions. For purposes of this Agreement, "Confidential Information" shall mean any and all information related to the business or businesses of ATC and its Affiliates or ALLTEL and its Affiliates, including any of their respective successors and assigns, other than information that (i) has been or is obtained from a source independent of the disclosing Party that, to the receiving Party's knowledge, is not subject to any confidentiality restriction, (ii) is or becomes generally available to the public other than as a result of unauthorized disclosure by the receiving Party, or (iii) is independently developed by the receiving Party without reliance in any way on information provided by the disclosing Party or a third party independent of the disclosing Party that, to the receiving Party's knowledge, is not
29 subject to any confidentiality restriction. Notwithstanding the foregoing, nothing in this Section 5.2 or in the Confidentiality Agreement shall be deemed to (i) limit or restrict ATC's right to market the Sites to third parties and to operate, maintain, license or lease any of the Sublease Interests and Acquired Interests (including, without limitation, build-to-suit sites and the disclosure of reasonably necessary information regarding the Sites (other than Excluded Sites), ALLTEL Equipment, Microwave Equipment, Additional ALLTEL Equipment or proposed installation or the frequencies which are operated from the Included Site), (ii) limit or restrict ATC or ALLTEL's right to identify the ALLTEL Equipment, Microwave Equipment, and/or Additional ALLTEL Equipment at any Included Site in Governmental Filings or marketing materials, or (iii) prohibit ATC from providing copies of all Confidential Information with respect to a Site permitted to be disclosed under clause (i) and (ii) above to existing or potential tenants at the applicable Site, or (iii) limit or restrict the disclosure by ATC to any Person of the Required Co-Location Documents, Tower Data Files and/or Required Oasis Information. Without limiting the foregoing, it is understood that any violation of the provisions of this Section 5.2 by a Party's Representatives shall be deemed to be a breach of this Section by such Party. (c) Notwithstanding the provisions of Section 5.2(b), (i) each Party may disclose such information as it may reasonably determine to be necessary in connection with seeking all Governmental Authorizations or that is required by applicable Law to be disclosed, including without limitation in any registration, proxy or information statement or other document required to be filed under any federal or state securities Law, and (ii) ATC may, with the prior written consent of any of the officers of ALLTEL designated in Section 5.2(c) of the ALLTEL Disclosure Schedule, which consent shall not be unreasonably withheld, delayed or conditioned, disclose the subject matter of this Agreement to Persons with whom an ALLTEL Company has a business or contractual relationship in connection with ATC's due diligence investigation. In the event that this Agreement is terminated in accordance with its terms, each Party shall promptly redeliver all written Confidential Information provided pursuant to this Section or any other provision of this Agreement or otherwise in connection with the Transactions and shall not retain any copies, extracts or other reproductions in whole or in part of such written material, other than one copy thereof which shall be delivered to independent counsel for such Party which shall be bound by the provisions of Section 5.2(b). (d) No investigation pursuant to this Section or otherwise shall affect any representation or warranty in this Agreement of any Party or any condition to the obligations of the Parties hereto. (e) Notwithstanding anything to the contrary herein, the Confidentiality Agreement shall remain in full force and effect and shall survive Closing or termination or expiration of this Agreement. In the event of any conflict between the terms of the Confidentiality Agreement and this Section 5.2, this Section 5.2 shall control. SECTION 5.3. Agreement to Cooperate; Certain Other Covenants. ------------------------------------------------------------ (a) Each of the Parties hereto shall use reasonable business efforts (x) to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable
30 under applicable Law to consummate the Transactions, and (y) to refrain from taking, or cause to be refrained from taking, any action and to refrain from doing or causing to be done, anything which could impede or impair the consummation of the Transactions, including, in all cases, without limitation using its reasonable business efforts (i) to prepare and file with the applicable Governmental Authorities as promptly as practicable after the execution of this Agreement all requisite applications and amendments thereto, together with related information, data and exhibits, necessary to request issuance of orders approving the Transactions by all such applicable Governmental Authorities, (ii) to obtain all necessary or appropriate waivers, consents and approvals, (iii) to effect all necessary registrations, filings and submissions (including all filings, if any, required under the Hart-Scott-Rodino Act and all other filings necessary for ATC or any of its Affiliates to own and operate the Sublease Interests or Acquired Interests), (iv) to lift any injunction or other legal bar to the Transactions (and, in such case, to proceed with the Transactions as expeditiously as possible), (v) to obtain the satisfaction of the conditions specified in Article X, and (vi) to advise the other of, in the case of ALLTEL, any changes that would be required in the ALLTEL Disclosure Schedule if the applicable representations and warranties set forth in Article VI did not refer to the date of this Agreement. The provisions of this Section shall apply to all Affiliates of ATC and ALLTEL. Anything in this Agreement, including without limitation this Section 5.3(a), to the contrary notwithstanding, ATC Parent and ATC shall not be required, as a condition to consummation of the Transactions, including satisfaction of the conditions set forth in Section 10.1, to, or to cause any of its Affiliates to, agree to divest, hold separate, or otherwise take or commit to take any action (such as, for example, placing assets in a trust with a trustee that is not controlled by ATC) that materially limits its or any of their freedom of action with respect to, or its or any of their ability to retain, communication sites that ATC Parent or any of its subsidiaries owns, operates, leases or subleases as of the Effective Date, or has the right to own, acquire, lease or sublease, including the Sites to be acquired or leased or subleased pursuant to the terms hereof, if any such Action would require or result in ATC Parent and its subsidiaries divesting, holding separate or taking any other such action that materially limits its or any of their freedom of action with respect to, or its or any of their ability to retain, in the aggregate, a material number of communications sites. (b) The parties shall cooperate with one another in the preparation of all Tax Returns, questionnaires, applications or other documents regarding any Taxes or transfer, recording, registration or other fees which become payable in connection with the Transactions that are required to be filed on or before the Closing Date. (c) Simultaneously with the execution of this Agreement or with the execution of a Joinder to Agreement in the form attached hereto as Exhibit C, as applicable, each of the ALLTEL Companies will execute and deliver a counterpart of (or Joinder to) the Build-to Suit Agreement. (d) ALLTEL shall, if required by ATC Parent in order to comply with the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended , reasonably cooperate and use its reasonable best efforts to cause its independent accountants to reasonably cooperate with ATC Parent in order to enable ATC Parent, in each case at ATC Parent's sole cost and expense, to have ATC Parent's independent accountants prepare audited financial statements
31 (consisting of balance sheets as of December 31, 2000 and 1999 and statements of income and cash flow for the three years ended December 31, 2000) with respect to the Sites and the operation thereof. Without limiting the generality of the foregoing, such cooperation shall include full access, with the right to make copies at ATC Parent's expense, to the books and records of ALLTEL with respect to the Sites and the operation thereof during normal business hours and upon reasonable prior notice. The provisions of this Section shall survive the Final Closing and the consummation of the Transactions. SECTION 5.4. Public Announcements. Until the Final Closing or the --------------------------------- termination of this Agreement, each Party shall consult with the other before issuing any press release or otherwise making any public statements with respect to this Agreement or the Transactions and shall not issue any such press release or make any such public statement without the prior written approval of the other. Notwithstanding the foregoing, the Parties acknowledge and agree that they may, without each other's prior consent, issue such press releases or make such public statements as may be required by applicable Law or any stock exchange, in which case the issuing Party shall use all reasonable efforts to consult with the other Party and agree upon the nature, content and form of such press release or public statement. SECTION 5.5. Notification of Certain Matters. Each Party shall give prompt -------------------------------------------- notice to the other of the occurrence or non-occurrence of any Event the occurrence or non-occurrence of which would be reasonably likely to cause (a) any representation or warranty made by it contained in this Agreement to be untrue or inaccurate in any material respect or (b) any failure by it to comply with or satisfy, or be able to comply with or satisfy, in any material respect, any covenant, condition or agreement to be complied with or satisfied by it under this Agreement such that, in any such case, one or more of the conditions of Closing would not be satisfied; provided, however, that the delivery of any notice pursuant to this Section shall not limit or otherwise affect the rights and remedies available hereunder to the Party receiving such notice or the obligations of the party delivering such notice and shall not, in any event, affect the representations, warranties, covenants and agreements of the parties or the conditions to their respective obligations under this Agreement. Such notice shall specifically identify all representatives, warranties, covenants and agreements affected by the occurrence or non-occurrence of any such Event. After the Closing with respect to any Site, ALLTEL shall no longer have an obligation to notify ATC of any of the matters contemplated by this Section 5.5 that related solely to such Site, except as otherwise provided by the Sublease. SECTION 5.6. Other Offers; Non-Solicitation. ALLTEL agrees that it and its ------------------------------------------- Affiliates, officers, directors, employees, agents and representatives (including without limitation any investment bankers, brokers, financial advisors, finders, attorneys or accountants) (i) shall not, directly or indirectly, (A) initiate, solicit, encourage or otherwise facilitate any inquiries or the making of any proposal or offer that constitutes, or may reasonably be expected to lead to, an Alternative Transaction, or (B) engage or participate in any discussions or negotiations or otherwise cooperate or provide assistance (including by way of furnishing non-public information) relating to or in contemplation of an Alternative Transaction, (ii) have terminated any discussions or negotiations with, and the provision of information or data (whether or not of a non-public nature) to, any Person relating to or in contemplation of an Alternative Transaction,
32 and (iii) have, or within two (2) Business Days of the Effective Date of this Agreement will have, requested each Person that has heretofore executed a confidentiality agreement in connection with its consideration of an Alternative Transaction to return all confidential information heretofore furnished to such Person by or on behalf of ALLTEL or any of its Affiliates and will not waive any "standstill" provision of any such, or any other, agreement. If ALLTEL, any of its Affiliates, any of its or any of their Representatives receives any inquiry with respect to an Alternative Transaction while this Agreement is in effect, such Person shall inform the inquiring party that it is not entitled to enter into discussions or negotiations relating to an Alternative Transaction. Without limiting the foregoing, it is understood that any violation of the restrictions set forth in this Section 5.6 by any director or officer of ALLTEL or any of its Affiliates or any investment banker, broker, financial advisor, finder, attorney, accountant or other agent or representative of ALLTEL or any of its Affiliates, whether or not acting on behalf of ALLTEL or any of its Affiliates, shall be deemed to be a breach of this Section by ALLTEL. Notwithstanding the foregoing, this Section 5.6 shall terminate and be of no further force and effect at any time at which ALLTEL has the right to terminate this Agreement pursuant to Section 12.1(b), (c), (e), or (f) without regard to whether ALLTEL shall have exercised such right of termination. SECTION 5.7. Preliminary Title Reports. Upon ATC's request, ALLTEL shall -------------------------------------- reasonably cooperate with ATC so that ATC may obtain, at ATC's sole cost and expense and in its sole discretion, either (i) a standard preliminary title report dated on or after the Effective Date issued by such title company or companies as ATC shall choose with respect to each of the Sites; or (ii) copies of title policies or marked up commitments to issue title policies. SECTION 5.8. Environmental Site Assessments. ATC may request that ALLTEL ------------------------------------------- obtain an Environmental Report or other environmental assessment, with respect to any Site on or before thirty (30) days prior to the contemplated Closing with respect to such Site (other than Excluded Sites), at ATC's sole cost and expense. Site assessments shall be conducted by such consultants and professionals as ALLTEL shall select and in a manner as shall be reasonably acceptable to ATC and shall be arranged at times mutually convenient to the Parties. Each of ALLTEL and ATC shall be entitled to have representatives present at the time such site assessments are conducted and to have copies of all correspondence with the company preparing such Environmental Reports or other environmental assessments. Notwithstanding anything to the contrary, all Environmental Reports or environmental assessments shall be obtained by ALLTEL in the name of, and for the benefit of, both ALLTEL and ATC. Nothing in this Section 5.8 shall limit, restrict or supercede ALLTEL's obligation to provide ATC with an Environmental Report pursuant to the Required Co-Location Documents. SECTION 5.9. Structural Assessments. As promptly as practicable after the ----------------------------------- execution of this Agreement, ATC may at its sole cost and expense (and ALLTEL may at its sole cost and expense) obtain one or more Structural Reports for a Site (other than Excluded Sites), prepared by one or more structural engineers or other experts selected by ATC and reasonably acceptable to ALLTEL. Each of ALLTEL and ATC shall be entitled to have representatives present at the time such engineers or other experts are inspecting the Towers or other improvements.
33 SECTION 5.10. Risk of Loss and Insurance. Between the Effective Date and ---------------------------------------- each Closing Date, the risks and obligations of ownership and loss of the Sublease Interests and Acquired Interests with respect to the Included Sites subject to such Closing and the correlative rights against insurance carriers and third parties shall belong to ALLTEL. In the event of the damage or destruction of all or a substantial portion of any of the Sublease Interests or any of the Acquired Interests prior to any Closing, the affected Sites shall become an Excluded Site unless the Parties agree in writing to the contrary. SECTION 5.11. Condemnation. In the event of the occurrence of a Taking of -------------------------- all or a Substantial Portion of any Site, or a bona fide threat of the commencement of any such proceedings, prior to any Closing any of which, individually or in the aggregate, would materially impair the Permitted Use of the applicable Site or the Tower or other Site Improvements thereon, the affected Sites shall become Excluded Sites unless the Parties agree in writing to the contrary. SECTION 5.12. Recordation of Site Designation Supplements. --------------------------------------------------------- (a) ATC shall be responsible for effecting the recordation of a short form memorandum for each Site Designation Supplement on each Included Site, unless prohibited by Law or by the applicable Ground Lease, and the parties hereto shall equally share all costs and expenses incurred in connection therewith. Promptly after effecting such recordation, ATC shall give the ALLTEL written confirmation of such recordation and copies of the recorded documents. (b) ALLTEL and, after the applicable Closing, ATC shall each have the right to place, each at its sole cost and expense, accurate signage on each Included Site to put third parties on notice of its interest in such Site, subject to compliance with applicable Laws and any Ground Lease for the Site in question. (c) Notwithstanding anything to the contrary contained herein, if ATC is unable to record any unrecorded Ground Lease or memorandum thereof in respect of any Site and at any time thereafter ALLTEL loses its interest under the Ground Lease by virtue of a foreclosure of a prior mortgage on the fee interest of such Site (so long as such mortgage was for the benefit of a Person other than ALLTEL or any of its Affiliates), ATC will have no claim against ALLTEL in respect thereof. (d) Following the applicable Closing, ATC and ALLTEL, with respect to those Sites that were the subject of a Site Designation Supplement and the Ground Lease or memorandum that was not recorded, shall continue reasonable efforts to cause the Ground Lease or a memorandum thereof to be recorded. Such obligation shall expire on the first anniversary of the Final Closing. If any such Ground Lease or a memorandum is thereafter recorded in respect of any Site, the Parties may re-record the Site Designation Supplement for such Site. SECTION 5.13. Additional Sites; In Progress Sites; Zoned Sites. -------------------------------------------------------------- (a) To the extent that an update provided under this Agreement relates to the addition or amendment of Exhibit A-1 or Exhibit A-2, as applicable, with respect to Sites that were not initially disclosed on Exhibit A-1 or Exhibit A-2 attached hereto (other than as contemplated by
34 Section 5.13(d) with respect to Zoned Sites listed in Exhibit N-1 or N-2 attached hereto) or were acquired by ALLTEL from a third party after the Effective Date (but excluding In Progress Sites) but prior to the Final Closing, such Site shall be deemed to be an Excluded Site for all purposes hereunder and shall not be deemed to be the subject of any representation, warranty or covenant of any of the ALLTEL Companies hereunder unless such Site is added to this Agreement by the mutual written agreement of the Parties hereto prior to the Final Closing ("Additional Site"); provided, however, that ALLTEL and ATC acknowledge and agree that ATC shall have the right (but not the obligation) to include any Site acquired by ALLTEL during the foregoing period of time or that was owned or leased as of the Effective Date but omitted from Exhibit A-1 and Exhibit A-2 (excluding Sites listed in Exhibits L, N-1, N-2, O-1 and O-2) as an Included Site in accordance with the terms and conditions of this Agreement and ALLTEL shall not offer any such Site to any third party nor enter into any agreement contrary to such ATC rights so long as (i) the affected Site is not subject to any right or obligation between the seller of such Site and a third party existing immediately prior to the acquisition of such Site by ALLTEL that could reasonably result in the acquisition of such Site (or any substantial portion thereof) or any ownership or operational interest in such Site (other than rights by a third party to collocate on such Site or a right of first refusal that is not exercised by such third party and has been waived by such third party or that has expired) by a third party, or (ii) such Site would have been listed in Exhibit A-2 had such Site been acquired by ALLTEL on or before the Effective Date and such acquisition resulted from the acquisition of an existing third party entity or the creation of a new partnership or joint venture between ALLTEL and a third party unless the consent or approval of such third party (in either case) is required to include such Site as an Included Site and, after the exercise of reasonable and good faith efforts by ALLTEL, such third party does not grant such required consent or approval. The foregoing provision shall not survive the Final Closing or earlier termination of this Agreement. (b) With respect to any In Progress Site completed after the Effective Date and/or prior to the Final Closing, upon completion of such In Progress Site, ALLTEL shall send written notice to ATC (as soon as practicable, but in no event to exceed twenty (20) days following substantial completion of such In Progress Site) together with all Required Co-Location Documents (prepared and obtained at ALLTEL's sole cost and expense), a detailed list of the equipment and property that ALLTEL intends to install at such In Progress Sites (including location of such equipment), the aggregate amount of out-of-pocket costs and expenses associated with or directly related to the acquisition, construction and development of such In Progress Site and updated ALLTEL Disclosure Schedules with respect to such Site(s), and ATC shall have the right to acquire ALLTEL's interest in such Site in accordance with the provisions of Section 3.2 by providing ALLTEL with written notice hereunder not less than sixty (60) days following ATC's receipt of such completion notice and the Required Co-Location Documents and other accompanying information required under this Section 5.13(b) of ATC's intention to include such In Progress Site as an Included Site. In the event that ATC does not so notify ALLTEL within the foregoing time period with respect to an In Progress Site, such Site shall be deemed an Excluded Site for all purposes hereunder. (c) Notwithstanding anything to the contrary, ATC and ALLTEL may mutually agree, in writing, to transfer any In Progress Site not then completed to ATC pursuant to the terms and
35 conditions of the Build to Suit Agreement and ATC shall complete such Sites in accordance with the terms and conditions thereof and such Site shall be conveyed to ATC in accordance with Section 3.2 of this Agreement in consideration for the applicable Purchase Price notwithstanding the fact that it is not a completed Site. (d) Notwithstanding anything to the contrary, ALLTEL shall send written notice to ATC (as soon as practicable, but in no event to exceed twenty (20) days following substantial completion of any Zoned Site) together with all Required Co-Location Documents (prepared and obtained at ALLTEL's sole cost and expense), a detailed list of the equipment and property that ALLTEL intends to install at such Zoned Sites (including location of such equipment), and updated ALLTEL Disclosure Schedules with respect to such Site(s). Upon ATC's receipt of all of the foregoing, such Zoned Site shall be deemed an Included Site so long as (i) ALLTEL has completed such Site(s), (ii) ATC does not designate such Site(s) as an Excluded Site pursuant to the Site Exclusion Criteria (notwithstanding the expiration of the time period for such designation with respect to other Sites hereunder) or pursuant to Section 4.6(b) within thirty (30) days from ATC's receipt of both ALLTEL's notice designating such Zoned Site(s) as an Included Site hereunder, the Required Co-Location Documents and updated ALLTEL Disclosure Schedule for such Site, (iii) ATC does not designate such Zoned Site as an Excluded Site by providing ALLTEL with written notice hereunder not less than thirty (30) days following the later of (X) ATC's receipt of such completion notice, the other accompanying information required under this Section 5.13(d), and (Y) the applicable ATC Delivery Date of ATC's intention to exclude such Zoned Site as an Excluded Site (A) if ATC reasonably believes that the Ground Rent or other payments to the Ground Lessor are substantially above the then-current market rate for the associated geographic area, or (B) if an available site location which could have reasonably accommodated the ALLTEL Equipment, and, if applicable, Microwave Equipment is located within two (2) miles of the Zoned Site, or (C) if the Tower can not accommodate at least two additional Broadband Equivalent Tenants in addition to ALLTEL and its Affiliates and Existing Third Party Tenants, if any). In addition to and subject to the provisions of this Section 5.13(d), all Zoned Sites shall be governed by the terms and conditions of this Agreement applicable to Sites listed in Exhibit A-1 and Exhibit A-2 attached hereto. (e) In the event that any Tower on a Site (other than an Excluded Site) is not owned by any of the ALLTEL Companies (i.e. is utilized by ALLTEL in whole or in part pursuant to a lease, license or other right of use agreement), such Site shall be deemed to be an Excluded Site unless such Site is added to this Agreement upon written notice by ATC, in ATC's sole discretion, to ALLTEL received by ALLTEL on or before the applicable ATC Delivery Date of its intention to include any such Site as an Included Site in accordance with the terms and conditions of this Agreement. In no event shall this provision be applicable to any Tower upon which ALLTEL merely leases space for the installation and operation of its specific equipment located thereon (commonly known as a co-location site), all of which shall be automatically deemed Excluded Sites hereunder.
36 SECTION 5.14. ATC Parent's Guaranty. ----------------------------------- (a) ATC Parent unconditionally guarantees to ALLTEL the full and timely payment and performance and observance of all of the terms, provisions, covenants and obligations of ATC under this Agreement, including without limitation those set forth in Article XI, and other Transaction Documents and any Affiliate of ATC under any Transaction Documents (the "ATC Obligations"). ATC Parent agrees that if ATC or ATC's Affiliates default at any time in the performance of any of the ATC Obligations, ATC Parent shall faithfully perform and fulfill all ATC Obligations and shall pay to ALLTEL all Loss and Expense incurred by ALLTEL on account of any default by ATC or ATC's Affiliates and on account of the enforcement of this guaranty. (b) This guaranty obligation of ATC Parent shall be enforceable by ALLTEL in an Action against ATC Parent without the necessity of any Action by ALLTEL of any kind or nature whatsoever against ATC or its Affiliate, without the necessity of any notice to ATC Parent of ATC's or its Affiliate's default or breach under this Agreement or any Transaction Documents, and without the necessity of any other notice or demand to ATC Parent to which ATC Parent might otherwise be entitled, all of which notices ATC Parent hereby expressly waives. ATC Parent hereby agrees that the validity of this guaranty and the obligations of ATC Parent hereunder shall not be terminated, affected, diminished, or impaired by reason of the assertion or the failure to assert by ALLTEL against ATC or its Affiliate any of the rights or remedies reserved to ALLTEL pursuant to the provisions of this Agreement or any Transaction Documents or any other remedy or right which ALLTEL may have at law or in equity or otherwise. (c) ATC Parent covenants and agrees that this guaranty is an absolute, unconditional, irrevocable and continuing guaranty. The liability of ATC Parent hereunder shall not be affected, modified, or diminished by reason of any modification or termination of this Agreement and any other Transaction Documents or any modification or waiver of or change in any of the covenants and terms of this Agreement or any Transaction Documents by agreement of ALLTEL and ATC or its Affiliate, or by any unilateral action of either ALLTEL or ATC or its Affiliate, or by an extension of time that may be granted by ALLTEL to ATC or its Affiliate or any indulgence of any kind granted to ATC or its Affiliate, or any dealings or transactions occurring between ALLTEL and ATC or its Affiliate, including, without limitation, any adjustment, compromise, settlement, accord and satisfaction, or release, or any bankruptcy, insolvency, reorganization, arrangement, assignment for the benefit of creditors, receivership, or trusteeship affecting ATC or its Affiliate. ATC Parent does hereby expressly waive any suretyship defense it may have by virtue of any Law of any Governmental Authority. (d) All of ALLTEL's rights and remedies under this guaranty are intended to be distinct, separate, and cumulative and no such right and remedy herein is intended to be the exclusion of or a waiver of any other. (e) ATC Parent hereby waives, to the extent permitted by applicable Law, presentment, demand for performance, notice of nonperformance, protest, notice of protest, notice of dishonor, and notice of acceptance. ATC Parent further waives any right to require that an action be brought against ATC or its Affiliate or any other person or to require that resort be had by
37 ALLTEL to any security held by ALLTEL. The provisions of this Section 5.14 shall survive any termination of this Agreement. SECTION 5.15. ALLTEL Guaranty. ----------------------------- (a) The ALLTEL Guarantors, jointly and severally, unconditionally guarantee to ATC the full and timely payment and performance and observance of all of the terms, provisions, covenants and obligations of ALLTEL under this Agreement, including without limitation those set forth in Article XI, and other Transaction Documents and any Affiliate of ALLTEL under any Transaction Documents (the "ALLTEL Obligations"). The ALLTEL Guarantors agree that if ALLTEL or ALLTEL's Affiliate default at any time in the performance of any of the ALLTEL Obligations, the ALLTEL Guarantors shall faithfully perform and fulfill all ALLTEL Obligations and shall pay to ATC all Loss and Expense incurred by ATC on account of any default by ALLTEL or ALLTEL's Affiliate and on account of the enforcement of this guaranty. (b) This guaranty obligation of the ALLTEL Guarantors shall be enforceable by ATC in an Action against the ALLTEL Guarantors, jointly and severally as to each of the ALLTEL Guarantors, without the necessity of any Action by ATC of any kind or nature whatsoever against ALLTEL or its Affiliate, without the necessity of any notice to ALLTEL Inc. of ALLTEL's or its Affiliate's default or breach under this Agreement or any Transaction Documents, and without the necessity of any other notice or demand to any of the ALLTEL Guarantors to which the ALLTEL Guarantors might otherwise be entitled, all of which notices the ALLTEL Guarantors. hereby expressly waive. The ALLTEL Guarantors hereby agree that the validity of this guaranty and the obligations of the ALLTEL Guarantors hereunder shall not be terminated, affected, diminished, or impaired by reason of the assertion or the failure to assert by ATC against ALLTEL or its Affiliate any of the rights or remedies reserved to ATC pursuant to the provisions of this Agreement or any Transaction Documents or any other remedy or right which ATC may have at law or in equity or otherwise. (c) The ALLTEL Guarantors covenant and agree that this guaranty is an absolute, unconditional, irrevocable and continuing guaranty. The liability of the ALLTEL Guarantors hereunder shall not be affected, modified, or diminished by reason of any modification or termination of this Agreement and any other Transaction Documents or any modification or waiver of or change in any of the covenants and terms of this Agreement or any Transaction Documents by agreement of ATC and ALLTEL or its Affiliate, or by any unilateral action of either ATC or ALLTEL or its Affiliate, or by an extension of time that may be granted by ATC to ALLTEL or its Affiliate or any indulgence of any kind granted to ALLTEL or its Affiliate, or any dealings or transactions occurring between ATC and ALLTEL or its Affiliate, including, without limitation, any adjustment, compromise, settlement, accord and satisfaction, or release, or any bankruptcy, insolvency, reorganization, arrangement, assignment for the benefit of creditors, receivership, or trusteeship affecting ALLTEL or its Affiliate. Each of the ALLTEL Guarantors does hereby expressly waive any suretyship defense it may have by virtue of any Law of any Governmental Authority.
38 (d) All of ATC's rights and remedies under this guaranty are intended to be distinct, separate, and cumulative and no such right and remedy herein is intended to be the exclusion of or a waiver of any other. (e) The ALLTEL Guarantors hereby waive, to the extent permitted by applicable Law, presentment, demand for performance, notice of nonperformance, protest, notice of protest, notice of dishonor, and notice of acceptance. The ALLTEL Guarantors further waive any right to require that an action be brought against ALLTEL or its Affiliate or any other person or to require that resort be had by ATC to any security held by ATC. The provisions of this Section 5.15 shall survive any termination of this Agreement. SECTION 5.16. Delivery of Tower Files. Subject to this Section 5.16, ------------------------------------- ALLTEL shall (a) deliver complete sets of Required Co-Location Documents to ATC for each Site (other than Excluded Sites) (including, without limitation, Zoned Sites) in accordance with Section 4.5(a) and (b) provide information that is reasonably available and in ALLTEL's then reasonable possession relevant to ATC's preparation of the Required Oasis Information together with the delivery of the Required Co-Location Documents. Notwithstanding the foregoing, ALLTEL shall use its best efforts to deliver the Required Co-Location Documents to ATC for all Sites (other than Excluded Sites) on or before August 1, 2001. Pursuant to Section 10.2(a), no Site shall be deemed an Included Site until all Required Co-Location Documents have been delivered to ATC by ALLTEL, unless such obligation is expressly waived in writing by ATC, in its sole discretion. With respect to a Site, in no event shall ALLTEL deliver an incomplete set of Required Co-Location Documents to ATC unless ATC specifically agrees otherwise in writing with respect to the affected Site. To the extent that any Environmental Report or NEPA checklist is not in ALLTEL's, its Affiliates' or a third party's (on behalf of ALLTEL) possession, ALLTEL shall promptly retain a qualified consultant or contractor to obtain such data in a manner reasonably acceptable to ATC at times mutually convenient to the parties, and shall be obtained in the name of, and for the benefit of, both parties. ALLTEL shall be solely responsible for all costs associated with completing or obtaining any information or data required for the Required Co-Location Documents and ATC shall be solely responsible for all costs associated with completing or obtaining any information or data required for the Required Oasis Information (except to the extent in the possession of ALLTEL, its Affiliates or a third party (on behalf of ALLTEL)). SECTION 5.17. Conduct of Business by ALLTEL. ------------------------------------------- Except as otherwise specifically contemplated by this Agreement, after the Effective Date and prior to the Final Closing or earlier termination of this Agreement, unless ATC shall otherwise consent in writing, ALLTEL shall, and, if applicable, shall cause each of its Affiliates to: (a) conduct its business with respect to the Sites in the ordinary and usual course of business and consistent with past practice; (b) use reasonable business efforts to preserve intact its business organization and goodwill associated with the Sites, keep available the services of its present officers and key
39 employees who perform services related to the maintenance and operation of the Sites, and preserve the goodwill and business relationships with customers and others having business relationships with them relating to the Sites and not knowingly engage in any action, directly or indirectly, with the intent to adversely impact the Transactions; (c) confer on a regular and frequent basis with one or more representatives of ATC to report material operational matters and the general status of ongoing operations related to the maintenance, leasing, installations, modifications and operation of Sites; (d) maintain with financially responsible insurance companies insurance on the Sites in such amounts and against such risks and losses as are consistent with past practice; (e) not make any Tax election that could reasonably be likely to have an ALLTEL Material Adverse Effect or settle or compromise any material Tax liability related to the Sites; (f) except in the ordinary course of business or except as would not be reasonably likely to have, individually or in the aggregate, an ALLTEL Material Adverse Effect, not enter into or modify, amend or terminate any Material Agreement to which ALLTEL or any of its Affiliates is or may be a party or by which any of the Sublease Interests and Acquired Interests may be bound or to which any of them is or may be subject or waive, release or assign any material rights or claims thereunder; (g) notwithstanding anything else in this Agreement to the contrary, not modify, amend or terminate any Ground Lease, Existing Tenant Lease, Swap Agreement (provided, however, that ALLTEL may freely terminate any Swap Agreement) or not enter into, modify, amend or terminate any other lease, license or sublease of any or all space on any Site without, in each case, the express prior written consent of ATC (which consent shall not be unreasonably withheld, conditioned or delayed) or in accordance with the provisions of the Site Management Agreement; provided, however, that ALLTEL may attempt to extend the expiration date of any Ground Lease or obtain any Required Consents in accordance with the provisions of Section 3.3 prior to the applicable Closing Date for the affected Site; and (h) with respect to Swap Agreements, as lessee, not enter into any lease agreements or similar arrangements with respect to any of the Sites pursuant to any Swap Agreement and, as lessor, use its reasonable business efforts to terminate all existing lease agreements under any Swap Agreement affecting any Site (other than those in which the other party is a Governmental Authority). Notwithstanding the foregoing, ATC and ATC Parent agree that ALLTEL may add, subtract, modify or relocate any of its antennas or equipment from any Site in the ordinary course of business, and any net additions of antennas or equipment (i) made prior to the Effective Date shall not constitute a breach of the foregoing so long as made in the ordinary course of business consistent with past practices, and (ii) made after the Effective Date on each Site subsequently included in a Closing shall be subject to the provisions of Section 8 of the Sublease; provided, however, that prior to the applicable Closing Date for the affected Site, ALLTEL shall be obligated to provide ATC with written notice no less than fifteen (15) days following the
40 installation of any Additional ALLTEL Equipment or physical modification of any ALLTEL Equipment, Microwave Equipment or Additional ALLTEL Equipment (but in no event less than five days prior to the applicable Closing Date) on any of the Sites (other than Excluded Sites), in each case performed by ALLTEL or pursuant to ALLTEL's instruction, in the form of Exhibit K attached hereto (it being understood that all applicable sections of such form must be complete). ARTICLE VI REPRESENTATIONS, WARRANTIES AND COVENANTS OF ALLTEL ALLTEL hereby represents and warrants to ATC as follows as of the Effective Date and, as applicable, as of each Closing Date (except for any representations and warranties that speak as of a specified date, which shall be made only as of such date): SECTION 6.1. Organization and Business; Power and Authority; Effect of ---------------------------------------------------------------------- Transaction. - ----------- (a) ALLTEL is a corporation or other Person duly organized, validly existing and in good standing under the laws of its respective jurisdiction of incorporation or formation and has all requisite power and authority (corporate, limited liability company, partnership and other, as applicable) to own or hold under lease its properties and to conduct its business as now conducted and as presently proposed to be conducted. Section 6.1(a) of the ALLTEL Disclosure Schedule sets forth a true, correct and complete list of each ALLTEL Company which is made a party hereto and its jurisdiction of organization or incorporation. ALLTEL is duly qualified to do business and in good standing as a foreign corporation in each other jurisdiction (as shown on Section 6.1(a) of the ALLTEL Disclosure Schedule) in which the character of the property owned or leased by it or the nature of its business or operations requires such qualification, except in such jurisdictions where the failure to be so qualified or in good standing, individually or in the aggregate, has not had and will not reasonably be expected to have an ALLTEL Material Adverse Effect. (b) ALLTEL has all requisite power and authority (corporate and other) to execute, deliver and to perform its obligations under this Agreement and each Transaction Document executed or required to be executed by it pursuant hereto or thereto and to consummate the Transactions and the other transactions contemplated hereby and thereby; and the execution, delivery and performance by ALLTEL of this Agreement and each Transaction Document executed or required to be executed by it pursuant hereto or thereto have been duly authorized by all requisite corporate or other action on the part of ALLTEL, and no corporate, limited liability company or partnership, as applicable, proceedings (other than those taken on or before the Effective Date) on the part of ALLTEL are necessary to authorize this Agreement or the transactions contemplated hereby or to consummate the Transactions. This Agreement has been duly executed and delivered by ALLTEL and constitutes, and each Transaction Document executed or required to be executed by it pursuant hereto or thereto or to consummate the Transactions when executed and delivered by ALLTEL will constitute, a legal, valid and binding obligation of ALLTEL, enforceable in accordance with their respective terms, except as such
41 enforceability may be subject to bankruptcy, moratorium, insolvency, reorganization, arrangement, voidable preference, fraudulent conveyance and other similar Laws relating to or affecting the rights of creditors and except as the same may be subject to the effect of general principles of equity. (c) The execution, delivery and performance by ALLTEL of this Agreement and any Transaction Document executed or required to be executed by it pursuant hereto or thereto do not, and the consummation by ALLTEL of the Transactions and the other transactions contemplated hereby and thereby, and compliance by ALLTEL with the terms, conditions and provisions hereof or thereof will not: (i) except as set forth in Section 6.1(c) of the ALLTEL Disclosure Schedule, (A) conflict with, or result in a breach or violation of, or constitute a default under, any Organic Document of ALLTEL or any Law, or (B) to the knowledge of ALLTEL, conflict with, or result in a breach or violation of, or constitute a default under, or permit the termination, cancellation or acceleration of any obligation or liability (with or without notice, lapse of time or both) in, or but for any requirement of the giving of notice or passage of time or both would constitute such a conflict with, breach or violation of, or default under, or permit any such termination, cancellation or acceleration of, or result in any material change in the rights or obligations of any party under, any Governmental Authorization, Private Authorization, Ground Lease or Material Agreement of ALLTEL directly relating to any Site or the Transactions contemplated hereby; or (ii) result in or permit the creation or imposition of any Lien upon any Site except for such creations or impositions that would not, individually or in the aggregate, reasonably be expected to have an ALLTEL Material Adverse Effect. (d) Substantially all of the licenses issued to ALLTEL Inc. and its Affiliates by the FCC as of the Effective Date for the provision of wireless communications services (other than any paging related services) are held by the ALLTEL Guarantors or in partnerships in which the ALLTEL Guarantors are a general partner. SECTION 6.2. [RESERVED]. ----------------------- SECTION 6.3. Title to Properties; Leases. ---------------------------------------- (a) Section 6.3(a) of the ALLTEL Disclosure Schedule contains a true and accurate description of all real property associated with the Owned Sites. ALLTEL has good indefeasible, marketable and insurable fee title to all such real property (other than easement and leasehold real property) with respect to Owned Sites. With respect to all of the Owned Sites and Leased Sites, all of the Sublease Interests and Acquired Interests are so owned, in each case, free and clear of all Liens, except (i) Permitted Liens, and (ii) Liens set forth on Section 6.3(a) of the ALLTEL Disclosure Schedule. To the best of ALLTEL's knowledge, except as disclosed in Section 6.3(a) of the ALLTEL Disclosure Schedule, all improvements on the real property owned or leased by ALLTEL or any of its Affiliates at a Site are in compliance with applicable zoning,
42 wetlands and land use Laws and applicable title covenants, conditions, restrictions and reservations in all respects necessary to conduct the wireless communications business of ALLTEL and its Affiliates relating to the Included Sites (the "ALLTEL Business") as conducted, except for any instances of non- compliance which do not and will not materially and adversely affect the use of such Site or, individually or in the aggregate, have an ALLTEL Material Adverse Effect on the owner or lessee, as the case may be, of such real property associated with the Site. To the best of ALLTEL's knowledge, except as disclosed in Section 6.3(a) of the ALLTEL Disclosure Schedule, all such improvements (including, without limitation, the Towers) comply in all material aspects with all applicable Laws, Governmental Authorizations and Private Authorizations. There is no pending or, to ALLTEL's knowledge, threatened or contemplated action to take by eminent domain or otherwise to condemn any material part of any real property at an Included Site. Except as set forth in Section 6.3(a) of the ALLTEL Disclosure Schedule, to the best of ALLTEL's knowledge, all buildings and Towers are in a state of good repair and maintenance and sound operating condition, normal wear and tear excepted, have been maintained in a manner consistent with generally accepted standards of engineering practice, and currently permit the Included Sites to be operated as communication tower facilities in all material respects, except where such failure, individually or in the aggregate, does not or will not reasonably be expected to have an ALLTEL Material Adverse Effect. (b) Section 6.3(b) of the ALLTEL Disclosure Schedule contains a true, accurate and complete description of all Ground Leases under which any real property is leased to ALLTEL by any Person. Except as otherwise set forth in Section 6.3(b) of the ALLTEL Disclosure Schedule, each Ground Lease under which ALLTEL holds real or personal property constituting a part of the Sublease Interests and Acquired Interests is in full force and effect, has been duly authorized, executed and delivered by ALLTEL and, to its knowledge, each of the other parties thereto, and is a legal, valid and binding obligation of ALLTEL and, to its knowledge, each of the other parties thereto, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, moratorium, insolvency and similar Laws affecting the rights and remedies of creditors and obligations of debtors generally and by general principles of equity. ALLTEL has a valid leasehold interest in and, to its knowledge, enjoys peaceful and undisturbed possession under all Ground Leases pursuant to which it holds any such real property or personal property, subject to the terms of each Ground Lease and applicable Law. True, accurate and complete copies of each of such Ground Leases have been made available by ALLTEL to ATC, and ALLTEL has provided ATC with photocopies of all such Ground Leases requested by ATC (or true, accurate and complete descriptions thereof have been set forth in Section 6.3(b) of the ALLTEL Disclosure Schedule, with respect to those that are oral). Neither ALLTEL or any of its Affiliates nor, to ALLTEL's knowledge, any other party thereto has failed to duly comply with all of the material terms and conditions of each such Ground Lease or has done or performed, or failed to do or perform (and no Claim is pending or, to the knowledge of ALLTEL, threatened to the effect that ALLTEL or any of its Affiliates has not so complied, done and performed or failed to do and perform) any act which would invalidate or provide grounds for the other party thereto to terminate (with or without notice, passage of time or both) any of such Ground Leases or in any material respect impair the rights or benefits of, or materially increase the costs to, ALLTEL under any of such Ground Leases.
43 (c) Section 6.3(c) of the ALLTEL Disclosure Schedule contains a true and accurate description of all Existing Tenant Leases under which any portion of a Site is leased by ALLTEL to any Person. Except as otherwise set forth in Section 6.3(c) of the ALLTEL Disclosure Schedule, each Existing Tenant Lease is in full force and effect, has been duly authorized, executed and delivered by ALLTEL and, is a legal, valid and binding obligation of ALLTEL and, to its knowledge, each of the other parties thereto, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, moratorium, insolvency and similar Laws affecting the rights and remedies of creditors and obligations of debtors generally and by general principles of equity. To ALLTEL's knowledge, neither ALLTEL nor any of its Affiliates nor any other party thereto has failed to duly comply with all of the material terms and conditions of each such Existing Tenant Lease or has done or performed, or failed to do or perform (and no Claim is pending or, to the knowledge of ALLTEL, threatened to the effect that ALLTEL or any of its Affiliates has not so complied, done and performed or failed to do and perform) any act which would be reasonably likely to invalidate or provide grounds for the other party thereto or ALLTEL to terminate (with or without notice, passage of time or both) any of such Existing Tenant Leases. (d) The utility services currently available to each Included Site are adequate for the present use of such Site by ALLTEL and third party tenants utilizing the Included Sites as of the Effective Date, are, to ALLTEL's knowledge, being supplied by utility companies or pursuant to valid and enforceable contracts or tariffs, and there is no condition, individually or in the aggregate, which, to ALLTEL's knowledge, will result in the termination of the present access from such Site to such utility services or would have an ALLTEL Material Adverse Effect. (e) Except as otherwise provided in Section 6.4(b) of the ALLTEL Disclosure Schedules and subject to obtaining the Required Consents, ALLTEL has obtained all easements and rights-of-way that are reasonably necessary to provide vehicular and pedestrian ingress and egress to and from each of the Included Sites for the purposes used by ALLTEL in the ordinary course and for the Permitted Use. No Action is pending or, to ALLTEL's knowledge, threatened which, individually or in the aggregate, would have the effect of terminating or limiting such access or would have an ALLTEL Material Adverse Effect. SECTION 6.4. Compliance with Private Authorizations. Section 6.4(a) of the --------------------------------------------------- ALLTEL Disclosure Schedule sets forth a true, accurate and complete list and description of each Private Authorization (other than the Required Consents) which individually is material to the Sublease Interests and Acquired Interests and the operation of each Included Site and Section 6.4(b) of the ALLTEL Disclosure Schedule sets forth a true, accurate and complete list and description of each Required Consent. ALLTEL has, or shall as of the applicable Closing Date, obtained all Private Authorizations that are necessary for the ownership or operation of the Sublease Interests and Acquired Interests, which, if not obtained and maintained, could, individually or in the aggregate, have an ALLTEL Material Adverse Effect. All of such Private Authorizations are valid and in good standing and are in full force and effect. To the best knowledge of ALLTEL, neither ALLTEL nor or any of its Affiliates is in material breach or violation of, or in default in the performance, observance or fulfillment of, any such Private Authorization, and no Event exists or has occurred which constitutes, or but for any requirement
44 of giving of notice or passage of time or both would constitute, such a material breach, violation or default, under any such Private Authorization. No such Private Authorization is the subject of any pending or, to ALLTEL's knowledge, threatened attack, revocation or termination. SECTION 6.5. Compliance with Governmental Authorizations and Applicable ----------------------------------------------------------------------- Law. - --- (a) Section 6.5(a) of the ALLTEL Disclosure Schedule contains a true, complete and accurate description of each Governmental Authorization required under applicable Law to own and operate the Included Sites, as currently conducted or proposed to be conducted on or prior to the Closing Date (other than the FCC Authorizations or any Governmental Authorizations obtained by any third parties under any Existing Tenant Leases). ALLTEL has obtained all Governmental Authorizations that are necessary for the ownership or operation of the Included Sites as now conducted and which, if not obtained and maintained, could, individually or in the aggregate, have an ALLTEL Material Adverse Effect. To the knowledge of ALLTEL, none of the Governmental Authorizations listed in Section 6.5(a) of the ALLTEL Disclosure Schedule is subject to any restriction or condition that could limit in any material respect the ownership or operations of the Included Sites as currently conducted, except for restrictions and conditions generally applicable to Governmental Authorizations of such type. The Governmental Authorizations listed in Section 6.5(a) of the ALLTEL Disclosure Schedule are valid and in good standing, are in full force and effect and are not impaired in any material respect by any act or omission of ALLTEL or any of its Affiliates or its or any of their officers, directors, employees or agents, and the ownership and operation of the Included Sites are in accordance in all material respects with the Governmental Authorizations. All material reports, forms and statements required to be filed by ALLTEL or any of its Affiliates with all Governmental Authorities with respect to the Included Sites have been filed and are true, complete and accurate in all material respects, except for such failures, that individually or in the aggregate, have not had and would not reasonably be expected to have an ALLTEL Material Adverse Effect. No such Governmental Authorization is the subject of any pending or, to ALLTEL's knowledge, threatened challenge or proceeding to revoke or terminate any such Governmental Authorization. ALLTEL has no reason to believe that any such Governmental Authorization will not be renewed in the name of ALLTEL by the granting Governmental Authority in the ordinary course. (b) To the knowledge of ALLTEL, except as otherwise specifically set forth in Section 6.5(b) of the ALLTEL Disclosure Schedule, ALLTEL and each of its Affiliates has conducted the ALLTEL Business and owned and operated the Included Sites in accordance, and each of the Included Sites is in compliance, with all applicable Laws (excluding Environmental Laws) and Governmental Authorizations, except for such breaches, violations and defaults as, individually or in the aggregate, have not had and will not have an ALLTEL Material Adverse Effect. Except as otherwise specifically described in Section 6.5(b) of the ALLTEL Disclosure Schedule, ALLTEL, its Affiliates or the Included Sites are not subject to nor are charged by any Governmental Authority with, or, to ALLTEL's knowledge, is threatened or under investigation by any Governmental Authority with respect to, any breach or violation of, or default in the performance, observance or fulfillment of, any applicable Law relating to the ownership, use, occupancy management, repair, construction, replacement or and operation of the Included Sites which, individually or in the aggregate, has had or will have an ALLTEL Material Adverse
45 Effect. To the knowledge of ALLTEL, except as otherwise specifically described in Section 6.5(b) of the ALLTEL Disclosure Schedule, no Event exists or has occurred, which constitutes, or but for any requirement of giving of notice or passage of time or both would constitute, such a breach, violation or default, under any Governmental Authorization or any applicable Law, except for such breaches, violations or defaults as, individually or in the aggregate, have not had and will not have an ALLTEL Material Adverse Effect. (c) Except as set forth in Section 6.5(c) of the ALLTEL Disclosure Schedule, there have not been during the past three fiscal years of ALLTEL and there are no Actions of any kind pending or, to the knowledge of ALLTEL, threatened at Law, in equity or before any Governmental Authority against ALLTEL or any of its Affiliates or any of its or their officers or directors relating to the ownership or operation of the Included Sites or the conduct of ALLTEL's business thereon that, individually or in the aggregate, would reasonably be expected to have an ALLTEL Material Adverse Effect. SECTION 6.6. Related Transactions. Neither ALLTEL nor any of its --------------------------------- Affiliates is a party or subject to any Contractual Obligation relating to the ownership or operation of any of the Included Sites or the conduct of ALLTEL's Business that would have an ALLTEL Material Adverse Effect thereon between ALLTEL or any of its Affiliates and any of its or any of their executive officers or directors, to the knowledge of ALLTEL, any member of the Immediate Family of any thereof, or any Affiliate of any of the foregoing, including without limitation any Contractual Obligation providing for the furnishing of services to or by, providing for rental of property, real, personal or mixed, to or from, or providing for the lending or borrowing of money to or from, the leasing of property to or from, or otherwise requiring payments to or from, any such Person, other than (a) employment arrangements, (b) Contractual Obligations between ALLTEL and any of the foregoing that are set forth in Section 6.6(b) of the ALLTEL Disclosure Schedule and will be terminated, at no cost or expense to ATC, prior to the applicable Closing, or (c) as specifically set forth in Section 6.6(c) of the ALLTEL Disclosure Schedule. SECTION 6.7. Insurance. All material fire and casualty, general liability, ---------------------- business interruption, product liability, and sprinkler and water damage insurance policies maintained by ALLTEL or any of its Affiliates with respect to the Included Sites are with reputable insurance carriers, provide full and adequate coverage for ALLTEL and such Affiliates with respect to the Included Sites, and are in character and amount at least equivalent to that carried by Persons engaged in similar businesses and subject to the same or similar perils or hazards. SECTION 6.8. Tax Matters. Except as set forth in Section 6.8 of the ALLTEL ------------------------ Disclosure Schedule: (a) all Taxes relating exclusively to the Included Sites due with respect to any completed and settled audit, examination or deficiency litigation with any Taxing Authority have been paid in full, except for Taxes due with respect to any audit, examination or deficiency litigation with any Taxing Authority, individually or in the aggregate, that have not had and would not reasonably be expected to have an ALLTEL Material Adverse Effect;
46 (b) there is no audit, examination or deficiency litigation pending with respect to any Taxes that relate exclusively to the Included Sites, and during the past three years no Taxing Authority has given written notice of the commencement of any audit, examination or deficiency litigation with respect to any Taxes that relate exclusively to the Included Sites, except for such audits, examinations or deficiency litigation, individually or in the aggregate, that have not had and would not reasonably be expected to have an ALLTEL Material Adverse Effect; and (c) neither ALLTEL nor any of its Affiliates is bound by any currently effective private ruling, closing agreement or similar agreement with any Taxing Authority relating to Taxes that relate exclusively to the Included Sites, except for such private rulings, closing agreements or similar agreements, individually or in the aggregate, that have not had and would not reasonably be expected to have an ALLTEL Material Adverse Effect. SECTION 6.9. Material Agreements. Listed on Section 6.9 of the ALLTEL -------------------------------- Disclosure Schedule are all Material Agreements (other than Ground Leases and Existing Tenant Leases) relating to the ownership or operation of the Included Sites (other than the direct ownership or operation of ALLTEL's communication services), or to which any of the Included Sites is subject. ALLTEL has or shall provide ATC with photocopies of all such Material Agreements requested by ATC (or true, accurate and complete descriptions thereof have been set forth in Section 6.9 of the ALLTEL Disclosure Schedule with respect to Material Agreements that are oral). All of such Material Agreements are valid, binding and legally enforceable obligations of ALLTEL or one of its Affiliates, except as such enforceability may be limited by bankruptcy, moratorium, insolvency and similar Laws affecting the rights and remedies of creditors and obligations of debtors generally and by general principles of equity. To the best of its knowledge, neither ALLTEL nor any of its Affiliates has failed to duly comply with all of the material terms and conditions of each such Material Agreement (and no Claim is pending or, to the knowledge of ALLTEL, threatened in writing to the effect that ALLTEL or any of its Affiliates has not so complied, done and performed or failed to do and perform) any act which would invalidate or provide grounds for the other party thereto to terminate (with or without notice, passage of time or both) any of such Material Agreements or impair in any material respect the rights or benefits of, or materially increase the costs to, ALLTEL or any of its Affiliates under any of such Material Agreements. SECTION 6.10. Broker or Finder. Except Salomon Smith Barney Inc. which is ------------------------------ an advisor to ALLTEL, no broker or finder has acted on its behalf in connection with this Agreement or the Transactions and ALLTEL agrees to indemnify the ATC Indemnitees from and against any and all claims or demands for commissions or other compensation by any broker, finder or similar agent claiming to have been employed by or on behalf of ALLTEL or its Affiliates, including, without limitation, Salomon Smith Barney Inc. SECTION 6.11. Operating and Maintenance. Agreements. Except for the --------------------------------------- Contracts set forth in Section 6.11 of the ALLTEL Disclosure Schedule, there are no Contracts to which ALLTEL is a party or subject to presently in effect associated with the operations or maintenance of any Included Site (or any portion thereof) that can not be terminated by ALLTEL upon less than one hundred eighty (180) days prior written notice without penalty.
47 SECTION 6.12. Environmental Matters. With respect to Included Sites only ----------------------------------- and except as set forth in Section 6.12 of the ALLTEL Disclosure Schedule, or, with respect to paragraphs (a), (b), (c) and (d)(i), except for such exceptions as, individually or in the aggregate, have not had and would not reasonably be expected to have an ALLTEL Material Adverse Effect: (a) ALLTEL has no knowledge of any written request for information or other correspondence concerning its potential liability with respect to any Site under or pursuant to any Environmental Law, and (ii) neither ALLTEL nor any of its Affiliates is a party to or, to ALLTEL's knowledge, threatened with any Action involving a demand for damages or other potential liability with respect to violations or breaches with respect to a Site of any Environmental Law; (b) neither ALLTEL nor any of its Affiliates has entered into or has knowledge of any consent decree, compliance order or administrative order issued pursuant to any Environmental Law with respect to a Site, and (ii) neither ALLTEL nor any of its Affiliates is a party in interest or, to ALLTEL's knowledge, in default under any judgment, order, writ, injunction or decree of any final order issued with respect to a Site pursuant to any Environmental Law; (c) to ALLTEL's knowledge, each of ALLTEL, its Affiliates and the Sites is in compliance with all Environmental Laws (to the extent such compliance relates solely to the Sites), has obtained all Environmental Permits relating to the Sites that are required under Environmental Laws, and has filed all applications, notices and other documents required to be filed to effect the timely renewal or issuance of all Environmental Permits relating to the ownership or operation of the Sites in the manner owned, operated and conducted as of the Effective Date or proposed to be owned, operated and conducted prior to the Closing Date; (d) to ALLTEL's knowledge, (i) there are no Hazardous Materials present on a Site as a result of any Releases, including without limitation from underground storage tanks, and (ii) neither ALLTEL nor any of its Affiliates has conducted or has knowledge of any Phase II environmental site assessment report as to material environmental matters relating to any Site; (e) to the knowledge of ALLTEL, neither ALLTEL nor any of its Affiliates has installed or used any above ground or underground storage tanks for Hazardous Materials on any Site and, to ALLTEL's knowledge, there are no above ground or underground storage tanks for Hazardous Materials on any Site; and (f) ALLTEL has no knowledge of any past or present Event involving a Site, which Event, individually or in the aggregate, would reasonably be expected to have an ALLTEL Material Adverse Effect as a result of any Environmental Law. SECTION 6.13 Copies of Documents. With respect to any Ground Leases, -------------------------------- Existing Tenant Leases, or other documents or agreements related to the Included Sites and provided to ATC hereunder or upon ATC's request, to the knowledge of ALLTEL, are true, correct and complete in all material respects and include all amendments, supplements and modifications thereto or material waivers currently in effect thereunder.
48 ARTICLE VII REPRESENTATIONS, WARRANTIES AND COVENANTS OF ATC ATC hereby represents and warrants to ALLTEL as follows: SECTION 7.1. Organization and Business; Power and Authority; Effect of ---------------------------------------------------------------------- Transaction. - ----------- (a) ATC is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware and has all requisite power and authority (corporate and other) to own or hold under lease its properties and to conduct its business as now conducted and as presently proposed to be conducted. ATC is, or shall be as of the applicable Closing Date, duly qualified to do business and in good standing as a foreign corporation in each jurisdiction in which an Included Site is located, except in such jurisdictions where the failure to be so qualified or in good standing, individually or in the aggregate, has not had and will not reasonably be expected to have an ATC Material Adverse Effect. (b) ATC has all requisite power and authority (corporate and other) to execute, deliver and to perform its obligations under this Agreement and each Transaction Document executed or required to be executed by it pursuant hereto or thereto and to consummate the Transactions and the other transactions contemplated hereby and thereby; and the execution, delivery and performance by ATC of this Agreement and each Transaction Document executed or required to be executed by it pursuant hereto or thereto have been duly authorized by all requisite corporate or other action on the part of ATC, and no other corporate proceedings on the part of ATC are necessary to authorize this Agreement or the transactions contemplated hereby or to consummate the Transactions. This Agreement has been duly executed and delivered by ATC and constitutes, and each Transaction Document executed or required to be executed by it pursuant hereto or thereto or to consummate the Transactions when executed and delivered by ATC will constitute, a legal, valid and binding obligation of ATC, enforceable in accordance with their respective terms, except as such enforceability may be subject to bankruptcy, moratorium, insolvency, reorganization, arrangement, voidable preference, fraudulent conveyance and other similar Laws relating to or affecting the rights of creditors and except as the same may be subject to the effect of general principles of equity. (c) The execution, delivery and performance by ATC of this Agreement and any Transaction Document executed or required to be executed by it pursuant hereto or thereto do not, and the consummation by ATC of the Transactions and the other transactions contemplated hereby and thereby, and compliance by ATC with the terms, conditions and provisions hereof or thereof will not: (i) (A) except with respect to the ATC Parent Indenture, conflict with, or result in a breach or violation of, or constitute a default under, any Organic Document of ATC or any Law, (B) conflict with, or result in a breach or violation of, or constitute a default under, or permit the termination, cancellation or
49 acceleration of any obligation or liability (with or without notice, lapse of time or both) in, or but for any requirement of the giving of notice or passage of time or both would constitute such a conflict with, breach or violation of, or default under, or permit any such termination, cancellation or acceleration of, or result in any material change in the rights or obligations of any party under, any Governmental Authorization, Private Authorization or Material Agreement of ATC, except for such exceptions as individually or in the aggregate would not have an ATC Material Adverse Effect; or (ii) require ATC to make or obtain any Governmental Authorization, Governmental Filing or Private Authorization, except, if required, for filings under the Hart-Scott-Rodino Act. SECTION 7.2. [RESERVED]. ----------------------- SECTION 7.3. Compliance with Governmental Authorizations and Applicable ----------------------------------------------------------------------- Law. ATC and each of its Affiliates has conducted its business and - --- owned and operated its property and assets in accordance with all applicable Laws and Governmental Authorizations, except for such breaches, violations and defaults as, in the aggregate, have not had and will not have an ATC Material Adverse Effect. Neither ATC nor any of its Affiliates is in or is charged by any Governmental Authority with, or, to ATC's knowledge, is threatened or under investigation by any Governmental Authority with respect to, any breach or violation of, or default in the performance, observance or fulfillment of, any applicable Law which, in the aggregate, has had or will have an ATC Material Adverse Effect. No Event exists or has occurred, which constitutes, or but for any requirement of giving of notice or passage of time or both would constitute, such a breach, violation or default, under any Governmental Authorization or any applicable Law, except for such breaches, violations or defaults as, in the aggregate, have not had and will not have an ATC Material Adverse Effect. SECTION 7.4. Broker or Finder. No broker or finder has acted on its behalf ----------------------------- in connection with this Agreement or the transactions contemplated herein and ATC agrees to indemnify the ALLTEL Indemnitees from and against any and all claims or demands for commissions or other compensation by any broker, finder or similar agent claiming to have been employed by or on behalf of ATC or any of its Affiliates. SECTION 7.5. Sufficient Funding. ATC has made available to ALLTEL copies of ------------------------------- the ATC Parent Indenture pursuant to which ATC will, at the time of each Closing, have funds sufficient to consummate the Transactions to be consummated at such Closing and to pay the related fees and expenses of ATC. ATC will, at the time of each Closing, have sufficient funds available to consummate the Transactions to be consummated at such Closing, including, without limitation, sufficient funds to pay the Rent to ALLTEL in respect of all of the Sublease Interests being leased or subleased at such Closing.
50 ARTICLE VIII REPRESENTATIONS, WARRANTIES AND COVENANTS OF ATC Parent ATC Parent hereby represents and warrants to ALLTEL as follows: SECTION 8.1. Organization and Business; Power and Authority; Effect of ---------------------------------------------------------------------- Transaction. - ----------- (a) ATC Parent is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware and has all requisite power and authority (corporate and other) to own or hold under lease its properties and to conduct its business as now conducted and as presently proposed to be conducted. (b) ATC Parent has all requisite power and authority (corporate and other) to execute, deliver and to perform its obligations under this Agreement and each Transaction Document executed or required to be executed by it pursuant hereto or thereto and to consummate the Transactions and the other transactions contemplated hereby and thereby; and the execution, delivery and performance by ATC Parent of this Agreement and each Transaction Document executed or required to be executed by it pursuant hereto or thereto have been duly authorized by all requisite corporate or other action on the part of ATC Parent, and no other corporate proceedings on the part of ATC Parent are necessary to authorize this Agreement or the transactions contemplated hereby or to consummate the Transactions. This Agreement has been duly executed and delivered by ATC Parent and constitutes, and each Transaction Document executed or required to be executed by it pursuant hereto or thereto or to consummate the Transactions when executed and delivered by ATC Parent will constitute, a legal, valid and binding obligation of ATC Parent, enforceable in accordance with their respective terms, except as such enforceability may be subject to bankruptcy, moratorium, insolvency, reorganization, arrangement, voidable preference, fraudulent conveyance and other similar Laws relating to or affecting the rights of creditors and except as the same may be subject to the effect of general principles of equity. (c) The execution, delivery and performance by ATC Parent of this Agreement and any Transaction Document executed or required to be executed by it pursuant hereto or thereto do not, and the consummation by ATC Parent of the Transactions and the other transactions contemplated hereby and thereby, and compliance by ATC Parent with the terms, conditions and provisions hereof or thereof will not: (i) (A) except as may be required pursuant to the ATC Parent Indenture, conflict with, or result in a breach or violation of, or constitute a default under, any Organic Document of ATC Parent or any Law, (B) conflict with, or result in a breach or violation of, or constitute a default under, or permit the termination, cancellation or acceleration of any obligation or liability (with or without notice, lapse of time or both) in, or but for any requirement of the giving of notice or passage of time or both would constitute such a conflict with, breach or violation of, or default under, or permit any such termination, cancellation or
51 acceleration of, or result in any material change in the rights or obligations of any party under, any Governmental Authorization, Private Authorization or Material Agreement of ATC Parent, except for such exceptions as individually or in the aggregate would not have an ATC Material Adverse Effect; or (ii) require ATC Parent to make or obtain any Governmental Authorization, Governmental Filing or Private Authorization, except for (x) filings under the Hart-Scott-Rodino Act, if required, and the Securities and Exchange Act of 1934, as amended, and with the New York Stock Exchange, and (y) such exceptions as individually or in the aggregate would not have an ATC Material Adverse Effect. SECTION 8.2. [RESERVED]. ----------------------- SECTION 8.3. Compliance with Governmental Authorizations and Applicable ----------------------------------------------------------------------- Law. ATC and each of its Affiliates has conducted its business and owned and - --- operated its property and assets in accordance with all applicable Laws and Governmental Authorizations, except for such breaches, violations and defaults as, in the aggregate, have not had and will not have an ATC Material Adverse Effect. Neither ATC nor any of its Affiliates is in or is charged by any Governmental Authority with, or, to ATC's knowledge, is threatened or under investigation by any Governmental Authority with respect to, any breach or violation of, or default in the performance, observance or fulfillment of, any applicable Law which, in the aggregate, has had or will have an ATC Material Adverse Effect. No Event exists or has occurred, which constitutes, or but for any requirement of giving of notice or passage of time or both would constitute, such a breach, violation or default, under any Governmental Authorization or any applicable Law, except for such breaches, violations or defaults as, in the aggregate, have not had and will not have an ATC Material Adverse Effect. SECTION 8.4. Broker or Finder. No broker or finder has acted on its behalf ----------------------------- in connection with this Agreement or the transactions contemplated herein and ATC Parent agrees to indemnify the ALLTEL Indemnitees from and against any and all claims or demands for commissions or other compensation by any broker, finder or similar agent claiming to have been employed by or on behalf of ATC Parent or any of its Affiliates. SECTION 8.5. Sufficient Funding. ATC has made available to ALLTEL copies ------------------------------- of the ATC Parent Indenture pursuant to which ATC will, at the time of each Closing, have funds sufficient to consummate the Transactions to be consummated at such Closing and to pay the related fees and expenses of ATC. ATC will, at the time of each Closing, have sufficient funds available to consummate the Transactions to be consummated at such Closing, including, without limitation, sufficient funds to pay the Rent to ALLTEL in respect of all of the Sublease Interests being leased or subleased at such Closing. SECTION 8.6. ATC Representations and Warranties. The representations and ----------------------------------------------- warranties of ATC set forth in Article VII are true and correct.
52 ARTICLE IX [INTENTIONALLY OMITTED] ARTICLE X CONDITIONS TO OBLIGATIONS OF ALLTEL AND ATC SECTION 10.1. Conditions to Obligations of Each Party. The respective ----------------------------------------------------- obligations of each Party to consummate the Transactions, on each Closing Date, shall, except as hereinafter provided in this Section, be subject to the satisfaction at or prior to each Closing Date of the following conditions, any or all of which may be waived, in whole or in part, to the extent permitted by applicable Law: (a) As of the Closing Date, no Action shall be pending before any Governmental Authority that has resulted or is reasonably likely to result in any judgement, order or decree enjoining, restraining, prohibiting or making illegal the consummation of the Transactions contemplated at that Closing, taken as a whole, it being understood and agreed that a written request by any Governmental Authority for information with respect to the Transactions, which information could be used in connection with such Action, shall not in itself be deemed to be a Action pending before any such Governmental Authority; (b) The waiting period (and any extension thereof), if any, applicable to the consummation of the Transactions under the Hart-Scott-Rodino Act shall have expired or been terminated; and (c) Except with respect to the Hart-Scott-Rodino Act, all authorizations, consents, waivers, orders or approvals required to be obtained from all Governmental Authorities, and all filings, submissions, registrations, notices or declarations required to be made by any of the parties with any Governmental Authority, prior to the consummation of the Transactions contemplated at that Closing, shall have been obtained from, and made with, all such Governmental Authorities, except for such authorizations, consents, waivers, orders, approvals, filings, registrations, notices or declarations the failure to obtain or make would not, individually or in the aggregate, reasonably be expected to have an ALLTEL Material Adverse Effect or an ATC Material Adverse Effect, as the case may be. (d) All Required Consents and all Private Authorizations required pursuant to Section 6.4 shall have been obtained from all Persons (other than Governmental Authorities) prior to the applicable Closing (including without limitation, at the cost and expense of ALLTEL, all modifications, if any, of Ground Leases, Existing Tenant Leases, Site Maintenance Agreements, and Material Agreements) and shall have been obtained, without the imposition, individually or in the aggregate, of any condition or requirement that has had or would be reasonably likely to have an ALLTEL Material Adverse Effect or an ATC Material Adverse Effect, as the case may be, and in accordance with the provisions of Sections 3.3 and 4.6; provided, however, that to the extent any such Required Consents or Private Authorizations have not been obtained with respect
53 to a Site, the Closing for such Site shall be postponed until a subsequent Closing unless such Closing is the Final Closing in accordance with Section 4.6. SECTION 10.2. Conditions to Obligations of ATC. The obligation of ATC ---------------------------------------------- to consummate the Transactions, on each Closing Date, shall be subject to the satisfaction at or prior to each such Closing Date of the following conditions, any or all of which may be waived, in whole or in part, by ATC and ATC Parent to the extent permitted by applicable Law: (a) All agreements, certificates, opinions and other documents required to be delivered to ATC pursuant to the provisions of this Agreement shall have been delivered to ATC (including, with respect to each Included Site, the Tower File Data on or before fifteen (15) days prior to the applicable Closing Date, provided, however, that the delivery of the Required Co-Location Documents shall be governed by the terms and conditions of Section 5.16); (b) Subject to Section 4.6, (i) the representations and warranties of ALLTEL contained in this Agreement shall be true and correct at and as of the Closing Date with the same force and effect as though made on and as of such date, except (x) to the extent such representations and warranties expressly speak as of an earlier date (in which case such representations and warranties shall be true and correct as of such earlier date) and (y) to the extent that the failure of such representations and warranties to be true and correct, individually or in the aggregate, have not had and will not be reasonably likely to have an ALLTEL Material Adverse Effect; (ii) each and all of the agreements and covenants to be performed or satisfied by ALLTEL hereunder at or prior to the Closing Date shall have been duly performed or satisfied in all material respects; and (iii) ALLTEL shall have furnished ATC with a certificate signed by an executive officer of ALLTEL stating that the conditions of this Section 10.2(b)(i) and (ii) have been satisfied; (c) On or prior to the Initial Closing Date, ALLTEL shall have (i) executed and delivered to ATC the Sublease and the same shall have become effective as of the Initial Closing Date and shall remain in effect as of the applicable Closing Date, and (ii) delivered an opinion, dated as of the Initial Closing Date, of Kutak Rock LLP, counsel for ALLTEL, in the form attached hereto as Exhibit G and made a part hereof. (d) On or prior to the applicable Closing Date with respect to a Site, ALLTEL shall have executed and delivered to ATC the following: (i) A certificate as of the applicable Closing Date setting forth (A) any additions or deletions of antennas on each Tower included in such Closing since the Effective Date, and (B) any amendments, extensions or terminations of, or any new licenses, leases or subleases with any other Person (including, without limitation, Ground Leases, Existing Tenant Leases, and Site Maintenance Agreements) related to the applicable Included Sites; (ii) A complete and accurate Site Designation Supplement or site schedule, as applicable, for each Included Site and the same shall have become effective as of the applicable Closing Date; provided, however, that ATC may elect, in its sole discretion, to waive this obligation to Closing with respect to any
54 Site and in such event the Parties thereto mutually agree to resolve, in good faith and in accordance with Section 4.5, the complete and accurate form of such Site Designation Supplement or site schedule, as applicable, and execute such form no more than forty (40) days following the applicable Closing Date; and (iii) If applicable, each ALLTEL Entity that executes a Joinder to Agreement hereto shall have executed a similar joinder to the Sublease, BTS Agreement, and Site Management Agreement in accordance with the terms therein. SECTION 10.3. Conditions to Obligations of ALLTEL. The obligation of ALLTEL ------------------------------------------------- to consummate the Transactions, on each Closing Date, shall be subject to the satisfaction at or prior to each such Closing Date of the following conditions, any or all of which may be waived, in whole or in part, by ALLTEL to the extent permitted by applicable Law: (a) All agreements, certificates, opinions and other documents required to be delivered to ALLTEL pursuant to the provisions of this Agreement shall have been delivered to ALLTEL; (b) The representations and warranties of ATC and ATC Parent contained in this Agreement shall be true and correct in all material respects at and as of the Closing Date with the same force and effect as though made on and as of such date, except (x) to the extent such representations and warranties expressly speak as of an earlier date (in which case such representations and warranties shall be true and correct as of such earlier date) and (y) to the extent that the failure of such representations and warranties to be true and correct, individually or in the aggregate, have not had and will not be reasonably likely to have ATC Material Adverse Effect; (ii) each and all of the agreements and covenants to be performed or satisfied by ATC or ATC Parent hereunder at or prior to the Closing Date shall have been duly performed or satisfied in all material respects; and (iii) ATC and ATC Parent shall have furnished ALLTEL with a certificate signed by an executive officer of ATC and ATC Parent respectively stating that the conditions of this Section 10.3(b)(i) and (ii) have been satisfied; (c) On or prior to the Initial Closing Date, ATC Parent and ATC shall have (i) executed and delivered to ALLTEL the Sublease and the same shall have become effective as of the Initial Closing Date and shall remain in effect as of the applicable Closing Date, and (ii) delivered an opinion, dated as of the Initial Closing Date, of Sullivan & Worcester LLP, counsel for ATC, in the form attached hereto as Exhibit H and made a part hereof; and (d) On or prior to the applicable Closing Date with respect to a Site, ATC shall have executed and delivered to ALLTEL a Site Designation Supplement or site schedule, as applicable, for each Included Site and the same shall have become effective as of the applicable Closing Date; provided, however, that in the event that ATC elects to exercise its right to waive this obligation as a condition to Closing with respect to any Site pursuant to Section 10.2(d)(ii), ALLTEL shall also have been deemed to have waived such obligation hereunder and in such event the Parties thereto mutually agree to resolve, in good faith and in accordance with Section 4.5, the complete and accurate form of such Site Designation Supplement or site schedule, as
55 applicable, and execute such form no more than forty (40) days following the applicable Closing Date. ARTICLE XI INDEMNIFICATION SECTION 11.1. Survival. The representations and warranties of the Parties ---------------------- contained in or made pursuant to this Agreement or any Transaction Document shall survive the applicable Closing and shall remain operative and in full force and effect for a period of eighteen (18) months after the applicable Closing Date, except that in the case of matters of a nature referred to in Sections 6.1, 7.1, and 8.1 which shall survive and remain operative and in full force and effect for the applicable statute of limitations, regardless of any investigation thereof made by or on behalf of any Party hereto. The covenants and agreements of the parties contained in or made pursuant to this Agreement or any Transaction Document shall survive any Closing (unless any such covenant or agreement by its express terms in this Agreement does not so survive or survives for a lesser period) and shall remain operative and in full force and effect for the statute of limitations applicable to contractual obligations. The term "Indemnity Period" shall mean the applicable period with respect to which a representation, warranty, covenant or agreement survives any Closing as provided in this Section. No claim for indemnification may be asserted after the expiration of the Indemnity Period. Notwithstanding anything herein to the contrary, any representation, warranty, covenant and agreement which arises and is the subject of a Claim which is asserted in writing prior to the expiration of the applicable Indemnity Period shall survive with respect to such Claim or any dispute with respect thereto until the final resolution thereof. SECTION 11.2. Indemnification. ----------------------------- (a) Each of the ALLTEL Companies agrees, severally and not jointly, that it shall indemnify, defend and hold harmless the ATC Indemnitees from and against any and all damages, claims, losses, expenses, costs, obligations, and liabilities including, without limiting the generality of the foregoing, liabilities for all reasonable attorneys', accountants' and experts' fees and expenses incurred, including those incurred to enforce the terms of this Agreement or any Transaction Document (collectively, "Loss and Expense"), suffered by the ATC Indemnitees by reason of or arising out of (i) any breach of representation or warranty made by the applicable ALLTEL pursuant to this Agreement, and (ii) any failure by the applicable ALLTEL to perform or fulfill any of its covenants or agreements set forth in this Agreement. (b) ATC agrees that it shall indemnify, defend and hold harmless the ALLTEL Indemnitees from and against all Loss and Expense suffered by any of them by reason of or arising out of (i) any breach of representation or warranty made by ATC or ATC Parent pursuant to this Agreement, and (ii) any failure by ATC or ATC Parent to perform or fulfill any of its covenants or agreements set forth in this Agreement.
56 SECTION 11.3. Limitation of Liability. ------------------------------------- (a) Notwithstanding the provisions of Section 11.2, the ATC Indemnitees, on the one hand, and the ALLTEL Indemnities, on the other hand, shall be entitled to recover their Loss and Expense in respect of any Claim pursuant to the provisions of Sections 11.2(a)(i) and (b)(i), as the case may be, only (i) in the event that the aggregate Loss and Expense for all Claims exceed, in the aggregate, one percent (1%) of the sum of (x) the aggregate Rent payable by ATC with respect to all of the Included Sites and (y) the aggregate Purchase Price payable by ATC with respect to all of the Included Sites, in which event the indemnified party shall only be entitled to recover all such Loss and Expense in excess of that amount; and (ii) to the extent that the aggregate Loss and Expense for all Claims does not exceed twenty-nine percent (29%) of the sum of (x) the aggregate Rent payable by ATC with respect to all of the Included Sites and (y) the aggregate Purchase Price payable by ATC with respect to all of the Included Sites. (b) In the case any event shall occur which would otherwise entitle any Party to assert a claim for indemnification hereunder, no Loss and Expense shall be deemed to have been sustained by such party to the extent of any proceeds received by such Party from any insurance policies with respect thereto. (c) Except in the event of fraud, intentional misrepresentation or intentional breach of warranty, covenant or agreement or as otherwise provided in Section 13.5 (solely with respect to the remedy of specific performance set forth therein) and notwithstanding any other provision of this Agreement (including, without limitation, the provisions of Section 13.5 (other than the remedy of specific performance set forth therein)), the sole and exclusive remedy of ATC or its Affiliates before or after any Closing or termination of this Agreement with respect to the Site Exclusion Criteria under Sections 4.6(a)(ii) through (vi) or with respect to the ALLTEL Disclosure Schedules under Section 4.6(b) is to cause the applicable Site, at ATC's option, to be designated as an Excluded Site or to defer the Closing for such Site to a later Closing Date. SECTION 11.4. Notice of Claims. If an indemnified party believes that ------------------------------ it has suffered or incurred any Loss and Expense, it shall notify the indemnifying party promptly in writing, and in any event within the applicable Indemnity Period specified in Section 11.1, describing such Loss and Expense, all with reasonable particularity and containing a reference to the provisions of this Agreement in respect of which such Loss and Expense shall have occurred. If any Action is instituted by a third party with respect to which an indemnified party intends to claim any liability or expense as Loss and Expense under this Article, such indemnified party shall promptly notify the indemnifying party of such Action, but the failure to so notify the indemnifying party shall not relieve such indemnifying party of its obligations under this Article, except to the extent such failure to notify prejudices such indemnifying party's ability to defend against such Claim. SECTION 11.5. Defense of Third Party Claims. The indemnifying party shall ------------------------------------------- have the right to conduct and control, through counsel of its own choosing, reasonably acceptable to the indemnified party, any third party Action or other Claim, but the indemnified party may, at its election, participate in the defense thereof at its sole cost and expense; provided, however, that if the indemnifying party shall fail to defend any such Action or other Claim, then the indemnified
57 party may defend, through counsel of its own choosing, such Action or other Claim, and (so long as it gives the indemnifying party at least fifteen (15) days' notice of the terms of the proposed settlement thereof and permits the indemnifying party to then undertake the defense thereof) settle such Action or other Claim and to recover from the indemnifying party the amount of such settlement or of any judgment and the reasonable costs and expenses of such defense. The indemnifying party shall not compromise or settle any such Action or other Claim without the prior written consent of the indemnified party, which consent shall not unreasonably be withheld, delayed or conditioned if the terms and conditions of such compromise or settlement proposed by the indemnifying party and agreed to in writing by the claimant in such Action or other Claim (a) include a full release of the indemnified party from the Action or other Claim which is the subject of the settlement proposal, and (b) if the indemnified party is an ATC Indemnitees, do not include any term or condition which would restrict in any material manner rights and remedies of ATC under the Sublease or the continued ownership or operations of the Sublease Interests and Acquired Interests or the conduct of any other business of ATC or any of its Affiliates) in substantially the manner then being owned, operated and conducted by ATC or any of its Affiliates (or any successor or assign). No matter whether an indemnifying party defends or prosecutes any third party Action or Claim, the indemnified and indemnifying parties shall cooperate in the defense or prosecution thereof. Such cooperation shall include access during normal business hours afforded to the indemnifying party to, and reasonable retention by the indemnified party of, records and information which are reasonably relevant to such third party Action or Claim, and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder, and the indemnifying party shall reimburse the indemnified party for all its reasonable out-of-pocket expenses in connection therewith. SECTION 11.6. Exclusive Remedy. Except for fraud, intentional ------------------------------ misrepresentation or intentional breach of warranty, covenant or agreement or as otherwise provided in Section 13.5 (solely with respect to the remedy of specific performance set forth therein) or as may be provided for in any other Transaction Document, the indemnification provided in this Article shall be the sole and exclusive post-Final Closing remedy available to any Party against any other party for any Claim under this Agreement. ARTICLE XII TERMINATION, AMENDMENT AND WAIVER SECTION 12.1. Termination. This Agreement may be terminated at any time ------------------------- only pursuant to the following provisions: (a) by mutual consent of ALLTEL and ATC; or (b) by ATC or ALLTEL if any permanent injunction, decree or judgment of any Governmental Authority preventing consummation of the Transactions, taken as a whole, shall have become final and nonappealable; or
58 (c) by ALLTEL in the event (i) none of the ALLTEL Companies is in material breach of this Agreement and none of any of their representations or warranties shall have become and continue to be untrue in any manner that would cause the condition set forth in Section 10.2(b) not to be satisfied, and (ii) ATC is in material breach of this Agreement or any of its representations or warranties shall have been or become and continue to be untrue in any manner that would cause the conditions set forth in Section 10.3(b) not to be satisfied, and such a breach or untruth exists and is capable of being cured and is not cured on or prior to, or is not capable of being cured by and will prevent or delay consummation of the Final Closing by or beyond, the Termination Date; or (d) by ATC in the event (i) neither ATC nor ATC Parent is in material breach of this Agreement and none of either of its representations or warranties shall have become and continue to be untrue in any manner that would cause the condition set forth in Section 10.3(b) not to be satisfied, and (ii) any of the ALLTEL Companies is in material breach of this Agreement or any of the ALLTEL Companies' representations or warranties shall have been or become and continue to be untrue in any manner that would cause the conditions set forth in Section 10.2(b) not to be satisfied, and such a breach or untruth exists and is capable of being cured and is not cured on or prior to, or is not capable of being cured by and will prevent or delay consummation of the Final Closing by or beyond, the Termination Date; or (e) by either ATC or ALLTEL, (i) if all of the conditions to ATC's or ALLTEL's obligations (as the case may be) to consummate the Initial Closing set forth in Sections 10.1 and 10.2 (in the case of ATC) and 10.1 and 10.3 (in the case of ALLTEL) shall not have been satisfied or waived on or before the last day of the six (6) -month period commencing on the Effective Date, or (ii) on or after the Termination Date, in either case for any reason other than a breach or default by such terminating Party of its respective representations, warranties, covenants, agreements or other obligations hereunder such that the conditions to the non-terminating Party's obligations to consummate the Initial Closing or other applicable Closing, as the case may be, set forth in Section 10.3(b) or Section 10.2(b), as the case may be, would not be satisfied; or (f) by ALLTEL in the event (i) none of the ALLTEL Companies is in material breach of this Agreement and none of any of their representations or warranties shall have become and continue to be untrue in any manner that would cause the condition set forth in Section 10.2(b) not to be satisfied, and (ii) ATC or ATC Parent is, at the time of any Closing, in breach of the representations and warranties set forth in Section 7.5 or 8.5, respectively. The term "Termination Date" shall mean eight months (8) following the Initial Closing Date or such other date as the Parties may, from time to time, mutually agree. The right of ATC or the ALLTEL Companies to terminate this Agreement pursuant to this Section shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any Party, any Person controlling any such Party or any of their respective Representatives whether prior to or after the execution of this Agreement. The right of ATC or the ALLTEL Companies to terminate this Agreement pursuant to this Section shall be exercised by written notice to the non-terminating Parties.
59 If this Agreement is terminated by ALLTEL pursuant to Section 12.1(c), Section 12.1(e) or Section 12.1(f) (but only if at the time of such termination, ATC is in material breach of this Agreement or any of its representations and warranties shall have been untrue in any manner that would cause the conditions in Section 10.3(b) not to be satisfied), then ALLTEL shall be entitled to and ATC Parent shall pay ALLTEL, at ALLTEL's election, within ten (10) business days of delivery to ATC by ALLTEL of a written demand therefor at any time after the date of such termination, a termination fee in the amount of fifty million dollars ($50,000,000) ("Termination Fee") by wire transfer of immediately available funds to an account in the United States designated in writing by ALLTEL. Any election by ALLTEL to receive the Termination Fee under this paragraph shall constitute its sole and exclusive remedy in the event of such termination of this Agreement, except for the provisions of Article XI with respect to prior Closings. SECTION 12.2. Effect of Termination. Except as provided in Sections 4.3, ----------------------------------- 5.1, 5.2 (with respect to confidentiality), 5.4, 5.14, 5.15 and 12.1 and this Section and Article XIII, in the event of the termination of this Agreement pursuant to Section 12.1, this Agreement shall forthwith become void, there shall be no liability on the part of any Party, or any of their respective stockholders, partners, members, officers or directors, to the other and all rights and obligations of any Party shall cease; provided, however, that, (i) such termination shall not, except in the case ALLTEL has elected to receive and has received the Termination Fee pursuant to the provisions of Section 12.1 (other than in the event of any fraud, willful misrepresentation or willful breach by ATC or ATC Parent), relieve any Party from liability for any fraud, intentional misrepresentation or intentional breach of any of its warranties, covenants or agreements set forth in this Agreement, and (ii) no termination of this Agreement shall result in the rescission of any Closing theretofore consummated hereunder or affect or terminate the rights, remedies and obligations of the Parties (including without limitation Article XI) with respect to such previously consummated Closing. Notwithstanding the foregoing, each party shall have the right to seek specific performance of this Agreement pursuant to the provisions of Section 13.5. ARTICLE XIII GENERAL PROVISIONS SECTION 13.1. Waivers; Amendments. Changes in or additions to this --------------------------------- Agreement may be made, or compliance with any term, covenant, agreement, condition or provision set forth herein may be omitted or waived (either generally or in a particular instance and either retroactively or prospectively) with, but only with, the consent in writing of the Parties hereto. No delay on the part of either Party at any time or times in the exercise of any right or remedy shall operate as a waiver thereof. Any consent may be given subject to satisfaction of conditions stated therein. The failure to insist upon the strict provisions of any covenant, term, condition or other provision of this Agreement or to exercise any right or remedy hereunder shall not constitute a waiver of any such covenant, term, condition or other provision thereof or default in connection therewith. The waiver of any covenant, term, condition or other provision hereof or default hereunder shall not affect or alter this Agreement in any other respect, and each and every
60 covenant, term, condition or other provision of this Agreement shall, in such event, continue in full force and effect, except as so waived, and shall be operative with respect to any other then existing or subsequent default in connection herewith. SECTION 13.2. ALLTEL References. Anything in this Agreement to the ------------------------------- contrary notwithstanding, each of the ALLTEL Companies acknowledges and agrees that (a) all of the representations and warranties of ALLTEL set forth in Article VI, and (b) each of the covenants and agreements of ALLTEL set forth in this Agreement, including without limitation Articles III, IV, V and XI, are intended to apply, and shall apply, to each of the ALLTEL Companies with respect to the applicable Sites with the same force and effect as though each were specifically named therein. SECTION 13.3. Notices. All notices and other communications which by any --------------------- provision of this Agreement are required or permitted to be given shall be given in writing and shall be deemed to have been delivered (a) five (5) business days after being mailed by first-class or express mail, postage prepaid, (b) the next day when sent overnight by a nationally recognized courier service, (c) upon confirmation when sent by telex, telegram, telecopy or other form of rapid transmission, confirmed by mailing (by first class or express mail, postage prepaid, or by a nationally recognized courier service) written confirmation at substantially the same time as such rapid transmission, or (d) upon delivery when personally delivered to the receiving Party (which if other than an individual shall be an officer or other responsible party of the receiving Party). All such notices and communications shall be mailed, sent or delivered as set forth below or to such other person(s), telex or facsimile number(s) or address(es) as the party to receive any such communication or notice may have designated by written notice to the other Party. If to ATC or ATC Parent: 116 Huntington Avenue Boston, Massachusetts 02116 Attention: Chief Financial Officer and General Counsel Telecopier No.: (617) 375-7575
61 with a copy to (which shall not constitute notice to ATC or ATC Parent): Sullivan & Worcester LLP One Post Office Square Boston, Massachusetts 02109 Attention: Norman A. Bikales, Esq. Telecopier No.: (617) 338-2880 If to ALLTEL: ALLTEL Communications, Inc. One Allied Drive Little Rock, Arkansas 72202 Attention: President and General Counsel Telecopier No.: (501) 905-0962 SECTION 13.4. Power of Attorney. Each and every one of the ALLTEL Companies ------------------------------- other than ALLTEL Inc. hereby irrevocably constitutes and appoints ALLTEL Inc. as its and their agent and attorney-in-fact to modify, amend or otherwise change or waive any and all terms, conditions and other provisions of this Agreement and any other of the Transaction Documents, to exercise on behalf of the ALLTEL Companies any options or elections granted to ALLTEL hereunder, to take all actions and execute all documents necessary or desirable to effect the terms hereof and thereof, to take all actions and execute all documents which may be necessary or desirable in connection therewith, to give and receive all consents and all notices hereunder, to negotiate, settle and compromise claims for indemnification hereunder, and to perform any other act arising out of or pertaining to this Agreement. ALLTEL Inc. hereby accepts the foregoing appointment. Nothing herein shall be deemed to make ALLTEL Inc. liable to any of the ALLTEL Companies because of service in the foregoing capacity as agent and attorney-in-fact. In performing any of its duties under this Section, ALLTEL Inc. shall not incur any Liability whatsoever to any of the ALLTEL Companies or its Affiliates. It is expressly understood and agreed that this power of attorney and the agency created hereby is coupled with an interest of the respective Parties hereto and shall be binding and enforceable on and against the respective successors and assigns of ALLTEL Inc., and each of them, and this power of attorney shall not be revoked or terminated and shall continue to be binding and enforceable in the manner provided herein. SECTION 13.5. Specific Performance; Other Rights and Remedies. Each Party ------------------------------------------------------------- recognizes and agrees that in the event the other Party should refuse to perform any of its obligations under this Agreement or any Transaction Document, the remedy at Law would be inadequate and agrees that for breach of such provisions, each Party shall, in addition to such other remedies as may be available to it at law or in equity or as provided in Article XI, be entitled to injunctive relief and to enforce its rights by an action for specific performance to the extent permitted by applicable Law. Each Party hereby waives any requirement for security or the posting of any bond or other surety in connection with any temporary or permanent award of injunctive, mandatory or other equitable relief. Nothing herein contained shall be construed as prohibiting any Party from pursuing any other remedies available to it pursuant to the provisions
62 of this Agreement or applicable Law for such breach or threatened breach, including without limitation the recovery of damages, subject to the terms and conditions of Section 13.15. SECTION 13.6. Severability. If any term or provision of this Agreement -------------------------- shall be held or deemed to be, or shall in fact be, invalid, inoperative, illegal or unenforceable as applied to any particular case in any jurisdiction or jurisdictions, or in all jurisdictions or in all cases, because of the conflicting of any provision with any Law, such circumstance shall not have the effect of rendering the provision or provisions in question invalid, inoperative, illegal or unenforceable in any other jurisdiction or in any other case or circumstance or of rendering any other provision or provisions herein contained invalid, inoperative, illegal or unenforceable to the extent that such other provisions are not themselves actually in conflict with such Law, but this Agreement shall be reformed and construed in any such jurisdiction as if such invalid, inoperative, illegal or unenforceable provision had never been contained herein and such provision reformed so that it would be valid, operative and enforceable to the maximum extent permitted in such jurisdiction. Notwithstanding the foregoing, in the event of any such determination the effect of which is to affect materially and adversely any Party, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible to the fullest extent permitted by applicable Law in an acceptable manner to the end that the Transactions are fulfilled and consummated to the maximum extent possible. SECTION 13.7. Counterparts. This Agreement may be executed in several -------------------------- counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, binding upon all of the Parties. In pleading or proving any provision of this Agreement, it shall not be necessary to produce more than one set of such counterparts. SECTION 13.8. Section Headings. The headings contained in this Agreement ------------------------------ are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. SECTION 13.9. Governing Law. The validity, interpretation, construction and --------------------------- performance of this Agreement shall be governed by, and construed in accordance with, the applicable Laws of the state of Delaware applicable to contracts made and performed in such state and, in any event, without giving effect to any choice or conflict of Laws provision or rule that would cause the application of domestic substantive Laws of any other jurisdiction. SECTION 13.10. Further Acts. Each Party agrees that at any time, and from --------------------------- time to time, before and after the consummation of the Transactions, it will do all such things and execute and deliver all such Transaction Documents and other assurances, as any other Party or its counsel reasonably deems necessary or desirable in order to carry out the terms and conditions of this Agreement and the Transactions or to facilitate the enjoyment of any of the rights created hereby or to be created hereunder. SECTION 13.11. Entire Agreement. This Agreement (together with the ALLTEL ------------------------------- Disclosure Schedule, the Exhibits hereto, and the other documents delivered or to be delivered in connection herewith) constitutes the entire agreement of the Parties with respect to the subject
63 matter hereof and supersedes all prior agreements, arrangements, covenants, promises, conditions, undertakings, inducements, representations, warranties and negotiations, expressed or implied, oral or written, between the Parties, with respect to the subject matter hereof. Each of the Parties is a sophisticated Person that was advised by experienced counsel and, to the extent it deemed necessary, other advisors in connection with this Agreement. Each of the Parties hereby acknowledges that (a) none of the Parties has relied or will rely in respect of this Agreement or the Transactions upon any document or written or oral information previously furnished to or discovered by it or its representatives, other than this Agreement (or such of the foregoing as are delivered at the Closing), (b) there are no covenants or agreements by or on behalf of any Party or any of its respective Affiliates or representatives other than those expressly set forth in this Agreement and the Transaction Documents, and (c) the Parties' respective rights and obligations with respect to this Agreement and the events giving rise thereto will be solely as set forth in this Agreement and the Transaction Documents. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EACH PARTY HERETO AGREES THAT, EXCEPT FOR THE RESPECTIVE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLES VI, VII, AND VIII OF THIS AGREEMENT, NONE OF THE PARTIES MAKES AND EACH HEREBY DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND EACH HEREBY DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER REPRESENTATIVES, WITH RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR THE TRANSACTIONS, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER OR THE OTHER'S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING. SECTION 13.12. Assignment. Neither ATC nor any ALLTEL Company nor any ------------------------- ALLTEL Guarantor may assign its rights and obligations under, or grant a security interest in, this Agreement to any Person without the consent of the other Parties hereto except that it shall inure to the benefit of and be binding upon any successor to any Party by operation of Law, including by way of mergers, consolidation or sale, transfer or other disposition of all or substantially all of its assets, including without limitation pursuant to any liquidation or dissolution; provided, however, that (a) ATC may assign all of its rights and obligations hereunder to one or more wholly-owned subsidiaries of ATC Parent and to Permitted Subleasehold Mortgagees (as defined in the Sublease) without the consent of any ALLTEL Company so long as (i) ATC fully, irrevocably and unconditionally guarantees all such obligations, and (ii) in the case of any wholly-owned subsidiary of ATC Parent, such assignee becomes a party hereto and bound by the provisions hereof, and (b) any ALLTEL Company or ALLTEL Guarantor may assign its rights and obligations hereunder, in whole or in part, to any Affiliate of such ALLTEL Company without the consent of ATC so long as (i) the assigning ALLTEL Company or ALLTEL Guarantor fully, irrevocably and unconditionally guarantees all such obligations and (ii) such assignee becomes a party hereto and bound by the provisions hereof. All references herein to any Party shall be deemed to include any successor (including a
64 corporate successor) to such Party. In the event that ATC Parent assigns any of its rights or interest in or to this Agreement, ATC Parent shall not be released from its liability and obligations under this Agreement. SECTION 13.13. Parties in Interest. This Agreement shall be binding upon ---------------------------------- and inure solely to the benefit of each Party, and nothing in this Agreement, express or implied, is intended to or shall confer upon any Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. SECTION 13.14. Mutual Drafting. This Agreement is the result of the joint -------------- efforts of ALLTEL and ATC, and each provision hereof has been subject to the mutual consultation, negotiation and agreement of the Parties and there shall be no construction against any Party based on any presumption of that Party's involvement in the drafting thereof. SECTION 13.15. [RESERVED]. ------------------------- SECTION 13.16. Excluded Damages. NOTWITHSTANDING THE PROVISIONS OF SECTION ------------------------------- 11 OR ANY OTHER PROVISION TO THE CONTRARY, EACH PARTY HERETO HEREBY WAIVES THE RIGHT TO RECOVER AND NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL (INCLUDING BUT NOT LIMITED TO LOST PROFITS), PUNITIVE, EXEMPLARY AND SIMILAR DAMAGES AND THE MULTIPLIED PORTION OF DAMAGES, HOWEVER ARISING, EVEN IF A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. SECTION 13.17. Expenses. The phrase "ATC and ALLTEL shall share or bear ----------------------- equally the cost" and other similar expressions that appear throughout this Agreement shall mean that ATC, on the one hand, bears fifty percent (50%) of the applicable cost, and ALLTEL, on the other hand, bears fifty percent (50%) of such cost. SECTION 13.18. Agents. In no event will either Party to this Agreement be --------------------- deemed to be or constitute the agent or representative of the other Party to this Agreement. SECTION 13.19. Several Liability. Notwithstanding any other provision of -------------------------------- this Agreement to the contrary, and notwithstanding any liability or obligation that ALLTEL would have as a general partner of any of the other ALLTEL Companies under this Agreement or any Site Designation Supplement (in each case, whether or not expressly set forth herein or therein), by operation or law or otherwise, (i) the obligations of any ALLTEL Company (other than the ALLTEL Guarantors pursuant to Section 5.15) under this Agreement are several and not joint, and (ii) each of the ALLTEL Companies (other than the ALLTEL Guarantors pursuant to Section 5.15) will have no personal liability for the payment or performance of any obligation of any of the other ALLTEL Companies under this Agreement. [SIGNATURES APPEAR ON FOLLOWING PAGE] (Remainder of Page Intentionally Left Blank)
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives, all effective as of the day and year first written above. ATC: American Towers, Inc., a Delaware corporation By: _________________________________________________ Name: James S. Eisenstein Title: Executive Vice President and Chief Development Officer ATC PARENT: American Tower Corporation, a Delaware corporation By: _________________________________________________ Name: James S. Eisenstein Title: Executive Vice President and Chief Development Officer ALLTEL INC.: ALLTEL Communications, Inc., a Delaware corporation By: _________________________________________________ Name: Scott T. Ford Title: President ALLTEL ENTITIES: 360(degrees) Communications Company 360(degrees) Communications Company of Charlottesville 360(degrees) Communications Company of Florida 360(degrees) Communications Company of Ft. Walton Beach Limited Partnership, by 360(degrees) Communications Company of Florida, its general partner 360(degrees) Communications Company of Hickory Limited Partnership by 360 Communications Company of Hickory No. 1, its general partner 360(degrees) Communications Company of Lynchburg 360(degrees) Communications Company of Nevada Limited Partnership by ALLTEL Communications, Inc., its general partner 360(degrees) Communications Company of New Mexico 360(degrees) Communications Company of North Carolina No. 1
360(degrees) Communications Company of Ohio No. 4 360(degrees) Communications Company of South Carolina No. 1 360(degrees) Communications Company of Texas Limited Partnership by 360 Communications Company, its general partner 360(degrees) Communications Company of Virginia 360(degrees) Communications Company Tennessee No. 2 Aliant Cellular, Inc. ALLTEL Alabama Limited Partnership by ALLTEL Corporate Services, Inc., its general partner ALLTEL Mobile Communications of the Carolinas, Inc. ALLTEL Ohio Limited Partnership by 360(degrees) Communications Company of Petersburg, its general partner ALLTEL Wireless Holdings, L.L.C. Florida RSA 9 Limited Partnership by ALLTEL Communications, Inc., its general partner Georgia RSA 14 Cellular Partnership by ALLTEL Communications, Inc., its general partner Greenville MSA Limited Partnership by TeleSpectrum, Inc., its general partner Kansas RSA 15 Limited Partnership by 360(degrees) Communications Company of Nebraska, its general partner Liberty Cellular, Inc. New York NewCo Subsidiary, Inc. North Carolina RSA 15 North Sector Limited Partnership by 360(degrees) Communications Company, its general partner North Carolina RSA 6 Limited Partnership by 360(degrees) Communications Company of North Carolina No. 1, its general partner Ohio Cellular RSA Limited Partnership by 360(degrees) Communications Company of Ohio No. 3, its general partner Radiofone, Inc. RCTC Wholesale Corporation TeleSpectrum, Inc. TeleSpecturm of Virginia, Inc. Tennessee RSA 8 Limited Partnership by 360(degrees) Communications Company of Tennessee No. 1, its general partner Texas RSA #10B-2 Limited Partnership by 360(degrees) Communications Company of Texas No.2, its general partner
Texas RSA 10B4 Limited Partnership by 360(degrees) Communications Company, its general partner Texas RSA 9B3 Limited Partnership by 360(degrees) Communications Company, its general partner Virginia Metronet, Inc. Virginia RSA 1 Limited Partnership by 360(degrees) Communications Company of Virginia No. 1, its general partner By:__________________________________________________________________ Name: Scott T. Ford Title: President ALLTEL GUARANTORS: Each of the undersigned Affiliates of ALLTEL Inc. hereby executes and delivers this Agreement as an ALLTEL Guarantor solely for the purpose of guaranteeing, jointly and severally, the ALLTEL Obligations in accordance with the terms and conditions of Sections 5.15, 6.1(d), and 13.19, and each agrees to be bound by the provisions of Sections 5.15, 6.1(d), 13.12 and 13.19 with the same force and effect as if each were specifically named as an ALLTEL Guarantor in the above Agreement, such guaranty being in addition to its rights and obligations as an ALLTEL Entity, if applicable. 360(degrees) Communications Company 360(degrees) Communications Company of Charlottesville 360(degrees) Communications Company of Florida 360(degrees) Communications Company of Ft. Walton Beach Limited Partnership 360(degrees) Communications Company of Hickory Limited Partnership 360(degrees) Communications Company of Lynchburg 360(degrees) Communications Company of Nevada Limited Partnership 360(degrees) Communications Company of New Mexico 360(degrees) Communications Company of North Carolina No. 1 360(degrees) Communications Company of Ohio No. 4
360(degrees) Communications Company of South Carolina No. 1 360(degrees) Communications Company of Texas Limited Partnership by 360(degrees) Communications Company, its general partner 360(degrees) Communications Company of Virginia 360(degrees) Communications Company Tennessee No. 2 Aliant Cellular, Inc. ALLTEL Alabama Limited Partnership by ALLTELL Corporate Services, Inc., its general partner ALLTEL Mobile Communications of the Carolinas, Inc. ALLTEL Ohio Limited Partnership by 360(degrees) Communications Company of Petersburg, its general partner ALLTEL Wireless Holdings, L.L.C. Florida RSA 9 Limited Partnership by ALLTELL Communications, Inc., its general partner Georgia RSA 14 Cellular Partnership by ALLTELL Communications, Inc., its general partner Greenville MSA Limited Partnership by TeleSpectrum, Inc., its general partner Kansas RSA 15 Limited Partnership by 360(degrees) Communications Company of Nebraska, its general partner Liberty Cellular, Inc. New York NewCo Subsidiary, Inc. North Carolina RSA 15 North Sector Limited Partnership by 360(degrees) Communications Company, its general partner North Carolina RSA 6 Limited Partnership by 360(degrees) Communications Company of North Carolina No. 1, its general partner Ohio Cellular RSA Limited Partnership by 360(degrees) Communications Company of Ohio No.3, its general partner Radiofone, Inc. (a Louisiana corporation) Radiofone, Inc. (a Tennessee corporation) RCTC Wholesale Corporation TeleSpectrum, Inc. TeleSpecturm of Virginia, Inc. Tennessee RSA 8 Limited Partnership by 360(degrees) Communications Company of Tennessee No.1, its general partner Texas RSA #10B-2 Limited Partnership by 360(degrees) Communications Company of Texas No.2, its general partner
Texas RSA 10B4 Limited Partnership by 360(degrees) Communications Company, its general partner Texas RSA 9B3 Limited Partnership by 360(degrees) Communications Company, its general partner Virginia Metronet, Inc. Virginia RSA 1 Limited Partnership by 360(degrees) Communications Company of Virginia No. 1, its general partner 360(degrees) Communications Company of Ohio No. 1 360(degrees) Communications Company of Ohio No. 2 360(degrees) Communications Company of Ohio No. 3 360(degrees) Communications Company of Pennsylvania No. 1 Petersburg Cellular Telephone Company, Inc. 360(degrees) Communications Company of South Carolina No. 2 360(degrees) Communications Company of Texas No. 1 360(degrees) Communications Company of Texas No. 3 360(degrees) Communications Company of Virginia No. 1 By:________________________________________________________ Name: Scott T. Ford Title: President
EXHIBIT A-1 LIST OF EXISTING SITES SEE ATTACHED.
EXHIBIT A-2 LIST OF POTENTIAL EXISTING SITES SEE ATTACHED.
EXHIBIT B LIST OF ALLTEL ENTITIES 360(degrees) Communications Company 360(degrees) Communications Company of Charlottesville 360(degrees) Communications Company of Florida 360(degrees) Communications Company of Ft. Walton Beach Limited Partnership 360(degrees) Communications Company of Hickory Limited Partnership 360(degrees) Communications Company of Lynchburg 360(degrees) Communications Company of Nevada Limited Partnership 360(degrees) Communications Company of New Mexico 360(degrees) Communications Company of North Carolina No. 1 360(degrees) Communications Company of Ohio No. 4 360(degrees) Communications Company of South Carolina No. 1 360(degrees) Communications Company of Texas Limited Partnership 360(degrees) Communications Company of Virginia 360(degrees) Communications Company Tennessee No. 2 Aliant Cellular, Inc. ALLTELL Alabama Limited Partnership ALLTELL Mobile Communications of the Carolinas, Inc. ALLTELL Ohio Limited Partnership ALLTELL Wireless Holdings, L.L.C. Florida RSA 9 Limited Partnership Georgia RSA 14 Cellular Partnership Greenville MSA Limited Partnership Kansas RSA 15 Limited Partnership Liberty Cellular, Inc. New York NewCo Subsidiary, Inc. North Carolina RSA 15 North Sector Limited Partnership North Carolina RSA 6 Limited Partnership Ohio Cellular RSA Limited Partnership Radiofone, Inc. RCTC Wholesale Corporation TeleSpectrum, Inc. TeleSpectrum of Virginia, Inc. Tennessee RSA 8 Limited Partnership Texas RSA #10B-2 Limited Partnership Texas RSA 10B4 Limited Partnership Texas RSA 9B3 Limited Partnership Virginia Metronet, Inc. Virginia RSA 1 Limited Partnership 360(degrees) Communications Company of North Carolina Limited Partnership
ALLTEL Cellular Associates of Arkansas Limited Partnership ALLTEL Cellular Associates of South Carolina Limited Partnership ALLTEL Central Arkansas Cellular Limited Partnership ALLTEL Missouri RSA #14 Limited Partnership ALLTEL Northern Arkansas RSA Limited Partnership Arkansas RSA #2 (Searcy County) Cellular Limited Partnership Baton Rouge Cellular Telephone Company Charleston-North Charleston MSA Limited Partnership Fayetteville MSA Limited Partnership Florida RSA #1B (Naples) Limited Partnership Georgia RSA 12 Cellular Partnership Georgia RSA 8 Cellular Partnership Las Cruces Cellular Telephone Company Missouri RSA #15 Limited Partnership Missouri RSA #2 Partnership Missouri RSA #4 Limited Partnership North Carolina RSA #15 Limited Partnership North Carolina RSA #5 Cellular Partnership Northwest Arkansas RSA Limited Partnership Ohio RSA #3 Limited Partnership Ohio RSA 2 Limited Partnership Ohio RSA 5 Limited Partnership Ohio RSA 6 Limited Partnership Oklahoma RSA #4 South Partnership Pennsylvania RSA No. 6(1) Limited Partnership Petersburg Cellular Partnership Raleigh-Durham MSA Limited Partnership South Carolina RSA #3 Cellular General Partnership South Carolina RSA #7 Cellular General Partnership South Carolina RSA #9 Cellular General Partnership South Carolina RSA No. 2 Cellular General Partnership South Carolina RSA No. 4 Cellular General Partnership South Carolina RSA No. 5 Cellular General Partnership South Carolina RSA No. 6 Cellular General Partnership South Carolina RSA No. 8 Cellular General Partnership Texas RSA #11B Limited Partnership Texas RSA 7B2 Limited Partnership Toledo MSA Limited Partnership Tuscon 21 Limited Partnership Tyler/Longview/Marshall MSA Limited Partnership Virginia RSA 2 Limited Partnership Youngstown-Warren MSA Limited Partnership
EXHIBIT C FORM OF JOINDER TO AGREEMENT This Joinder to that certain Agreement to Sublease dated December 19, 2000 by and among ALLTEL Communications, Inc., the ALLTEL Entities (as defined therein), and American Towers, Inc. and American Tower Corporation ("Agreement") is executed by the undersigned in accordance with the provisions of the Agreement. The undersigned hereby joins in the execution and delivery of the Agreement, makes the applicable representations set forth in the Agreement, and agrees that the undersigned shall be deemed to be one of the ALLTEL Companies for all purposes under the Agreement. The undersigned agrees to be bound by all terms, covenants and conditions contained in the Agreement, as one of the ALLTEL Companies, as if the undersigned were an original party to the Agreement. Date: ___________________________________ ___________________________________ By: Name: Title: AGREED TO AND ACKNOWLEDGED BY: AGREED TO AND ACKNOWLEDGED BY: ____________________________ ___________________________________ ____________________________ ___________________________________ By: By: Name: Name: Title: Title:
EXHIBIT D FORM OF SUBLEASE See attached.
EXHIBIT E FORM OF ASSIGNMENT OF GROUND LEASES ASSIGNMENT AND ASSUMPTION OF GROUND LEASE THIS ASSIGNMENT AND ASSUMPTION OF GROUND LEASE ("Assignment") is made and entered into as of this _____ day of ________________, _____ ("Transfer Date") by ____________________________("Assignor") and American Towers, Inc. ("Assignee"). PRELIMINARY STATEMENT On the ____ day of ____, ____, ____________________, ("Ground Lessor"), as lessor, and Assignor, as lessee, entered into that certain ____________________ ("Ground Lease") for that certain parcel of real property ("Real Property") located in the County of _______, State of ____, which Real Property is more particularly described in Exhibit "A" attached hereto. ----------- In consideration of the mutual covenants contained in this Assignment, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee hereby agree as follows: 1. ASSIGNMENT. As of the Transfer Date, Assignor hereby assigns and ---------- transfers all of its rights, title, claim and interest in, to and under the Ground Lease to Assignee and its successors and assigns. 2. ACCEPTANCE OF ASSIGNMENT. Assignee, as of the Transfer Date, ------------------------ hereby accepts the foregoing assignment of the Ground Lease and assumes all of the Assignor's liabilities, obligations and duties under the Ground Lease that arise or relate to the period after the Transfer Date. 3. BINDING EFFECT. This Assignment will be binding on and inure to -------------- the benefit of the parties herein, their heirs, executors, administrators, successors-in-interest and assigns. 4. GOVERNING LAW. This Assignment will be governed by and construed ------------- in accordance with the internal laws of the State in which the Real Property is located without regard to principles of conflicts of laws. 5. COUNTERPARTS. This Assignment may be executed in two or more ------------ counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. 6. SUPERSEDING AGREEMENTS. In the event any term hereof conflicts ---------------------- with the terms of the Agreement to Sublease dated as of December 19, 2000, by and among ALLTEL Communications, Inc, the ALLTEL Entities, Assignee and American Tower Corporation (the "Agreement to Sublease"), the terms of the Agreement to Sublease shall prevail.
7. CAPITALIZED TERMS. For purposes of this Assignment, all ----------------- capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Agreement to Sublease. THIS ASSIGNMENT has been executed by Assignor and Assignee on the Transfer Date. ASSIGNOR: ________________________________ By:_____________________________ Printed Name:___________________ Title:__________________________ ASSIGNEE: AMERICAN TOWERS, INC. By:_____________________________ Printed Name:___________________ Title:__________________________ [Add appropriate notary]
EXHIBIT F FORM OF ASSIGNMENT OF EXISTING TENANT LEASES ASSIGNMENT AND -------------- ASSUMPTION OF EXISTING TENANT LEASES ------------------------------------ THIS AGREEMENT ("Agreement") dated as of this ___ day of __________, _____ is entered into by and among _____________________, a _____________________ ("Assignor"), and AMERICAN TOWERS, INC., a Delaware corporation ("Assignee"). Recitals: -------- WHEREAS, in accordance with the terms and conditions of that certain Agreement to Sublease dated as of December 19, 2000, by and among ALLTEL Communications, Inc, the ALLTEL Entities, Assignee and American Tower Corporation (the "Agreement to Sublease"), Assignee agreed to sublease from Assignor certain Sites and certain associated assets used and useful in the operation of the Sites and agreed to assume certain obligations of Assignor. Agreement: --------- NOW, THEREFORE, in accordance with the Agreement to Sublease and for good and valuable consideration, receipt of which is hereby acknowledged, the parties agree as follows: 1. For purposes of this Agreement, all capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Agreement to Sublease. 2. Assignor does hereby irrevocably transfer and assign to Assignee all of the rights, interest, liabilities, obligations and duties of Assignor under the Existing Tenant Leases described in Schedule A attached hereto and Assignee ---------- hereby assumes and agrees to pay, perform and discharge when due all of the liabilities, obligations, and duties of Assignor under the Existing Tenant Leases described in Schedule A attached hereto arising on or after the date ---------- hereof. 3. The parties hereto do hereby agree to perform, execute and/or deliver or cause to be performed, executed and/or delivered any and all such further agreements and assurances as either of the parties hereto may reasonably require to consummate the transactions contemplated
hereunder. 4. In the event any term hereof conflicts with the terms of the Agreement to Sublease, the terms of the Agreement to Sublease shall prevail. IN WITNESS WHEREOF, each party has caused this Agreement to be duly executed and delivered in its name and on its behalf, as of the date first above written. ASSIGNOR By: ____________________________________ AMERICAN TOWERS, INC. By: ____________________________________
COMMONWEALTH OF MASSACHUSETTS COUNTY OF SUFFOLK On ___________, before me, the undersigned notary public, personally appeared _____________________, to me personally known, who, by me duly sworn (or affirmed) did say that he is Vice President of American Towers, Inc. and that the instrument was signed on behalf of said corporation by authority of its board of directors and said ___________________ acknowledged said instrument to be the free act and deed of such corporation. WITNESS my hand and official seal. SIGNATURE: _____________________________________ Notary Public My Commission expires _______________________ STATE OF _________________ COUNTY OF _________________ On ___________, before me, the undersigned notary public, personally appeared _____________________, to me personally known, who, by me duly sworn (or affirmed) did say that he is ____________________ of ______________________________, [the general partner of __________________] and that the instrument was signed on behalf of said corporation by authority of its board of directors and said _______________________ acknowledged said instrument to be the free act and deed of such corporation. WITNESS my hand and official seal. SIGNATURE: _____________________________________ Notary Public My Commission expires _______________________
EXHIBIT G FORM OF OPINION LETTER FROM ALLTEL'S COUNSEL See attached.
EXHIBIT H FORM OF OPINION LETTER FROM ATC'S COUNSEL See attached.
EXHIBIT I FORM OF REQUIRED OASIS INFORMATION See attached.
EXHIBIT J FORM OF ASSUMPTION OF CONTRACTUAL OBLIGATIONS ASSIGNMENT AND -------------- ASSUMPTION OF CONTRACTS AGREEMENT --------------------------------- THIS AGREEMENT ("Agreement") dated as of this ___ day of _______, _____ is entered into by and between ____________________, a ________________ corporation ("Assignor"), and AMERICAN TOWERS, INC., a Delaware corporation ("Assignee"). Recitals: -------- WHEREAS, in accordance with the terms and conditions of that certain Agreement to Sublease dated as of December 19, 2000, by and among ALLTEL Communications, Inc, the ALLTEL Entities, Assignee and American Tower Corporation (the "Agreement to Sublease"), Assignee agreed to sublease from Assignor certain Sites and certain associated assets used and useful in the operation of the Sites and agreed to assume certain obligations of Assignor. Agreement: --------- NOW, THEREFORE, in accordance with the Agreement to Sublease and for good and valuable consideration, receipt of which is hereby acknowledged, the parties agree as follows: 1. For purposes of this Agreement, all capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Agreement to Sublease. 2. Assignor does hereby irrevocably transfer and assign to Assignee all of the rights, interest, liabilities, obligations and duties of Assignor under the Contracts described in Schedule A attached hereto and Assignee hereby ---------- assumes and agrees to pay, perform and discharge when due all of the liabilities, obligations, and duties of Assignor under the Contracts described in Schedule A attached hereto arising on or after the date hereof. ---------- 3. The parties hereto do hereby agree to perform, execute and/or deliver or cause to be performed, executed and/or delivered any and all such further agreements and assurances as
either of the parties hereto may reasonably require to consummate the transactions contemplated hereunder. 4. In the event any term hereof conflicts with the terms of the Agreement to Sublease, the terms of the Agreement to Sublease shall prevail. IN WITNESS WHEREOF, each party has caused this Agreement to be duly executed and delivered in its name and on its behalf, as of the date first above written. ASSIGNOR By: ____________________________________ AMERICAN TOWERS, INC. By: ____________________________________
EXHIBIT K FORM OF NOTICE OF MODIFICATION OR ADDITION OF ALLTEL EQUIPMENT TO: AMERICAN TOWER ______________ ______________ Attn: _______ In accordance with ALLTEL's obligations under Section 5.17 of the Agreement to Sublease dated December 19, 2000 by and among ALLTEL Communications, Inc., the ALLTEL Entities, American Tower Corporation, and American Towers, Inc. ("ATC"), this letter serves as notice to ATC that on _________________ ALLTEL completed certain changes, modifications or additions of ALLTEL equipment at the following Site: Site Name: ____________________ Site Address: _________________ Site Coordinates: _______________ ALLTEL Site Number (if any): ______ Exhibit 1 attached hereto describes the ALLTEL equipment installed at such Site prior to the recent change, modification, or addition (which Exhibit must be completed in full by ALLTEL where applicable). Exhibit 2 attached hereto describes the ALLTEL equipment installed currently at such Site following such change, modification, or addition on the date identified above (which Exhibit must be completed in full by ALLTEL where applicable). The work performed by ALLTEL at this Site was: (PLEASE CHECK ONE) ___ a physical modification of existing equipment on the Site (this Notice is not required for replacements with identical equipment or simple adjustments to existing equipment as long as the location of the equipment is not changed --for example, no Notice is required for downtilting) ___ a replacement of existing equipment on the Site (Tower, shelter or other parts of the Site other than replacements with identical equipment) ___ addition of new equipment (other than within ALLTEL's existing buildings or shelters) IS ALLTEL THE ONLY USER OF THIS SITE/TOWER: (Check one) ____ YES or ____ NO For additional information, please contact the following ALLTEL Representative:
Name: _______________________________________ Address: ____________________________________ Phone: ______________________________________ Fax: ________________________________________ Email: ______________________________________ ALLTEL: ________________________________ By: ____________________________ Name: __________________________ Title: _________________________ Date: __________________________
EXHIBIT 1 --------- ALLTEL EQUIPMENT EXISTING PRIOR TO MODIFICATION OR ADDITION SEE ATTACHED
EXHIBIT 2 --------- ALLTEL EQUIPMENT FOLLOWING MODIFICATION OR ADDITION SEE ATTACHED
EXHIBIT L EXCLUDED SITES See attached.
EXHIBIT M [RESERVED]
EXHIBIT N-1 SITES TO BE COMPLETED BY ALLTEL (ZONED SITES) See attached.
EXHIBIT N-2 POTENTIAL SITES TO BE COMPLETED BY ALLTEL (ZONED SITES) See attached.
EXHIBIT O-1 LIST OF IN PROGRESS SITES See attached.
EXHIBIT O-2 LIST OF POTENTIAL IN PROGRESS SITES See attached.
Exhibit 2.3 ----------- BUILD TO SUIT AGREEMENT ___________________________________________________________ PREAMBLE: --------- This Build to Suit Agreement is entered into as of this 19th day of December, 2000 (the "Effective Date") by and among ALLTEL COMMUNICATIONS, INC., a Delaware corporation ("ALLTEL Inc.") and the ALLTEL Entities (ALLTEL Inc. and the ALLTEL Entities being each referred to herein individually as "ALLTEL" and collectively as the "ALLTEL Companies"), AMERICAN TOWERS, INC., a Delaware corporation ("ATC") and AMERICAN TOWER CORPORATION, a Delaware corporation ("ATC Parent"). RECITALS: WHEREAS, ALLTEL desires that ATC identify, develop, acquire and construct new Tower communication sites within specified search areas designated by ALLTEL in the Territory for the non-exclusive use and occupancy by ALLTEL pursuant to the MLA; and WHEREAS, ATC desires to identify, acquire, develop and construct new Tower communication sites for profit within the Territory as BTS Sites based upon search areas or site locations designated by ALLTEL in accordance with this Agreement, and WHEREAS, ATC and ALLTEL desire to enter into this Agreement to set forth their respective duties and responsibilities pertaining to such identification, design, construction and installation and other matters relating thereto; NOW, THEREFORE, for and in consideration of the mutual agreements made herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Parties agree as follows: ARTICLE 1 DEFINITIONS Capitalized terms used in this Agreement and not otherwise defined shall have the respective meanings set forth in Exhibit A attached to this Agreement --------- and incorporated herein by reference.
ARTICLE 2 SCOPE OF WORK; NATURE OF ENGAGEMENT SECTION 2.01. Nature of Engagement (a) During the Term, each of the ALLTEL Companies hereby grants to ATC and its Affiliates the sole and exclusive right to construct all new Towers (including all Services associated thereto) subject to the terms and conditions of this Agreement. Provided the Minimum Included Sites is met, the ALLTEL Companies agree to enter into at least fifty (50) Licenses for BTS Sites (excluding any License terminated as a result of a rejection of the associated BTS Site by ATC in accordance with Section 3.02), in the aggregate, on or before the first anniversary of the Effective Date and the ALLTEL Companies agree to enter into at least fifty (50) Licenses for BTS Sites (excluding any License terminated as a result of a rejection of the associated BTS Site by ATC in accordance with Section 3.02), in the aggregate, on or before the second anniversary of the Effective Date (in each case, including In Progress Sites transferred to this Agreement or directly to the MLA) (each, an "ALLTEL Review Minimum"). If (i) the ALLTEL Companies do not meet an ALLTEL Review Minimum and (ii) the Minimum Included Sites is met, the ALLTEL Companies will be subject to the provisions of Section 5.02(b). ATC hereby accepts such engagement in accordance with the terms and conditions of this Agreement. (b) Upon the mutual written agreement of the Parties and notwithstanding the provisions of the Agreement to Sublease, an In Progress Site may be transferred to ATC at any Closing or at any time prior to or following any Closing (but in no event after the Final Closing) prior to the completion of construction by ALLTEL of such In Progress Site. In such event, (i) the affected In Progress Site shall be governed by the terms and conditions of this Agreement and shall be deemed a BTS Site hereunder from and after the assignment of such BTS Site to ATC and payment of the applicable Purchase Price; (ii) the transfer of such In Progress Site to ATC shall be subject to the terms and conditions of the Agreement to Sublease until such time as such In Progress Site has been assigned to ATC, including, without limitation, any rights that ATC may have thereunder with respect to designating such In Progress Site as an Excluded Site thereunder, and (iii) following such assignment, ATC shall perform the Services hereunder with respect to such In Progress Site as a BTS Site to the extent that the provisions hereof are relevant and appropriate with respect to the remaining Services, if any, to be performed hereunder by ATC with respect to such In Progress Sites. (c) ALLTEL shall license from ATC, and ATC shall license to ALLTEL, certain space, for the operation of the ALLTEL Equipment at all Completed BTS Sites pursuant to a License in accordance with the terms and conditions of the MLA and this Agreement with respect to BTS Sites. ALLTEL acknowledges that ATC shall have the right to license any other area of any BTS Site (other than the Licensed Space) to other tenants, on any terms and conditions acceptable to ATC, subject to ATC's obligations to ALLTEL under the License. (d) During the Term of this Agreement, if ALLTEL enters into a License for space on an ATC Existing Site as the anchor tenant by being the first tenant to enter into a mutually 2
executed License for such site prior to the time that ATC files for zoning approval for the construction of such site as a new Tower site (commonly known as a build-to-fill site or a speculative site), then such site shall be counted toward the ALLTEL Review Minimum, if applicable, for the appropriate year and, if applicable, the Penalty Review Minimum, as one half (1/2) of a BTS Site (notwithstanding the fact that this Agreement shall not be applicable to such site). SECTION 2.02. Scope of Work; Services. ATC shall perform the Services (including, without limitation, construct each BTS Site and install ALLTEL Equipment thereon) in accordance with the terms of this Agreement, the Scope of Work attached hereto as Exhibit B, the applicable Site Schedule, and the --------- applicable Specifications. The Scope of Work describes the applicable activities, time frames and responsibilities for both ALLTEL and ATC associated with the Services. Should any duties and responsibilities in the Scope of Work, Site Schedule or Exhibits conflict with duties and responsibilities in the body of this Agreement, the body of this Agreement shall control. SECTION 2.03. Site Acquisition Services for Non-BTS Sites. During the Term, ATC shall have the right to bid on any site identification, site acquisition, site development and site zoning services required by ALLTEL within the Territory for its efforts to co-locate its services at any communication facility that is not a BTS Site and ATC will be considered equally with all other bidders. Notwithstanding the foregoing, ALLTEL reserves its right to solicit offers and to contract with other persons or entities to perform the foregoing services for sites that are not and will not be BTS Sites so long as ATC is given an opportunity to submit a bid for ALLTEL's good faith consideration. SECTION 2.04. Relationship. The Parties agree to reasonably cooperate with each other in the performance of this Agreement. ALLTEL and ATC, in the performance of this Agreement, will be acting in their individual capacities and not as employees, partners, joint venturers, agents or associates of one another. In the performance of this Agreement, ATC is, and shall at all times be, an independent contractor. Nothing contained in this Agreement creates the relationship of a joint venture, partnership, association or agency between the Parties. No Party shall have any authority to bind or otherwise obligate the other. Persons retained by either Party as employees or agents shall not, solely by reason thereof, be deemed to be employees or agents of the other Party. SECTON 2.05. Personnel; Subcontractors. (a) ATC shall, at its own cost and expense, employ only competent and able personnel for the performance of the Services and all of ATC's obligations under this Agreement, including, without limitation, contractors and subcontractors that are properly licensed and legally qualified to perform the Services hereunder. ATC shall, at all times during the term of this Agreement, keep a sufficient number of qualified personnel to the extent required to Complete each BTS Site by the Completion Date set forth in the applicable Site Schedule. ATC and ALLTEL, respectively, shall assign no less than one (1) national key manager to manage, supervise and be responsible for the timely performance of each Party's respective obligations hereunder. 3
(b) It is specifically agreed by the Parties that ATC will be entitled to subcontract with third parties selected by ATC for all or any portion of the Services and to appoint such third parties to discharge any other obligations to be performed in connection with the construction or development of the Sites; provided, however, that ATC shall not be relieved of any of its obligations hereunder as a result thereof. Upon ALLTEL's written request, ATC shall make available to ALLTEL a list of ATC's principal contractors and subcontractors, and ALLTEL shall have the right to reasonably request in writing that one or more particular contractor(s) or subcontractor(s) be removed from the list with respect to Services hereunder, in which case ATC shall not use such contractor(s) and/or subcontractor(s) to perform any Services or other obligations of ATC pursuant to this Agreement. (c) ATC will be solely responsible for the actions and conduct of all its employees, agents, advisors, contractors and subcontractors. ATC will ensure that anything related to its employees, agents, advisors, contractors or subcontractors shall be in compliance with Law. (d) ALLTEL reserves the right to reasonably require from ATC the immediate removal of or exclusion from any person from providing any portion of the Services hereunder, at ALLTEL's reasonable discretion and following prior written notice, who (i) engages in any misconduct, (ii) is incompetent or (iii) is negligent in the performance of his or her duties. ATC shall be responsible for any additional costs arising in connection with any removal or exclusion reasonably requested pursuant to this Section 2.04(d). (e) On or about November 15 of each year of the Term, ALLTEL and ATC will meet to review the estimated number and general geographic area for BTS Sites for the subsequent calendar year. Such review will be a status and planning review only. ARTICLE 3 NOTICE TO PROCEED; REJECTION RIGHTS SECTION 3.01. Issuance of a NTP for BTS Sites. (a) In the event that ALLTEL has determined, in good faith, that it desires the construction of a Tower upon which the ALLTEL Equipment can be installed, ALLTEL shall deliver to ATC a completed NTP in the form attached hereto as Exhibit E, together with the radio frequency search areas (in the form --------- of a street map with the precise search area border drawn upon it) within the Territory (each a "Search Ring") and the Specifications. ATC shall inform ALLTEL in writing within fifteen (15) Business Days upon receipt of such NTP whether it accepts such engagement or, in accordance with Section 3.02, rejects such NTP; provided, however, that in the event that ALLTEL offers ATC more than ten (10) NTPs during any given consecutive seven (7) day period, ATC shall be entitled to an additional five (5) Business Days for each group of up to ten (10) NTPs in excess of the initial ten (10) NTPs during that period. In the event that ATC fails to respond, in writing, to ALLTEL within the foregoing time periods, the associated NTP shall be deemed accepted by ATC. 4
(b) Upon the acceptance (or deemed acceptance) of an NTP by ATC, ATC shall be bound to perform the Services set forth in this Agreement with respect to such NTP and ATC shall commence the performance of the Services in accordance with the Scope of Work, applicable Site Schedules, the Specifications and this Agreement. SECTION 3.02. Rejection of NTPs and BTS Sites by ATC. (a) Notwithstanding anything to the contrary in this Agreement, ATC may elect to reject an NTP or not to construct a BTS Site after its acceptance (or deemed acceptance) thereof, upon written notice of such rejection from ATC to ALLTEL but prior to the commencement of construction of the Tower for any of the following reasons and within the following time periods: (i) Within 60 calendar days following ALLTEL's selection of a Site Candidate or within ten (10) calendar days following ATC's receipt of Zoning Approval, in the event that ATC reasonably determines, in good faith, that the aggregate construction and development cost (excluding land purchase and/or lease costs) for such BTS Site is reasonably likely to exceed Two Hundred Twenty-Five Thousand Dollars ($225,000) (which limit will be increased by 5% on each anniversary of the Effective Date); (ii) Within 60 calendar days following ALLTEL's selection of a Site Candidate, if ATC, after using commercially reasonable good faith efforts to do so, does not or can not obtain, in its sole but reasonable discretion, acceptable title, access, land use rights or environmental conditions at the affected BTS Site; (iii) Within 60 calendar days following ALLTEL's selection of a Site Candidate, if after commercially reasonable good faith efforts by ATC to negotiate with a potential Ground Lessor, such Ground Lessor insists upon (A) rent or other payments to the Ground Lessor that ATC reasonably believes to be substantially above the then-current market rate for the associated geographic area, (B) any form of revenue sharing or payment to the Ground Lessor based on third party leasing, or (C) a leased area of less than 3,000 square feet; (iv) Within 60 calendar days following ALLTEL's selection of a Site Candidate, if ATC is unable, after exercising commercially reasonable good faith efforts, to secure a Ground Lease that does not contain subleasing or use restrictions that would not permit ATC to freely market the BTS Site to third party tenants (for example, consent to subleasing or limitation on equipment or building installations); (v) If despite ATC's diligent efforts (including, but not limited to, the timely filing of all applications and excluding any appeals that are not administrative appeals), Zoning Approval or necessary Permits are not issued by the applicable Governmental Authorities or cannot be or are not completed within 270 days after the acceptance (or deemed acceptance) of an NTP by ATC; 5
(vi) On or before the tenth (10/th/) calendar day following ALLTEL's selection of a Site Candidate, in the event that an available site location which can reasonably accommodate the ALLTEL Equipment is located within the Search Ring of the proposed BTS Site that meets or exceeds the Specifications and so long as such alternative site location can be leased or licensed by ALLTEL on commercially reasonable terms and in a timely manner; and (vii) Within ten (10) calendar days following ATC's receipt of Zoning Approval, if such Zoning Approval requires the construction of a stealth or camouflage Tower or Tower that can only accommodate ALLTEL's requested installation; (b) Any and all costs and expenses incurred by ATC prior to its election to reject such BTS Site or any NTP pursuant to Section 3.02(a) shall remain the sole responsibility and liability of ATC; provided, however, that in the event that ALLTEL directs the assignment of such BTS Site to ALLTEL or a third party in accordance with Section 3.02(c), ALLTEL shall reimburse ATC for all of its reasonable and accountable out of pocket costs and expenses associated with or directly related to the identification, acquisition, development, and construction of such rejected BTS Site prior to any such assignment. (c) Any BTS Site rejected by ATC pursuant to Section 3.02(a) shall no longer be a BTS Site for the purposes of this Agreement. In the event that ATC rejects a BTS Site and ALLTEL desires to pursue an alternative site or Site Candidate other than the rejected BTS Site, ATC shall have the right to provide Services in accordance with the terms and conditions of this Agreement with respect to any such alternative site. ALLTEL shall be free to pursue such rejected Site or any other site (subject to the immediately preceding sentence, with respect to any alternative site) within the Search Ring (or cause a third party to pursue such Site or any other site (subject to the immediately preceding sentence, with respect to any alternative site) within the Search Ring) without any further obligation to ATC hereunder with respect to such BTS Site notwithstanding the provisions of Section 2.01(a); provided, however, that in the event that ATC rejects a BTS Site after the execution of a Ground Lease or acquisition of a fee simple interest in the land on which the BTS Site was to be built and notifies ALLTEL of the existence thereof in ATC's rejection notice, ALLTEL shall notify ATC no more than ten (10) Business Days following its receipt of ATC's rejection notice (and notification of any such Ground Lease or fee simple interest in the land on which such BTS Site was to be build) if ALLTEL desires that ATC assign any and all of its rights associated with the BTS Site to ALLTEL (or a third party designated by ALLTEL), and if ALLTEL so notifies ATC, ATC shall assign any and all of its rights associated with the BTS Site to ALLTEL or such third party, subject to Section 3.02(b) with respect to reimbursement of ATC's costs. (d) In the event that ATC elects to reject any BTS Site in accordance with this Section 3.02 any applicable License associated with such BTS Site shall automatically be terminated without any further action by any Party; provided, however, that upon the written request of either Party, both Parties agree to execute any instrument reasonably requested to evidence such termination. 6
ARTICLE 4 COMPENSATION SECTION 4.01. Compensation. Other than the Pass-Through Expenses and as otherwise expressly set forth in Section 3.02(b), this Article 4 and Paragraph II(B) of Exhibit B, ATC's entire compensation for the Services provided pursuant to this Agreement will be the payment of the BTS Rent by ALLTEL pursuant to the MLA. SECTION 4.02. Allocation of Site Costs. Other than the Pass-Through Expenses and as otherwise expressly set forth in Sections 3.02(b) and 6.01 and this Article 4, ATC shall be responsible for all of its costs and expenses associated with the Services. SECTION 4.03 Installation Services. With respect to all BTS Sites, ATC shall have the right of first offer to perform Installation Services at all BTS Sites as follows: (a) ALLTEL shall deliver its plans, specifications and installation bid parameters to ATC, either, at ALLTEL's election, (x) at the same time that ALLTEL delivers its request for a proposal for such services to other vendors, or (y) exclusively to ATC, and (i) in the event that ALLTEL delivers its request for proposal exclusively to ATC (which fact must be conspicuously disclosed to ATC within the associated request for proposal), ATC shall submit a bid to ALLTEL in accordance with the reasonable time and delivery requirements set forth in such request for proposal (notwithstanding the provisions of Section 12.01 which shall not be applicable to this Section 4.03, and for a period beginning on the date after the deadline provided in the request for proposal and for five (5) business days thereafter (unless ATC fails to submit a bid within the period of time reasonably required in the associated request for proposal, it being understood that ATC's failure to submit a definitive bid to perform such services shall be deemed an election not to perform the Installation Services) ATC and ALLTEL agree to engage in good faith negotiations with respect to the pricing and scope of work. (ii) in the event that ALLTEL delivers its request for proposal to ATC together with its submission to other vendors (or in the event that ALLTEL fails to conspicuously note in the associated request for proposal that ALLTEL is not requesting any bids from any other vendors for such work), ATC may submit a bid to ALLTEL in accordance with the reasonable time and delivery requirements set forth in such request for proposal (notwithstanding the provisions of Section 12.01 which shall not be applicable to this Section 4.03), and for a period beginning on the date after the deadline provided in the request for proposal and for five (5) business days thereafter (unless ATC elects not to perform the Installation Services, which ATC agrees to promptly confirm in writing), ATC and ALLTEL agree to engage in good faith negotiations with respect to the pricing and scope of work. (b) If ALLTEL and ATC have not agreed on the pricing following the expiration of the five (5) business day negotiation period (or in the event that ATC elected not to submit a bid pursuant to Section 4.03(a)(ii)), ALLTEL shall provide ATC redacted copies (only as to the 7
name, address or other identifying information associated with the company submitting such bid) of bids submitted by three (3) other reputable and experienced contractors to provide such installation or modification services, and ATC shall have the exclusive right to perform such services at the terms and conditions set forth in and at a price equal to the lesser of (A) the amount of the last bid submitted by ATC pursuant to Section 4.03(a), if any, or (B) the average of the three (3) competing bids by notifying ALLTEL within five (5) business days after ATC's receipt of the three (3) competing bids (but after the expiration of the exclusive negotiation period) whether ATC will perform the Installation Services, in which event ATC shall commence the services as soon as reasonably practicable or as mutually agreed to by the Parties hereto, and if ATC shall notify ALLTEL that ATC shall not perform the Installation Services, or if ATC shall fail to notify ALLTEL during the five (5) business day period after ATC's receipt of all of the competing bids, ALLTEL shall have the right to use another contractor of its choice to perform the associated services with respect to such request for proposal. SECTION 4.04. Components. With respect to all BTS Sites, ALLTEL shall submit all necessary materials requirements for Components to ATC at the time ALLTEL submits bid documentation to ATC pursuant to Section 4.03(a), upon receipt of a bid from ATC or one of its Affiliates (if any), ALLTEL and ATC agree to engage in good faith negotiations with respect to the provisioning of such Components on a site-by-site basis between the applicable representatives of ATC (or its Affiliate) and ALLTEL. Notwithstanding the foregoing, ALLTEL reserves the right to solicit offers and to contract with other persons or entities for the provision of Components so long as ATC is given an opportunity to submit a bid for ALLTEL's good faith consideration. In the event that ALLTEL, in its sole discretion, elects to accept ATC's bid, in whole or in part, ALLTEL shall purchase the selected Components from ATC in accordance with ATC's bid and ATC shall commence the manufacture or procurement of such Components as soon as reasonably practicable or as mutually agreed to by the Parties hereto. Notwithstanding anything to the contrary, the Parties hereto acknowledge and agree that ALLTEL shall have the right to select any one or more of the Components set forth in the applicable bid to purchase from ATC hereunder (provided, however, that ATC may, in its sole discretion, elect to offer discounts based on the purchase of multiple products in its bid). If applicable pursuant to Section 4.03, ATC shall install such Components as part of the Installation Services. Notwithstanding the foregoing, this Section 4.04 shall not be applicable to the extent (and only to the extent) that ALLTEL has a pre- existing written contract with a third party that provides for volume discounts, minimum obligation for the purchase of specific types of Components or an exclusive or requirements agreement for the benefit of such third party for such Components. Unless and until ALLTEL accepts an ATC bid in accordance with this Section 4.04, ALLTEL shall be under no obligation to purchase any Components from ATC under this Section 4.04. SECTION 4.05. Additional Services. Upon ALLTEL's and ATC's mutual written agreement, on a Site-by-Site basis, ATC may perform, or coordinate with third parties to perform, any other reports, studies, activities or service not expressly provided for in this Agreement. ALLTEL is under no obligation to use ATC for any additional services. SECTION 4.06. Pass-Through Expenses. Notwithstanding anything to the contrary in this Agreement or the Scope of Work, ATC shall be reimbursed for costs and expenses 8
incurred hereunder that are listed as reimbursable in Exhibit C attached hereto --------- at the rates set forth therein, but only for those applicable Services which ALLTEL has expressly requested ATC to provide or are required by the applicable Governmental Authority ("Pass-Through Expenses"). ARTICLE 5 SITE SCHEDULES; LATE FEES & PENALTIES SECTION 5.01. Site Schedule. Subject to Article 11, each Site Schedule for the Completion of the Services for BTS Sites will be determined on a Site-by- Site basis, in the form of the Site Schedule attached hereto as Exhibit D-1, with no time frame for any Service to exceed the outside time frames set forth in Exhibit D-2, each as may be adjusted from time to time upon the written agreement of both Parties on a Site-specific basis; provided, however, that notwithstanding anything to the contrary, ATC's failure to perform any of the Services within the individual time frames set forth in the Site Schedule (including, without limitation, the outside time frames set forth in Exhibit D- 2) shall not be deemed a default hereunder so long as ATC Completes the BTS Site on or before the "Projected Completion Date" set forth in the applicable Site Schedule, subject to Excusable Delays. Site Schedules shall be mutually agreed to between the Parties hereto no more than twenty (20) Business Days following ATC's acceptance of any NTP. If the Parties do not agree on a particular Site Schedule, the disagreement shall be resolved as a dispute in accordance with Section 12.11, and the time frames set forth in Exhibit D-2 shall apply to such Site until such time as the Parties agree on the Site Schedule. SECTION 5.02. Late Fees and Penalties. (a) ALLTEL and ATC acknowledge that the time for Completion of each BTS Site will be determined by the applicable Site Schedule. In the event that ATC fails to Complete a BTS Site (other than due to Excusable Delays) on or before the projected Completion Date specified in the Site Schedule applicable to that BTS Site, as modified in accordance with the provisions of this Agreement, including without limitation Section 5.01 and 6.01 and Article 11 ("Projected Completion Date"), ALLTEL shall be entitled to rent abatement of the BTS Rent (as set forth in the applicable License) for the affected BTS Site, or an equivalent cash payment, as set forth in the following sentences (the "Late Fee(s))") based on the number of days beyond the Projected Completion Date that the affected BTS Site is not Complete ("Day(s) Late"). If the Completion is fourteen (14) Days Late, the Late Fee shall be an amount equal to one month of the BTS Rent (it being understood that no Late Fee shall apply if the BTS Site is completed thirteen or less Days Late). If Completion is over fourteen (14) Days Late but less than twenty-nine (29) Days Late, in addition to any Late Penalties accrued to date, the Late Fee shall accrue at a rate of one-seventh (1/7) of an amount equal to one month of the BTS Rent per Day Late after the 14/th/ Day Late. If Completion is over twenty-eight (28) Days Late, but less than forty-three (43) Days Late, in addition to any Late Penalties accrued to date, the Late Fee shall accrue at a rate of three-fourteenths (3/14) of an amount equal to one month of the BTS Rent per Day Late after the 28/th/ Day Late. If Completion is over forty-two (42) Days Late, but less than sixty-one 9
(61) Days Late, in addition to any Late Penalties accrued to date, the Late Fee shall accrue at a rate of two-sevenths (2/7) of an amount equal to one month of the BTS Rent per Day Late after the 42/nd/ Day Late. If Completion is over sixty (60) Days Late, the Late Fee shall not increase beyond the Late Fee accrued to the sixtieth (60/th/) day, but ALLTEL shall thereafter have all rights set forth in Section 8.01(d), in addition to the right to receive cash payment of the Late Fee from ATC. If ALLTEL has not exercised its rights under Section 8.01(d), any Late Fee shall be payable, in ATC's sole discretion, in the form of a rent abatement or in cash. Any rent abatement of the BTS Rent due under the provisions of this Section 5.02 shall be applied to the initial BTS Rent due under the associated License beginning as of the License Commencement Date of such License. (b) In the event that (i) ALLTEL fails to achieve either or both of the ALLTEL Review Minimums and (ii) the Minimum Included Sites is met, the consequence shall be that ALLTEL shall be required to enter into at least one hundred fifty (150) Licenses for BTS Sites (excluding any License terminated as a result of a rejection of the associated BTS Site by ATC in accordance with Section 3.02), in the aggregate, during the period from the Effective Date through the third (3/rd/) anniversary of the Effective Date ("Penalty Review Minimum"). In the event that ALLTEL fails to achieve the Penalty Review Minimum, if applicable, ALLTEL shall promptly commence monthly penalty payments in an amount equal to one month of the BTS Rent to ATC for each BTS Site for which ALLTEL failed to achieve the Penalty Review Minimum, payable commencing on the first day of the month immediately following the third (3/rd/) anniversary of the Effective Date and on the first day of each month thereafter until the earlier of (i) ten (10) years, or (ii) Rent Commencement Date following the Completion of one (1) particular BTS Site subject to a License that ATC commenced Services for hereunder subsequent to the date that such monthly penalty payment commenced; it being understood that each subsequent BTS Site shall only be counted once as a BTS Site towards the terminations of the monthly penalty payments for each shortfall site and for the purposes of Section 8.01(b)(v). In the event that any Penalty Review Minimum is incurred in accordance with this Section 5.01(b), as among the ALLTEL Entities, the ALLTEL Entities agree to reasonably cooperate to use their reasonable best efforts to allocate any such penalties among the ALLTEL Entities in a fair and equitable manner based upon the relative benefits and faults of the ALLTEL Entities with respect to any Penalty Review Minimum. (c) Notwithstanding anything to the contrary, the fees and penalties provided for in this Section 5.02 are not deemed by the Parties to be punitive in nature but constitute liquidated damages and shall be ATC's and ALLTEL's, respectively, sole and exclusive remedy with respect to the circumstances described in Section 5.02 (other than ALLTEL's remedies set forth in Sections 8.01(b)(iv) and 8.01(d)); provided however, that ATC's or ALLTEL's failure to pay such fees or penalties within thirty (30) days after receipt of an invoice for such fees or penalties, to the extent not in reasonable good faith dispute hereunder, shall be deemed a material default by the non-paying Party hereto under this Agreement and all of the Licenses executed in accordance with the MLA and this Agreement. 10
ARTICLE 6 CHANGES TO SPECIFICATIONS SECTION 6.01. Changes to Specifications. If ALLTEL requests any changes to any Specifications, ATC shall make such changes to the Specifications subject to the terms of the next sentence and (a) the relevant Completion Date shall be adjusted as may be reasonably necessary, and (b) ALLTEL shall promptly reimburse ATC for any mutually agreed upon in writing increase in costs resulting therefrom. In no event shall ATC be required to implement any such change (X) until the Parties have come to a mutual written agreement with respect to such change, or (Y) which would require the construction of a tower structure lower than 120 feet. Notwithstanding the foregoing, ALLTEL reserves the right to request, upon no less than ten (10) days prior written notice, immaterial changes to the Specifications that do not affect ATC's allocated manpower, costs, or expenses nor the Site Schedule timeframes, and ATC shall effect such immaterial changes related to the Services as promptly as is practicable following its receipt of such request. ARTICLE 7 QUALITY STANDARDS; PROGRESS REPORTS; INSPECTION RIGHTS SECTION 7.01. Quality Standards. ATC agrees to furnish the Services for and on behalf of ALLTEL and to perform such Services in an expeditious and workmanlike manner consistent with the interests of ALLTEL in accordance with the provisions of this Agreement. In the performance of the Services, ATC shall furnish its best skill and judgment (a) in accordance with the standards established by the industry and in compliance with applicable Laws, (b) consistent with good development and construction practices and efficient business practices, (c) utilizing skill and judgment available throughout its organization in the performance of this Agreement to provide its professional knowledge, ideas, experience and abilities relating to the identification, acquisition, design, scheduling, development and construction of the BTS Sites, (d) in a competent professional and efficient manner and (e) consistent with the Specifications. SECTION 7.02. Quality Review. Within sixty (60) days after the Effective Date, ATC shall establish, implement and reduce to writing a program to monitor the quality of the identification, acquisition, development and construction of the BTS Sites. The purpose of the program shall be to assist in guarding against defects and deficiency in the Services. Prior to implementing the program, ATC shall provide ALLTEL a copy of the program, and ATC shall give due consideration to any comments of ALLTEL to the program. At any time and from time to time, ALLTEL may, in its discretion and at its sole expense, and without need to demonstrate cause, conduct an independent program to monitor the quality of the identification, acquisition, development and construction and ATC's 11
compliance with its obligations hereunder so long such program does not delay or hinder the performance of ATC's Services hereunder. SECTION 7.03. Compliance with Requirements, Permits, Bonds and Insurance during Construction ATC shall comply, and shall cause each of its Affiliates and their respective employees, agents, contractors, subcontractors, advisors or consultants to comply in all Laws as they relate to the development and construction of the BTS Sites and other Services; provided, however, that an immaterial noncompliance with any Law shall not be deemed a default or breach by ATC hereunder unless ALLTEL suffers an adverse consequence as a result of such noncomplaince. ATC shall, at its own cost and expense, procure and maintain all Tower Site Permits with respect to the BTS Sites. ATC shall promptly notify ALLTEL in writing on any non-compliance with any applicable Laws relating to any of the BTS Sites or any actual or potential problems or delays in obtaining the Permits. ATC shall obtain, or cause to be obtained, all required bonds and insurance, including without limitation the insurance required under Section 12.05 necessary for the commencement of construction and Completion of the Services with respect to each BTS Site. ATC shall promptly pay when due all amounts owed to contractors, subcontractors and other agents used by ATC in providing the Services, except for amounts being reasonably disputed in good faith. SECTION 7.04. Progress Reports. ALLTEL and ATC shall mutually agree upon a report format whereby ATC will keep ALLTEL reasonably informed on the progress of the BTS Sites. No less than once per week, ATC shall submit such report to ALLTEL. No less than once per month the national key manager assigned by ATC pursuant to Section 2.05(a) and representatives of ALLTEL shall meet or participate in a telephonic conference call to discuss such report and any other matters related to the BTS Sites. In addition, ATC acknowledges and agrees that it has an affirmative obligation and responsibility promptly to notify ALLTEL of any circumstance which delays or may delay any Site Schedule activity and the extent to which such Site Schedule activity may be delayed as a result of such circumstance. SECTION 7.05. Books and Records of ATC, Right of Inspection by ALLTEL. (a) ATC shall keep such accounts as may be necessary for its proper financial management of the Services under this Agreement. ALLTEL shall be afforded access during normal business hours and upon reasonable prior notice to all of ATC's records, books, correspondence, instructions, drawings, plans, blueprints, specifications, receipts, vouchers, memoranda and similar data, and employees or agents of ATC or its Affiliates who prepared or are familiar with such data, relating to the Pass-Through Expenses and the Services to the extent relating to ATC's compliance with the terms hereof, ATC's and each BTS Site's compliance with Law, the structural integrity of the BTS Sites or any other reasonable purpose, except for privileged or confidential documents or where disclosure is prohibited by Law. Such books and records shall be open for inspection and copying upon reasonable written notice by ALLTEL, at its cost, and its authorized representatives at reasonable hours at the applicable ATC area office 12
and shall be retained by ATC for a period of three (3) years after the expiration or termination of this Agreement. (b) ALLTEL may upon prior reasonable written notice, at its election and at its sole cost and expense, conduct or have conducted such inspections during normal business hours as it deems reasonably necessary at each BTS Site; provided, however, that ALLTEL shall not materially delay, hinder or interfere with the performance of the Services. If ALLTEL notifies ATC of any observed defects or nonconformities with the Specifications or Services, ATC shall promptly correct any defect or nonconformity in such time and manner as will permit Completion of each BTS Site in accordance with the Site Schedule for such BTS Site. The failure of ALLTEL to inspect any BTS Site or failure to notify ATC of any defects or nonconformities, however, will not in any way limit, waive, or otherwise affect the rights of ALLTEL with respect to any of ATC's warranties or obligations under this Agreement. ARTICLE 8 TERM AND TERMINATION SECTION 8.01. Term and Termination. (a) The term of this Agreement (the "Term") will commence on the Effective Date and will expire at the earlier of 11:59 p.m. on (i) December 19, 2005; provided, however, that in the event that ATC has not commenced Services for at least five hundred (500) BTS Sites by the foregoing date and such foregoing date is the expiration date of this Agreement, ATC shall have the right to extend the term of this Agreement for one (1) additional period of two (2) years by providing written notice to ALLTEL on or before November 15, 2005 or (ii) December 19, 2003 in the event that the aggregate number of Included Sites is less than 1,350 (provided, however, that the number of 1,350 shall be reduced by one (1) for each Site under the Agreement to Sublease that is an Excluded Site for any of the following reasons: (x) as a result of the Environmental Exclusion Criteria or (y) ALLTEL's lack of legal access to such Site) (collectively, the "Minimum Included Sites"). (b) This Agreement may be terminated at any time only pursuant to the following provisions: (i) by either Party upon a material uncured breach by the other Party of its obligations contained hereunder or in any of the attachments or exhibits thereof, which breach has not been remedied within a term of fifteen (15) calendar days after receipt of notice thereof by the breaching Party; provided, however, that if such failure to perform shall reasonably require a longer period to cure, then such cure period shall be extended for such time as is reasonably necessary to cure such failure to perform (not to exceed forty-five (45) calendar days after receipt of notice), but only so long as such efforts to cure, subject to Excusable Delays, are commenced within the initial fifteen (15) day period and thereafter are pursued diligently and in good faith. In the event a breach is not cured within the cure 13
period, the non-breaching Party may, in addition to terminating this Agreement, pursue any remedies available to it against the breaching Party in law or in equity; or (ii) by either Party if the other Party becomes insolvent as defined in the Uniform Commercial Code under the Laws applicable to this Agreement or makes an assignment for the benefit of creditors; or if any action is brought by the other Party seeking its dissolution or liquidation of its assets or seeking the appointment of a trustee, interim trustee, receiver or other custodian for any of its property; or if the other Party commences a voluntary proceeding under the Federal Bankruptcy Code; or if any reorganization or arrangement proceeding is instituted by ALLTEL for the settlement, readjustment, composition or extension of any of its debts upon any terms; or if any action or petition is otherwise brought by the other Party seeking similar relief or alleging that it is insolvent or unable to pay its debts as they mature; or if any action is brought against the other Party seeking its dissolution or liquidation of any of its assets, or seeking the appointment of a trustee, interim trustee, receiver or other custodian for any of its property, and any such action is consented to or acquiesced in by the other Party or is not dismissed or stayed within ninety (90) days after the date upon which it was instituted; or if any proceeding under the Federal Bankruptcy Code is instituted against the other Party and (1) an order for relief is entered in such proceeding, or (2) such proceeding is consented to or acquiesced in by the other Party or is not dismissed or stayed within ninety (90) days after the date upon which it was instituted; or if any reorganization or arrangement proceeding is instituted against the other Party for the settlement, readjustment, composition or extension of any of its debts upon any terms, and such proceeding is consented to or acquiesced in by the other Party or is not dismissed or stayed within ninety (90) days after the date upon which it was instituted; or if any action or petition is otherwise brought against the other Party seeking similar relief or alleging that it is insolvent, unable to pay its debts as they mature or generally not paying its debts as they become due, and such action or petition is consented to or acquiesced in by the other Party or is not dismissed or stayed within ninety (90) days after the date upon which it was brought; or (iii) (A) by ALLTEL, in the event ALLTEL terminates the Agreement to Sublease in accordance with Section 12.1(b), Section 12.1(c), Section 12.1(e)(i) or Section 12.1(f) or (B) by ATC, in the event ATC terminates the Agreement to Sublease in accordance with Section 12.1(b), Section 12.1(d) or Section 12.1(e)(i); or (iv) by ALLTEL, if the aggregate number of BTS Sites at which ATC incurred a Late Fee exceed the greater of (a) twenty-five (25) or (b) twenty-five percent (25%) of the total number of BTS Sites Completed during any consecutive twelve month period; or 14
(v) by ALLTEL or ATC, in the event that the Minimum Included Sites is met, at any time after the Parties have entered into at least an aggregate of five hundred (500) Licenses for BTS Sites (excluding any License terminated as a result of a rejection of the associated BTS Site by ATC in accordance with Section 3.02 as of the date of such termination). (c) Neither a termination nor the expiration of this Agreement will affect: (i) any duties or obligations for payment or performance that are or become owing hereunder (or pro-rata share thereof) prior to the effective date of such termination or expiration; (ii) any other duties or obligations that expressly survive the termination or expiration hereof; (iii) the terms of any License entered into by the Parties, which will continue in accordance with its terms and conditions provided that any License may be terminated in accordance with its terms or as specifically provided herein; or (iv) the rights and obligations of each Party hereto with respect to Services at any BTS Site where Services have commenced but are not yet Completed pursuant to the terms and conditions herein, which BTS Sites shall be Completed in accordance with the terms and conditions of this Agreement; provided, however, that in the event that this Agreement is terminated pursuant to Section 8.01(b) (i), (ii), or (iv), the terminating Party shall have the right to cease (or cause the cessation of) any further Services hereunder with respect to any BTS Sites which are not Completed upon written notice to the other Party. If ALLTEL is the terminating Party pursuant to Section 8.01(b) (i), (ii), or (iv), then ALLTEL shall have the option to direct the assignment of ATC's rights in any such BTS Sites (including any Ground Lease or fee simple title) to ALLTEL or a third party and reimburse