- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------- Form 10-Q ---------------- (Mark One): [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended September 30, 2001. [_] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Commission File Number: 001-14195 ---------------- American Tower Corporation (Exact name of registrant as specified in its charter) Delaware 65-0723837 (State or other jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 116 Huntington Avenue Boston, Massachusetts 02116 (Address of principal executive offices) Telephone Number (617) 375-7500 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes [X] No [_] - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
Outstanding at November 1, Class of Common Stock 2001 - --------------------- ----------- Class A Common Stock................................................ 184,826,952 Class B Common Stock................................................ 8,001,769 Class C Common Stock................................................ 2,267,813 ----------- Total............................................................. 195,096,534 =========== AMERICAN TOWER CORPORATION INDEX
Page No. -------- PART I. FINANCIAL INFORMATION Item 1. Unaudited Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets as of September 30, 2001 and December 31, 2000................................................. 1 Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2001 and 2000..................... 2 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2001 and 2000................................. 3 Notes to Condensed Consolidated Financial Statements............... 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................................. 12 Item 3. Quantitative and Qualitative Disclosures about Market Risk..... 30 PART II. OTHER INFORMATION Item 1. Legal Proceedings.............................................. 32 Item 2. Changes in Securities and Use of Proceeds...................... 32 Item 5. Other Information.............................................. 32 Item 6. Exhibits and Reports on Form 8-K............................... 32 Signatures............................................................. 34 PART I. FINANCIAL INFORMATION ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AMERICAN TOWER CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS--Unaudited (In Thousands, Except Share Data) See notes to condensed consolidated financial statements. 1
September 30, December 31, 2001 2000 ------------- ------------ ASSETS Current Assets: Cash and cash equivalents.......................... $ 276,094 $ 82,038 Restricted cash and investments.................... 62,225 46,036 Accounts receivable, net of allowance for doubtful accounts of $28,565 and $19,809, respectively..... 204,273 194,011 Prepaid and other current assets................... 64,068 42,377 Inventories........................................ 50,414 47,872 Cost and earnings in excess of billings on uncompleted contracts and unbilled receivables.... 67,943 43,652 Deferred income taxes.............................. 15,175 15,166 ---------- ---------- Total current assets............................... 740,192 471,152 ---------- ---------- Property and equipment, net......................... 3,177,651 2,296,670 Goodwill and other intangible assets, net........... 2,513,923 2,505,681 Deferred income taxes............................... 226,642 140,395 Other long-term assets.............................. 260,101 246,781 ---------- ---------- Total.............................................. $6,918,509 $5,660,679 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current portion of long-term obligations........... $ 12,169 $ 11,178 Accounts payable and accrued expenses.............. 171,331 161,337 Accrued tower construction costs................... 29,639 45,315 Accrued interest................................... 39,825 31,708 Billings in excess of costs on uncompleted contracts and unearned revenue.................... 50,948 48,248 ---------- ---------- Total current liabilities.......................... 303,912 297,786 ---------- ---------- Long-term obligations............................... 3,536,018 2,457,045 Other long-term liabilities......................... 57,145 12,472 ---------- ---------- Total liabilities.................................. 3,897,075 2,767,303 ---------- ---------- Minority interest in subsidiaries................... 5,411 16,346 ---------- ---------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred Stock; $0.01 par value; 20,000,000 shares authorized; no shares issued or outstanding........ Class A Common Stock; $0.01 par value; 500,000,000 shares authorized; 184,961,549 and 170,180,549 shares issued, 184,816,952 and 170,035,952 shares outstanding, respectively.......................... 1,850 1,701 Class B Common Stock; $0.01 par value; 50,000,000 shares authorized; 8,001,769 and 8,095,005 shares issued and outstanding, respectively............... 80 81 Class C Common Stock; $0.01 par value; 10,000,000 shares authorized; 2,267,813 shares issued and outstanding, respectively.......................... 23 23 Additional paid-in capital.......................... 3,636,142 3,174,622 Accumulated other comprehensive loss................ (22,290) Accumulated deficit................................. (595,442) (295,057) Less: Treasury stock (144,597 shares of Class A Common Stock at cost)............................. (4,340) (4,340) ---------- ---------- Total stockholders' equity......................... 3,016,023 2,877,030 ---------- ---------- Total.............................................. $6,918,509 $5,660,679 ========== ========== AMERICAN TOWER CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS--Unaudited (In Thousands, Except Per Share Data) See notes to condensed consolidated financial statements. 2
Three Months Ended Nine Months Ended September 30, September 30, ------------------- -------------------- 2001 2000 2001 2000 --------- -------- --------- --------- REVENUES: Rental and management............. $ 120,032 $ 75,535 $ 317,736 $ 192,475 Network development services...... 118,762 91,185 325,705 203,363 Satellite and fiber network access services......................... 57,402 42,238 178,191 95,684 --------- -------- --------- --------- Total operating revenues...... 296,196 208,958 821,632 491,522 --------- -------- --------- --------- OPERATING EXPENSES: Operating expenses excluding depreciation and amortization, and development and corporate general and administrative expenses: Rental and management........... 58,605 37,335 155,742 97,117 Network development services.... 105,609 75,741 290,190 173,068 Satellite and fiber network access services................ 55,353 32,060 169,467 74,318 Depreciation and amortization..... 118,898 75,973 317,853 198,264 Development expense............... 1,736 5,311 7,038 10,495 Corporate general and administrative expense........... 7,353 3,442 18,887 9,957 --------- -------- --------- --------- Total operating expenses...... 347,554 229,862 959,177 563,219 --------- -------- --------- --------- LOSS FROM OPERATIONS................ (51,358) (20,904) (137,545) (71,697) --------- -------- --------- --------- OTHER INCOME (EXPENSE): Interest expense.................. (73,483) (41,752) (210,223) (112,339) Interest income and other, net.... 720 6,560 13,578 12,997 Interest income, TV Azteca, net... 3,627 3,607 10,747 9,070 Loss on investment in US Wireless......................... (1,182) (23,408) Note conversion expense........... (26,336) (26,336) (16,968) Minority interest in net (earnings) losses of subsidiaries..................... (19) 140 (16) 82 --------- -------- --------- --------- Total other expense........... (96,673) (31,445) (235,658) (107,158) --------- -------- --------- --------- LOSS BEFORE INCOME TAXES AND EX- TRAORDINARY LOSSES................. (148,031) (52,349) (373,203) (178,855) INCOME TAX BENEFIT.................. 23,093 12,822 72,818 43,036 --------- -------- --------- --------- LOSS BEFORE EXTRAORDINARY LOSSES.... (124,938) (39,527) (300,385) (135,819) EXTRAORDINARY LOSSES ON EXTINGUISHMENT OF DEBT, NET OF INCOME TAX BENEFIT OF $2,892............................. (4,338) --------- -------- --------- --------- NET LOSS............................ $(124,938) $(39,527) $(300,385) $(140,157) ========= ======== ========= ========= BASIC AND DILUTED LOSS PER COMMON SHARE AMOUNTS Loss before extraordinary losses.. $ (0.65) $ (0.22) $ (1.58) $ (0.82) Extraordinary losses.............. (0.03) --------- -------- --------- --------- NET LOSS............................ $ (0.65) $ (0.22) $ (1.58) $ (0.85) ========= ======== ========= ========= WEIGHTED AVERAGE COMMON SHARES OUT- STANDING........................... 193,135 178,056 190,380 165,244 ========= ======== ========= ========= AMERICAN TOWER CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS--Unaudited (In Thousands) See notes to condensed consolidated financial statements. 3
Nine Months Ended September 30, ---------------------- 2001 2000 ---------- ---------- CASH FLOWS USED FOR OPERATING ACTIVITIES Net loss............................................. $ (300,385) $ (140,157) Non-cash items reflected in statement of operations.. 343,293 190,862 Increase in current assets........................... (52,371) (114,837) (Decrease) increase in current liabilities........... (11,555) 26,351 ---------- ---------- Cash used for operating activities..................... (21,018) (37,781) ---------- ---------- CASH FLOWS USED FOR INVESTING ACTIVITIES: Payments for purchase of property and equipment and construction activities............................. (441,867) (346,161) Payments for acquisitions, net of cash acquired...... (688,557) (1,163,281) Deposits, investments and other...................... (72,116) (97,435) ---------- ---------- Cash used for investing activities..................... (1,202,540) (1,606,877) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under credit facilities and other debt.... 181,500 1,377,500 Proceeds from senior notes offering.................. 1,000,000 Proceeds from convertible notes offering............. 450,000 Repayment of notes payable and credit facilities..... (77,691) (496,729) Net proceeds from equity offerings and stock options............................................. 365,684 532,548 Deferred financing costs, restricted cash and investments and other............................... (51,879) (37,403) ---------- ---------- Cash provided by financing activities.................. 1,417,614 1,825,916 ---------- ---------- NET INCREASE IN CASH AND CASH EQUIVALENTS.............. 194,056 181,258 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD......... 82,038 25,212 ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD............... $ 276,094 $ 206,470 ========== ========== CASH PAID FOR INCOME TAXES............................. $ 4,998 $ 2,772 ========== ========== CASH PAID FOR INTEREST................................. $ 196,586 $ 93,848 ========== ========== NON-CASH TRANSACTIONS: Issuance of common stock, warrants and options for acquisitions........................................ $ 7,077 $ 145,852 Issuance of common stock for equity investment....... 2,464 Treasury stock transactions.......................... 2,752 Note conversion transaction (including note conversion expense)................................. 60,107 136,400 TV Azteca transaction................................ 25,819 Capital leases....................................... 31,853 38,529 Note receivable converted to investment.............. 7,772 AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Unaudited 1. Basis of Presentation and Accounting Policies The accompanying condensed consolidated financial statements have been prepared by American Tower Corporation (the Company) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). The financial information included herein is unaudited; however, the Company believes such information and the disclosures are adequate to make the information presented not misleading and reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair presentation of financial position and results of operations for such periods. Results of interim periods may not be indicative of results for the full year. These condensed consolidated financial statements and related notes should be read in conjunction with the Company's 2000 Annual Report on Form 10-K. Use of Estimates--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results may differ from those estimates, and such differences could be material to the accompanying condensed consolidated financial statements. Loss Per Common Share--Basic and diluted 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 outstanding 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. Shares issuable upon exercise of options, warrants and other dilutive securities have been excluded from the computation of diluted loss per common share as the effect is anti-dilutive. Had options, warrants and other dilutive securities been included in the computation, weighted average shares for the diluted computation would have increased by approximately 29.5 million and 38.4 million for the three months ended September 30, 2001 and 2000, respectively, and 32.3 million and 40.3 million for the nine months ended September 30, 2001 and 2000, respectively. Recent Accounting Pronouncements--On January 1, 2001, the Company adopted the provisions of Statement of Financial Accounting Standard (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 market value of a derivative (that is unrealized gains or losses) is recorded as a component of an entity's net income or other comprehensive income, depending upon designation (as defined in the statement). The cumulative effect of adopting this statement resulted in a charge to other comprehensive income of $7.9 million, net of tax. The Company is exposed to interest rate risk relating to variable interest rates on its credit facilities. As part of its overall strategy to manage the level of exposure to the risk of interest rate fluctuations, the Company uses interest rate swaps, caps and collars, which qualify and are designated as cash flow hedges. The Company also uses swaptions to manage interest rate risk, which have not been designated as cash flow hedges. During the nine months ended September 30, 2001, the Company recorded an unrealized loss, excluding the charge for the cumulative effect of adopting SFAS No. 133, of approximately $21.1 million (net of a tax benefit of approximately $11.4 million) in other comprehensive loss for the change in fair value of cash flow hedges and reclassified $6.1 million (net of a tax benefit of approximately $3.3 million) into results of operations. Hedge ineffectiveness resulted in a gain of approximately $1.6 million for the nine months ended September 30, 2001 and was recorded in "interest income and other, net". The Company records the changes in fair value of its derivative instruments that are not accounted for as hedges in "interest income and other, net". At September 30, 2001 the 4 AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Unaudited--(Continued) fair value of the Company's derivative instruments represented a liability of approximately $39.8 million and is included in "other long-term liabilities". The Company estimates that approximately $16.5 million of derivative losses (net of tax benefit) included in other comprehensive loss will be reclassified into the statement of operations within the next twelve months. In June 2001, SFAS No. 141, "Business Combinations" was approved by the Financial Accounting Standards Board (FASB). SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. Goodwill and certain intangible assets will remain on the balance sheet and not be amortized. On an annual basis, and when there is reason to suspect that their values have been diminished or impaired, these assets must be tested for impairment, and write-downs may be necessary. The Company has not determined the impact that this statement will have on its consolidated financial position or results of operations. In June 2001, SFAS No. 142, "Goodwill and Other Intangible Assets" was approved by the FASB. SFAS No. 142 changes the accounting for goodwill and certain other intangibles from an amortization method to an impairment-only approach. Amortization of goodwill and certain other intangibles will cease upon adoption of this statement. The Company is required to implement SFAS No. 142 on January 1, 2002 and it has not determined the impact that this statement will have on its consolidated financial position or results of operations. Reclassifications--Certain reclassifications have been made to the 2000 condensed consolidated financial statements and related notes to conform to the 2001 presentation. 2. Income Taxes The Company provides for income taxes at the end of each interim period based on the estimated effective tax rate for the full fiscal year. Cumulative adjustments to the Company's estimate are recorded in the interim period in which a change in the estimated annual effective rate is determined. 3. Inventories Inventories 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 are as follows (in thousands): 5
September 30, 2001 December 31, 2000 ------------------- ----------------- Raw materials............................. $ 28,708 $ 20,887 Finished goods............................ 19,910 25,947 Work in process........................... 1,796 1,038 -------- -------- Total................................... $ 50,414 $ 47,872 ======== ======== AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Unaudited--(Continued) 4. Acquisitions General--The acquisitions consummated during the nine month period ended September 30, 2001 have been accounted for by the purchase method of accounting. The purchase prices have been allocated to the net assets acquired, principally intangible and tangible assets, and the liabilities assumed based on their estimated fair values at the date of acquisition. The excess of purchase price over the estimated fair value of the net assets acquired has been recorded as goodwill and other intangible assets. For certain acquisitions, the condensed consolidated financial statements reflect the preliminary allocation of purchase prices, as the appraisals of assets acquired have not been finalized. The Company does not expect any changes in depreciation and amortization as a result of such appraisals to be material to the Company's consolidated results of operations. During the nine month period ended September 30, 2001, the Company acquired various communication sites and related businesses and satellite and fiber network access service assets for an aggregate preliminary purchase price of approximately $690.9 million. The total purchase price includes the payment of $683.8 million in cash and the issuance of 342,069 shares of Class A common stock valued at approximately $7.1 million. Included in the above are amounts paid by the Company in connection with our agreement with ALLTEL. With the exception of the ALLTEL transaction discussed below, none of the individual acquisitions consummated during the nine months ended September 30, 2001 was deemed significant. The following summarizes the ALLTEL transaction to date. 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 fifteen-year sublease agreement. Under the agreement, the Company will sublease these towers for cash consideration of up to $657.9 million. ALLTEL also granted the Company the option to sublease 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. Under the agreement, the Company has the option to purchase the towers at the end of the fifteen-year term. During the nine months ended September 30, 2001, the Company subleased 1,406 towers and paid ALLTEL $421.8 million in cash. In addition, early in the fourth quarter of 2001, the Company subleased 259 towers and paid ALLTEL approximately $77.7 million in cash. The Company anticipates that it will only exercise its rights to sublease up to 1,850 towers in total under the ALLTEL agreement. The remaining closings are expected to occur during the balance of 2001 and in the first quarter of 2002. The following unaudited pro forma summary for the nine months ended September 30, 2001 and 2000 presents the condensed consolidated results of operations as if all of the acquisitions closing prior to September 30, 2001 (as referred to in the second paragraph of this note) had occurred as of January 1, 2000, after giving effect to certain adjustments, including depreciation and amortization and interest expense on debt incurred to fund the acquisitions. These unaudited pro forma results have been prepared for comparative purposes only and do not purport to be indicative of what would have occurred had the acquisitions been made as of January 1, 2000 or of results which may occur in the future. As of January 1, 2000, the Company had recorded a liability of approximately $1.2 million related primarily to contractual obligations assumed in its acquisition of towers from AT&T. During the nine month period ended 6
Nine Months Nine Months Ended Ended September 30, September 30, 2001 2000 ------------- ------------- In thousands, except per share data: Revenues..................................... $ 838,254 $ 522,713 Net loss before extraordinary losses......... $(317,527) $(176,698) Net loss..................................... $(317,527) $(181,036) Basic and diluted loss per common share before extraordinary losses........................ $ (1.67) $ (1.07) Basic and diluted loss per common share...... $ (1.67) $ (1.09) AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Unaudited--(Continued) September 30, 2001, the Company recorded an additional liability of approximately $7.4 million related primarily to contractual obligations assumed in connection with its acquisition of Interpacket Networks, Inc. During that same period, the Company recorded charges against these liabilities of approximately $2.7 million. In addition, the Company reversed approximately $1.9 million related to these liabilities against goodwill and other intangible assets. As of September 30, 2001, the Company has a remaining liability of approximately $4.0 million all of which is related primarily to contractual obligations assumed in the Interpacket Networks, Inc. acquisition. Since October 1, 2001 (excluding the ALLTEL transaction discussed above), the Company has consummated acquisitions for an aggregate preliminary purchase price of $16.3 million. In addition, the Company is party to various agreements, including the remaining portions of the ALLTEL transaction (not disclosed above), relating to the acquisition of assets and businesses from third parties for an estimated aggregate cost of approximately $68.1 million. Such transactions are subject to the satisfaction of customary closing conditions, which are expected to be met during the balance of 2001 and in the first quarter of 2002. The Company may pursue the acquisition of other properties and businesses in new and existing locations, although we have not entered into any definitive material agreements with respect to such acquisitions. 5. Business Segments The Company operates in three business segments: rental and management (RM), network development services (Services), and satellite and fiber network access services (SFNA). The RM segment provides for leasing and subleasing of antennae sites on multi-tenant towers and the leasing of other properties to a diverse range of customers primarily in the wireless communications and broadcast industries. The Services segment offers a broad range of network development services, including radio frequency engineering, network design, site acquisition, construction, zoning and other regulatory approvals, 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, both domestic and international. The accounting policies applied in compiling segment information below are similar to those described in the Company's 2000 Annual Report on Form 10-K. In evaluating financial performance, management focuses on operating profit (loss), excluding depreciation and amortization, development and corporate general and administrative expenses. This measure of operating profit (loss) is also before interest income and other, net, interest expense, loss on investment in US Wireless, note conversion expense, minority interest in net earnings of subsidiaries, income taxes and extraordinary losses. For reporting purposes, the RM segment includes interest income, TV Azteca, net. The Company's reportable segments are strategic business units that offer different services. They are managed separately because each segment requires different resources, skill sets and marketing strategies. All reported segment revenues are generated from external customers. Summarized financial information concerning the Company's reportable segments as of and for the three and nine months ended September 30, 2001 and 2000 is shown in the following table (in thousands). The "Other" column below represents amounts excluded from specific segments such as income taxes, extraordinary losses, corporate general and administrative expense, development expense, depreciation and amortization, loss on investment in US Wireless, note conversion expense, minority interest in net earnings of subsidiaries and interest. In addition, "Other" includes corporate assets such as cash and cash equivalents, restricted cash and investments, tangible and intangible assets and income tax accounts which have not been allocated to specific segments. 7 AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Unaudited--(Continued)
Three Months Ended September 30, RM Services SFNA Other Total - ------------------ ---------- -------- -------- --------- ---------- 2001 Revenues................. $ 120,032 $118,762 $ 57,402 $ 296,196 Operating profit (loss) ........................ 65,054 13,153 2,049 $(205,194) (124,938) Assets................... 4,783,644 785,979 631,705 717,181 6,918,509 2000 Revenues................. $ 75,535 $ 91,185 $ 42,238 $ 208,958 Operating profit (loss).. 41,807 15,444 10,178 $(106,956) (39,527) Assets................... 3,600,576 566,411 386,072 595,464 5,148,523 6. 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 have been and 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. The Senior Notes rank equally with the Company's convertible notes and rank junior to all indebtedness of its subsidiaries including amounts outstanding under the Company's credit facilities. 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 covenants and ratios 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 have been and will be used to finance the construction of towers, fund pending and future acquisitions and for general corporate purposes. The amount outstanding under the Senior Notes was $1.0 billion as of September 30, 2001 and is included in long-term obligations in the accompanying September 30, 2001 condensed consolidated balance sheet. Mexican credit facility--In February 2001, the Company's Mexican subsidiary consummated a loan agreement that provides 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 commitment 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 (each as defined in the agreement). The loan is due in 2003. The amount outstanding under the Mexican credit facility was approximately $95.0 million as of September 30, 2001 and is included in long-term obligations in the accompanying September 30, 2001 condensed consolidated balance sheet. 8
Nine Months Ended September 30, RM Services SFNA Other Total - ----------------- ---------- -------- -------- --------- ---------- 2001 Revenues................. $ 317,736 $325,705 $178,191 $ 821,632 Operating profit (loss) ........................ 172,741 35,515 8,724 $(517,365) (300,385) Assets................... 4,783,644 785,979 631,705 717,181 6,918,509 2000 Revenues................. $ 192,475 $203,363 $ 95,684 $ 491,522 Operating profit (loss).. 104,428 30,295 21,366 $(296,246) (140,157) Assets................... 3,600,576 566,411 386,072 595,464 5,148,523 AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Unaudited--(Continued) 7. Information Presented Pursuant to the Indenture for the Senior Notes The following table sets forth information that is presented solely to address certain reporting requirements contained in the indenture for the 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 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.
Three Months Ended Nine Months Ended September 30, 2001 September 30, 2001 ----------------------- ----------------------- Restricted Restricted Consolidated Group (1) Consolidated Group (1) ------------ ---------- ------------ ---------- Statement of Operations Data (in thousands): Operating revenues........... $ 296,196 $ 238,794 $ 821,632 $ 643,441 --------- --------- --------- --------- Operating expenses: Operating expenses excluding depreciation and amortization, and development and corporate general and administrative expenses.................... 219,567 164,214 615,399 445,932 Depreciation and amortization................ 118,898 100,296 317,853 267,327 Development expense.......... 1,736 1,701 7,038 6,303 Corporate general and administrative expense...... 7,353 7,353 18,887 18,887 --------- --------- --------- --------- Total operating expenses... 347,554 273,564 959,177 738,449 --------- --------- --------- --------- Loss from operations......... (51,358) (34,770) (137,545) (95,008) Interest expense............. (73,483) (70,543) (210,223) (202,014) Interest income and other, net......................... 720 4,331 13,578 17,339 Interest income, TV Azteca, net of interest expense of $289 and $873 for the three and nine months ended September 30, 2001, respectively ............... 3,627 3,627 10,747 10,747 Loss on investment in US Wireless.................... (1,182) (1,182) (23,408) (23,408) Note conversion expense...... (26,336) (26,336) (26,336) (26,336) Minority interest in net earnings of subsidiaries.... (19) (19) (16) (16) --------- --------- --------- --------- Loss before income taxes and extraordinary losses........ $(148,031) $(124,892) $(373,203) $(318,696) ========= ========= ========= ========= - -------- (1) Corporate overhead allocable to Verestar and interest expense related to intercompany borrowings by Verestar (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 and restricted cash and investments. 9
September 30, 2001 ----------------------- Restricted Consolidated Group ------------ ---------- Balance Sheet Data (in thousands): Cash and cash equivalents.............................. $ 276,094 $ 264,311 Restricted cash and investments........................ 62,225 62,225 Property and equipment, net............................ 3,177,651 2,884,786 Total assets........................................... 6,918,509 6,286,804 Long-term obligations, including current portion....... 3,548,187 3,431,700 Net debt(2)............................................ 3,209,868 3,105,164 Total stockholders' equity............................. 3,016,023 3,016,023 AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Unaudited--(Continued) 8. Comprehensive Loss Other comprehensive loss consists primarily of foreign currency translation adjustments, derivative instruments accounted for as cash flow hedges, and the impact of the Company's adoption of SFAS No. 133 discussed in note 1. The components of the Company's comprehensive loss are as follows (in thousands): 9. 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 an adverse outcome, have a material impact on the Company's consolidated financial position, the results of its operations or liquidity. 10. Loss on Investment in US Wireless During the nine months ended September 30, 2001, the Company wrote-off its entire investment in US Wireless. The majority of the charge, $22.2 million, occurred in the second quarter 2001 as a result of an assessment that a loss in value of the Company's preferred stock investment had occurred that was other than temporary. The remaining portion of the Company's investment, $1.2 million, was written off in the third quarter after US Wireless filed for protection under Chapter 11 of the United States Bankruptcy Code. 11. Convertible Note Exchanges During the third quarter, the Company acquired approximately $82.5 million face amount ($61.6 million carrying amount) of its 2.25% convertible notes. The transactions were pursuant to exchange agreements which the Company negotiated with a limited number of noteholders. Pursuant to these exchange agreements, the Company issued an aggregate of 2.4 million shares of Class A common stock that these noteholders were entitled to receive based on the conversion price set forth in the applicable indenture, plus an additional 1.5 million shares of Class A common stock to induce them to convert their holdings prior to the first scheduled redemption date. As a result of these transactions, in the third quarter the Company recorded a non-cash charge of $26.3 million, which represents the fair market value of the inducement shares. The Company may negotiate similar exchanges for its outstanding convertible notes during the fourth quarter and from time to time in the future, subject to market conditions. To the extent that inducement shares are issued by the Company as part of any future exchanges, the Company expects to record additional non-cash charges. 10
Three Months Ended Nine Months Ended September 30, September 30, ------------------- -------------------- 2001 2000 2001 2000 --------- -------- --------- --------- Net loss............................ $(124,938) $(39,527) $(300,385) $(140,157) Other comprehensive loss, net of tax: Foreign currency translation adjustments and other............ 683 527 Derivative instruments: Net change in fair value of cash flow hedges.................... (12,667) (21,086) Amounts reclassified into results of operations.......... 5,583 6,121 --------- -------- --------- --------- Comprehensive loss before cumulative effect adjustment.................. (131,339) (39,527) (314,823) (140,157) Cumulative effect adjustment recorded upon the adoption of SFAS No. 133 (net of an income tax benefit of $4,227)................. (7,852) --------- -------- --------- --------- Comprehensive loss.................. $(131,339) $(39,527) $(322,675) $(140,157) ========= ======== ========= ========= AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Unaudited--(Continued) 12. Restructuring On November 6, 2001, the Company announced a restructuring of the organization to include a reduction in the scope of its tower development activities and the centralization of certain operating functions. As a result of these initiatives, the Company expects to record a restructuring charge of approximately $41.0 million to $44.0 million. Approximately $9.0 million of the charge is associated with consolidating operations and employee reductions within all of the Company's business segments and includes employee separation costs and office closings. The Company expects to record this component of the charge in the fourth quarter of 2001 and in the first quarter of 2002. The remaining component of the restructuring charge, $32.0 million to $35.0 million, will be a non-cash write off of construction in progress related to project sites that will be abandoned as a result of the overall reduction in the Company's tower construction activity. The entire construction in progress charge will be recorded in the fourth quarter of 2001. 13. Subsequent Events On October 21, 2001, the Company amended its credit facilities agreement to provide for a total borrowing capacity of up to $2.25 billion. That capacity is subject to covenant and ratio restrictions relating to operating cash flow and tower construction cost levels. The credit facilities now include a $650.0 million credit facility (fully available, subject to covenant and ratio restrictions), an $850.0 million multi-draw Term Loan A (fully drawn), a $500.0 million Term Loan B (fully drawn) and a $250.0 million multi-draw Term Loan C (fully available, subject to covenant and ratio restrictions). In addition, on October 11, 2001 the Company consummated the sale of 8.7% of its Mexican subsidiary, ATC Mexico Holding Corp. (ATC Mexico), to J. Michael Gearon, Jr., an executive officer and director of the Company, for $8.4 million. Under the terms of the sale the consideration paid by Mr. Gearon is in the form of $1.7 million in cash and a $6.7 million note. The note, which accrues interest and is payable quarterly, is secured by approximately 411,000 shares of Class A common stock of the Company owned by Mr. Gearon and his interest in ATC Mexico. The purchase price represented the fair market value of an 8.7% interest in ATC Mexico on the date of the sale as determined with the assistance of an independent appraiser. Mr. Gearon may require the Company to purchase his interest in ATC Mexico for its then fair market value, as determined by an independent appraiser, any time after the soonest to occur of July 1, 2004, a Change in Control (as defined in a stockholder agreement) of the Company or ATC Mexico, or Mr. Gearon's death or disability. The Company has the right to purchase Mr. Gearon's interest in ATC Mexico for its then fair market value, as determined by an independent appraiser, after the soonest to occur of July 1, 2005, Mr. Gearon's death or disability or on either a Gearon Termination Event or a Forfeiture Event (each as defined in a stockholder agreement). 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Quarterly Report on Form 10-Q 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," "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 information under the caption entitled "Factors that May Affect Future Results" below for important factors that could cause actual results to differ materially from those indicated by our forward-looking statements made herein. 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. 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, Internet service providers, broadcasters and maritime customers, both domestic and international. Results of Operations As of September 30, 2001, the Company owned and/or operated approximately 13,800 communications sites, as compared to approximately 10,300 communications sites as of September 30, 2000. The acquisitions consummated in 2001 and 2000 have significantly affected operations for the three and nine months ended September 30, 2001, as compared to the three and nine months ended September 30, 2000. See the notes to the condensed consolidated financial statements and the Company's Annual Report on Form 10-K for a description of the acquisitions consummated in 2001 and 2000. 12 Three Months Ended September 30, 2001 and 2000 (dollars in thousands)-- Unaudited Rental and Management Revenue Rental and management revenue for the three months ended September 30, 2001 was $120.0 million, an increase of $44.5 million from the three months ended September 30, 2000. The increase resulted primarily from two factors: the leasing activity on towers acquired and constructed from the period October 1, 2000 to September 30, 2001 and increased leasing activity on towers that existed as of September 30, 2000. From the period October 1, 2000 to September 30, 2001, we acquired approximately 2,200 towers and constructed more than 1,500 towers. Additionally, during that same period, we added approximately 4,900 broadband equivalent tenants to both newly acquired/constructed and existing towers. The Company anticipates that the majority of lease up activity moving into the fourth quarter of 2001 and into 2002 will continue to come from broadband type customers. This acquisition, construction and leasing activity has not only significantly increased revenue, but has also increased the scope, depth and strength of our national and international tower network, providing us with a much larger base of tower revenue for the three months ended September 30, 2001 as compared to the three months ended September 30, 2000. In the fourth quarter of 2001, the Company announced an initiative to reduce the scope of its tower development activities. This reduction will result in a significant decrease in new tower construction in the near term and in a more selective criteria in evaluating acquisitions. The intention of this initiative is twofold: to accelerate our overall return on investment and to preserve capital. We believe in any event, that our existing portfolio will continue to provide us with a solid foundation for future revenue growth. Notwithstanding our proposed scaleback of tower development activities, however, we continue to believe that our leasing revenues, which comprise our core business, 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. 13
Three Months Ended September 30, Amount of Percentage ------------------- Increase Increase 2001 2000 (Decrease) (Decrease) --------- -------- ---------- ---------- Revenues: Rental and management............... $ 120,032 $ 75,535 $44,497 59% Network development services........ 118,762 91,185 27,577 30 Satellite and fiber network access services........................... 57,402 42,238 15,164 36 --------- -------- ------- Total revenues...................... 296,196 208,958 87,238 42 --------- -------- ------- Operating Expenses: Rental and management............... 58,605 37,335 21,270 57 Network development services........ 105,609 75,741 29,868 39 Satellite and fiber network access services........................... 55,353 32,060 23,293 73 --------- -------- ------- Total operating expenses excluding depreciation and amortization, development and corporate general and administrative expenses........ 219,567 145,136 74,431 51 --------- -------- ------- Depreciation and amortization....... 118,898 75,973 42,925 57 Development expense................. 1,736 5,311 (3,575) (67) Corporate general and administrative expense............................ 7,353 3,442 3,911 114 Interest expense.................... 73,483 41,752 31,731 76 Interest income and other, net...... 720 6,560 (5,840) (89) Interest income, TV Azteca, net of $289 and $296 of interest expense, respectively ...................... 3,627 3,607 20 1 Loss on investment in US Wireless... 1,182 1,182 N/A Note conversion expense............. 26,336 26,336 N/A Minority interest in net (earnings) losses of subsidiaries............. (19) 140 (159) (114) Income tax benefit.................. 23,093 12,822 10,271 80 --------- -------- ------- Net loss............................ $(124,938) $(39,527) $85,411 216% ========= ======== ======= Network Development Services Revenue Network development services revenue for the three months ended September 30, 2001 was $118.8 million, an increase of $27.6 million from the three months ended September 30, 2000. The growth in revenues during the three months ended September 30, 2001 as compared to the three months ended September 30, 2000 resulted primarily from increased volume of services such as construction management, installation and related colocation services, tower maintenance services, and an increase in component sales driven primarily from an acquisition. Satellite and Fiber Network Access Services Revenue Satellite and fiber network access services revenue for the three months ended September 30, 2001 was $57.4 million, an increase of $15.2 million from the three months ended September 30, 2000. The majority of the increase resulted from the consummation of several key acquisitions that occurred in 2001 and 2000 including: Publicom, Interpacket Networks and a Satellite Network Access Point (SNAP) facility in Switzerland. These acquisitions significantly increased our service capabilities, revenue base, and geographical scope of customers, leading to significant incremental revenues in 2001. This increase in revenue was partially offset by the non-renewal of service contracts of several key customers and a decrease in demand for services in Latin America and from emerging telecommunications carriers. Rental and Management Expense Rental and management expense for the three months ended September 30, 2001 was $58.6 million, an increase of $21.3 million from the three months ended September 30, 2000. The majority of the increase resulted from incremental operating expenses incurred in the three months ended September 30, 2001 for the more than 3,700 towers that were acquired or constructed from the period October 1, 2000 to September 30, 2001 as discussed above. The balance of the increase reflects, to a lesser extent, increased bad debt expense for the segment as a whole and higher operating expenses for the three months ended September 30, 2001 related to towers that existed as of September 30, 2000. Network Development Services Expense Network development services expense for the three months ended September 30, 2001 was $105.6 million, an increase of $29.9 million from the three months ended September 30, 2000. The increase is primarily due to overall increases in the service volume discussed above, increases in the overhead costs necessary to support both internal construction and external sales and incremental expenses related to the consummation of an acquisition. Satellite and Fiber Network Access Services Expense Satellite and fiber network access services expense for the three months ended September 30, 2001 was $55.4 million, an increase of $23.3 million from the three months ended September 30, 2000. The primary reason for the increase relates to the incremental expenses attributable to the strategic acquisitions discussed above. Other components of the increase include increased personnel and infrastructure costs to help manage the growth of this segment and increased overhead related to the development and marketing of new product lines and, to a lesser extent, increased bad debt expense. Depreciation and Amortization Depreciation and amortization for the three months ended September 30, 2001 was $118.9 million, an increase of $42.9 million from the three months ended September 30, 2000. The principal component of the increase is an increase in depreciation expense of $28.1 million. This is primarily a result of the Company's purchase and acquisition of approximately $1.4 billion of property and equipment from the period October 1, 2000 to September 30, 2001. The other component of the increase is the increased amortization of $14.8 million, resulting from our recording and amortizing approximately $473.7 million of goodwill and other intangible assets related to acquisitions consummated from the period October 1, 2000 to September 30, 2001. 14 Development Expense Development expense for the three months ended September 30, 2001 was $1.7 million, a decrease of $3.6 million from the three months ended September 30, 2000. The majority of the decrease results from reduced expenses related to tower site inspections, data gathering and acquisition integration in the three months ended September 30, 2001. Corporate General and Administrative Expense Corporate general and administrative expense for the three months ended September 30, 2001 was $7.4 million, an increase of $3.9 million from the three months ended September 30, 2000. The majority of the increase is a result of expenses incurred to implement a new company-wide Enterprise Resource Planning (ERP) system, coupled with increased information technology and personnel costs related to supporting the Company's overall growth. Interest Expense Interest expense for the three months ended September 30, 2001 was $73.5 million, an increase of $31.7 million from the three months ended September 30, 2000. The majority of the increase, $26.9 million, resulted primarily from increased borrowings outstanding related to our credit facilities and senior notes, offset by a decrease in interest rates on our credit facilities. The remaining component of the increase represents increases in interest on capital leases and other notes payable and increased deferred financing amortization. Interest Income and Other, net Interest income and other, net for the three months ended September 30, 2001, was $0.7 million, a decrease of $5.8 million from the three months ended September 30, 2000. The decrease relates primarily to increased losses on equity investments and a decrease in interest earned on invested cash on-hand, offset, to a lesser extent, by foreign currency gains. Loss on Investment in US Wireless During the three months ended September 30, 2001, the Company wrote off the remaining portion, $1.2 million, of its investment in US Wireless. The non- cash charge was recorded after US Wireless filed for protection under Chapter 11 of the United States Bankruptcy Code on August 29, 2001. The Company had previously written off $22.2 million of its investment in the second quarter of 2001 after making an assessment that a loss in value in the Company's preferred stock investment had occurred that was other than temporary. Note Conversion Expense During the three months ended September 30, 2001, the Company acquired a portion of its 2.25% convertible notes in exchange for shares of its Class A common stock. As a consequence of those negotiated exchanges with certain of its noteholders, the Company recorded a non-cash charge of $26.3 million. The note conversion expense represents the fair value of incremental stock issued as an inducement to noteholders to convert their holdings prior to the first scheduled redemption date. There were no such exchanges during the three months ended September 30, 2000. See "Liquidity and Capital Resources-- Convertible Note Exchanges" for more information. Income Tax Benefit The income tax benefit for the three months ended September 30, 2001 was $23.1 million, an increase of $10.3 million from the three months ended September 30, 2000. The primary reason for the increase is a result of the increase in our loss before income taxes partially offset by an increase in amortization of non-deductible intangible assets arising from stock acquisitions, non-deductible note conversion expense and the valuation allowance related to our state net operating loss carryforwards. The effective tax rate differs in both periods from the statutory rate primarily due to the valuation allowance related to our state net operating loss carryforwards and the effect of non-deductible items, principally the amortization of intangible assets on certain stock acquisitions and non-deductible note conversion expense on which the Company has recorded no tax benefit. In assessing the realizability of the deferred tax asset, we analyzed our forecast of future taxable income and potential tax planning strategies and concluded that recoverability of the net deferred tax asset is more likely than not. 15 Nine Months Ended September 30, 2001 and 2000 (dollars in thousands)-- Unaudited Rental and Management Revenue Rental and management revenue for the nine months ended September 30, 2001 was $317.7 million, an increase of $125.3 million from the nine months ended September 30, 2000. The increase resulted primarily from two factors: the leasing activity on towers acquired and constructed from the period October 1, 2000 to September 30, 2001 and increased leasing activity on towers that existed as of September 30, 2000. From the period October 1, 2000 to September 30, 2001, we acquired approximately 2,200 towers and constructed more than 1,500 towers. Additionally, during that same period, we added approximately 4,900 broadband equivalent tenants to both newly acquired/constructed and existing towers. The Company anticipates that the majority of lease up activity moving into the fourth quarter and into 2002 will continue to come from broadband type customers. This acquisition, construction and leasing activity has not only significantly increased revenue, but has also increased the scope, depth and strength of our national and international tower network, providing us with a much larger base of tower revenue for the nine months ended September 30, 2001 as compared to the nine months ended September 30, 2000. 16
Nine Months Ended September 30, Amount of Percentage -------------------- Increase Increase 2001 2000 (Decrease) (Decrease) --------- --------- ---------- ---------- Revenues: Rental and management.............. $ 317,736 $ 192,475 $125,261 65% Network development services....... 325,705 203,363 122,342 60 Satellite and fiber network access services.......................... 178,191 95,684 82,507 86 --------- --------- -------- Total revenues..................... 821,632 491,522 330,110 67 --------- --------- -------- Operating Expenses: Rental and management.............. 155,742 97,117 58,625 60 Network development services....... 290,190 173,068 117,122 68 Satellite and fiber network access services.......................... 169,467 74,318 95,149 128 --------- --------- -------- Total operating expenses excluding depreciation and amortization, development and corporate general and administrative expenses....... 615,399 344,503 270,896 79 Depreciation and amortization...... 317,853 198,264 119,589 60 Development expense................ 7,038 10,495 (3,457) (33) Corporate general and administra- tive expense...................... 18,887 9,957 8,930 90 Interest expense................... 210,223 112,339 97,884 87 Interest income and other, net..... 13,578 12,997 581 4 Interest income, TV Azteca, net of $873 and $753 of interest expense, respectively ..................... 10,747 9,070 1,677 18 Loss on investment in US Wireless.. 23,408 23,408 N/A Note conversion expense............ 26,336 16,968 9,368 55 Minority interest in net (earnings) losses of subsidiaries............ (16) 82 (98) (120) Income tax benefit................. 72,818 43,036 29,782 69 Extraordinary losses on extinguish- ment of debt...................... 4,338 (4,338) (100) --------- --------- -------- Net loss........................... $(300,385) $(140,157) $160,228 114% ========= ========= ======== Network Development Services Revenue Network development services revenue for the nine months ended September 30, 2001 was $325.7 million, an increase of $122.3 million from the nine months ended September 30, 2000. The growth in revenues during the nine months ended September 30, 2001 as compared to the nine months ended September 30, 2000 resulted primarily from strategic acquisitions and increased volume for services such as construction management, installation and related colocation services, and tower maintenance services. Satellite and Fiber Network Access Services Revenue Satellite and fiber network access services revenue for the nine months ended September 30, 2001 was $178.2 million, an increase of $82.5 million from the nine months ended September 30, 2000. The majority of the increase resulted from the consummation of several key acquisitions that occurred in 2001 and 2000 including: General Telecom, U.S. Electrodynamics, Publicom, Interpacket Networks and a SNAP facility in Switzerland. These acquisitions significantly increased our service capabilities, revenue base and geographical scope of customers, leading to significant incremental revenues in 2001. This increase in revenue was partially offset by the non-renewal of service contracts of several key customers and a decrease in demand for services in Latin America and from emerging telecommunications carriers. Rental and Management Expense Rental and management expense for the nine months ended September 30, 2001 was $155.7 million, an increase of $58.6 million from the nine months ended September 30, 2000. The majority of the increase resulted from incremental operating expenses incurred in the nine months ended September 30, 2001 for the more than 3,700 towers that were acquired or constructed from the period October 1, 2000 to September 30, 2001 as discussed above. The remaining increase reflects, to a lesser extent, increased bad debt expense for the segment as a whole and higher operating expenses related to towers that existed as of September 30, 2000. Network Development Services Expense Network development services expense for the nine months ended September 30, 2001 was $290.2 million, an increase of $117.1 million from the nine months ended September 30, 2000. The majority of the increase is due to incremental expenses related to the consummation of strategic acquisitions, overall increases in the volume of services work performed, increases in the overhead costs necessary to support both internal construction and external sales and, to a lesser extent, increased bad debt expense. Satellite and Fiber Network Access Services Expense Satellite and fiber network access services expense for the nine months ended September 30, 2001 was $169.5 million, an increase of $95.1 million from the nine months ended September 30, 2000. The majority of the increase is due to incremental expenses related to the consummation of the strategic acquisitions discussed above. Other components of the increase include increased personnel and infrastructure costs to help manage the growth of this segment, increased overhead related to the development and marketing of new product lines and, to a lesser extent, increased bad debt expense. Depreciation and Amortization Depreciation and amortization for the nine months ended September 30, 2001 was $317.9 million, an increase of $119.6 million from the nine months ended September 30, 2000. The principal component of the increase is an increase in depreciation expense of $71.3 million. This is primarily a result of the Company's purchase and acquisition of approximately $1.4 billion of property and equipment from the period October 1, 2000 to September 30, 2001. The other component of the increase is the increased amortization of $48.3 million, resulting from our recording and amortizing approximately $473.7 million of goodwill and other intangible assets related to acquisitions consummated from the period October 1, 2000 to September 30, 2001. Development Expense Development expense for the nine months ended September 30, 2001 was $7.0 million, a decrease of $3.5 million from the nine months ended September 30, 2000. The decrease resulted primarily from reduced 17 tower site inspection, data gathering costs and acquisition integration expenses incurred in the nine months ended September 30, 2001. Corporate General and Administrative Expense Corporate general and administrative expense for the nine months ended September 30, 2001 was $18.9 million, an increase of $8.9 million from the nine months ended September 30, 2000. The majority of the increase is a result of expenses incurred to implement a new company-wide ERP system, coupled with increased information technology and personnel costs related to supporting the Company's overall growth. Interest Expense Interest expense for the nine months ended September 30, 2001 was $210.2 million, an increase of $97.9 million from the nine months ended September 30, 2000. The majority of the increase, $84.2 million, resulted primarily from increased borrowings outstanding related to our credit facilities and senior notes, offset by a decrease in interest rates on our credit facilities. The remaining component of the increase represents interest on capital leases and other notes payable and additional deferred financing amortization. Interest Income and Other, net Interest income and other, net for the nine months ended September 30, 2001, was $13.6 million, an increase of $0.6 million from the nine months ended September 30, 2000. The increase resulted primarily from interest earned on invested cash on hand, offset by losses on equity investments and decreases in the fair value of derivative instruments not accounted for as hedges. Interest Income, TV Azteca, net Interest income, TV Azteca, net for the nine months ended September 30, 2001 was $10.7 million, an increase of $1.7 million from the nine months ended September 30, 2001. The increase results from interest earned on the entire principal amount of the note, $119.0 million, during the nine months ended September 30, 2001 as compared to less than the entire principal amount of the note outstanding for a portion of the nine months ended September 30, 2000. Loss on Investment in US Wireless During the nine months ended September 30, 2001, the Company wrote off its entire investment in US Wireless. The non-cash charge resulted from an assessment that a loss in value on its preferred stock investment had occurred that was other than temporary. Note Conversion Expense During the nine months ended September 30, 2001, the Company acquired a portion of its 2.25% convertible notes in exchange for shares of its Class A common stock. As a consequence of these negotiated exchanges with certain of its noteholders, the Company recorded a non-cash charge of $26.3 million. In a similar transaction during the nine-month period ended September 30, 2000, the Company acquired a portion of its 6.25% and 2.25% convertible notes in exchange for shares of its Class A common stock. As a result, the Company recorded a non-cash charge of $17.0 million during that period. These charges represent the fair value of incremental stock issued as an inducement to noteholders to convert their holdings prior to the first scheduled redemption date. Income Tax Benefit The income tax benefit for the nine months ended September 30, 2001 was $72.8 million, an increase of $29.8 million from the nine months ended September 30, 2000. The primary reason for the increase is a result of the increase in our loss before income taxes and extraordinary losses partially offset by an increase in amortization of non-deductible goodwill arising from stock acquisitions, non-deductible note conversion expense 18 and the valuation allowance related to our state net operating loss carryforwards. The effective tax rate differs in both periods from the statutory rate primarily due to the valuation allowance related to our state net operating loss carryforwards and the effect of non-deductible items, principally the amortization of intangible assets on certain stock acquisitions and non-deductible note conversion expense on which the Company has recorded no tax benefit. In assessing the realizability of the deferred tax asset, we analyzed our forecast of future taxable income and potential tax planning strategies and concluded that recoverability of the net deferred tax asset is more likely than not. Extraordinary Losses on Extinguishment of Debt, net The Company incurred extraordinary losses on the extinguishment of debt, net in the first quarter 2000 of $4.3 million. The losses were incurred as a result of an amendment and restatement of our primary credit facility ($3.0 million, net of a tax benefit of $2.0 million) and our early retirement of debt assumed as part of the UNISite, Inc. merger ($1.3 million, net of a tax benefit of $1.0 million). Restructuring On November 6, 2001, the Company announced a restructuring of the organization to include a reduction in the scope of its tower development activities and the centralization of certain operating functions. As a result of these initiatives, the Company expects to record a restructuring charge of approximately $41.0 million to $44.0 million. Approximately $9.0 million of the charge is associated with consolidating operations and employee reductions within all of the Company's business segments and includes employee separation costs and office closings. The Company expects to record this component of the charge in the fourth quarter of 2001 and in the first quarter of 2002. The remaining component of the restructuring charge, $32.0 million to $35.0 million, will be a non-cash write off of construction in progress related to project sites that will be abandoned as a result of the overall reduction in the Company's tower construction activity. The entire construction in progress charge will be recorded in the fourth quarter of 2001. Liquidity and Capital Resources Our liquidity needs arise from our acquisition-related activities, debt service, working capital needs, and capital expenditures associated principally with our tower construction program. As of September 30, 2001, we had approximately $338.3 million in cash and cash equivalents (including $62.2 million of restricted cash), working capital of approximately $436.3 million and approximately $330.0 million of borrowings available under our credit facilities after giving effect to covenants and ratio restrictions. Historically, we have met our operational liquidity needs primarily with internally generated funds and bank borrowings and have financed our acquisitions and our construction program with a combination of capital funds from sales of our equity and debt securities and bank borrowings. Through the remainder of 2001 and into 2002 we expect that operational liquidity needs will continue to be met as they have in the past. However, we expect that acquisition and construction programs which will be on a reduced scale from prior levels will be financed with available cash and bank borrowings. If funding through the equity and debt markets can be obtained on attractive terms, we would consider financing our acquisition and construction activity by such means. Our 2001 capital expenditures are expected to be approximately $575.0 million to $600.0 million ($442.0 million of which has already been incurred as of September 30, 2001). This includes towers to be built under existing build-to-suit agreements. In addition, as of September 30, 2001, we were subject to various agreements relating to acquisitions of assets (including ALLTEL) or businesses from various third parties that were pending. Based on these agreements, we expect to close $162.1 million in transactions during the fourth quarter of 2001 and the first quarter of 2002. Lastly, we believe that debt service requirements will be significant for the remainder of 2001 and into the forseeable future. We believe our current cash and cash equivalents (including restricted cash and investments) and anticipated borrowing capacity under our credit facilities will be sufficient to meet these cash requirements. 19 For the nine months ended September 30, 2001, cash flows used for operating activities were $21.0 million, as compared to cash flows used for operating activities of $37.8 million for the nine months ended September 30, 2000. The change is primarily related to a decreased investment in working capital. For the nine months ended September 30, 2001, cash flows used for investing activities were $1.2 billion, as compared to $1.6 billion for the nine months ended September 30, 2000. The decrease in 2001 is primarily due to a decrease in cash expended for mergers and acquisitions, offset by an increase in property and equipment expenditures. For the nine months ended September 30, 2001, cash flows provided by financing activities were $1.4 billion as compared to $1.8 billion for the nine months ended September 30, 2000. The decrease is primarily related to a reduction in the aggregate net cash inflows from bank borrowings and external debt and equity offerings. As of September 30, 2001, we had outstanding indebtedness of $3.5 billion, certain of which is described below under "Credit Facilities" and "Equity Offering and Note Placement". As of September 30, 2001, we had outstanding $212.7 million principal amount of our 6.25% convertible notes due October 15, 2009, $202.5 million principal amount of our 2.25% convertible notes due October 15, 2009, $450.0 million principal amount of our 5% convertible notes due February 1, 2010 and other debt of approximately $237.8 million. 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. In October 2001, we amended our credit facilities to provide us with a borrowing capacity of up to $2.25 billion. Borrowings under the credit facilities are subject to certain covenant and ratio restrictions, relating to operating cash flow and tower construction cost levels. The credit facilities now include a $650.0 million credit facility which was fully available (subject to the covenant and ratio restrictions) as of September 30, 2001, maturing on June 30, 2007, an $850.0 million multi-draw Term Loan A, which was fully drawn as of September 30, 2001, maturing on June 30, 2007, a $500.0 million Term Loan B, which was fully drawn as of September 30, 2001 maturing on December 31, 2007 and a multi-draw $250.0 million Term Loan C, which was not available to the Company on September 30, 2001, but is fully available now (subject to covenant and ratio restrictions). 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 restricted subsidiaries must comply, whether or not there are any borrowings outstanding. The parent company is also restricted with respect to indebtedness. 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 interest reserves 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 September 30, 2001 we had approximately $62.2 million of restricted cash and investments related to such interest reserves. 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 commitment will be reduced on a dollar-for-dollar basis if additional lenders join the ATC Mexico loan agreement. This loan agreement 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 the 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 September 30, 2001, an aggregate of $95.0 million was outstanding under the loan agreement. 20 Equity Offering and Note Placement. 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 senior notes that mature in February 2009 for total net proceeds of $969.0 million. These notes require semiannual interest payments and contain certain financial and operational covenants and other restrictions similar to those in our credit facilities. We have used and will use the proceeds from these two transactions to finance the construction of towers, fund pending and future acquisitions and for general corporate purposes. Convertible Note Exchanges. In the third quarter of 2001, the Company acquired a portion of its outstanding convertible notes. During this period, approximately $82.5 million in face amount ($61.6 million carrying amount) of the Company's 2.25% convertible notes was converted into shares of Class A common stock. All of these conversions were pursuant to exchange agreements which the Company negotiated with a limited number of noteholders. Pursuant to these exchange agreements, the Company has issued an aggregate of 2.4 million shares of Class A common stock that these noteholders were entitled to receive based on the conversion price set forth in the applicable indenture, plus an additional 1.5 million shares of Class A common stock to induce them to convert their holdings prior to the first scheduled redemption date. As a result of these transactions, in the third quarter of 2001 the Company recorded a non-cash charge of $26.3 million, which represents the fair market value of the inducement shares. The Company may negotiate similar exchanges for its outstanding convertible notes during the fourth quarter of 2001 and from time to time in the future, subject to market conditions. To the extent that inducement shares are issued by the Company as part of any future exchanges, the Company expects to record additional non-cash charges. ATC Separation--We continue to be obligated under the ATC Separation agreement for certain tax liabilities to CBS Corporation and American Radio Systems. As of September 30, 2001 no material matters covered under this indemnification have been brought to our attention. Acquisitions and Construction. In the fourth quarter of 2001, the Company announced an initiative to reduce the scope of our tower development activities. This reduction will result in a significant decrease in new tower construction in the near term and in a more selective criteria in evaluating future development and acquisitions. The intention of this initiative is twofold: to accelerate our overall return on investment and to preserve capital. We continue to believe that our 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 September 30, 2001, we were a party to various agreements relating to the acquisition 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 (see note 4 of the condensed consolidated financial statements). Economic Conditions. The slow down in the economy could reduce consumer demand for wireless services or negatively impact the availability of debt and equity capital, thereby causing providers to delay or abandon implementation of new systems and technologies. We believe that the economic slow down in 2001 has harmed, and may continue to harm, the financial condition of some wireless service providers, certain of which, including customers of ours, have filed for bankruptcy. 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 market value of a derivative (that is unrealized gains or losses) is recorded as a component of an entity's net income or other comprehensive income, depending upon designation (as defined in the statement). Such adoption resulted in a charge to other comprehensive income of $7.9 million, net of tax, from the cumulative effect of adopting this standard. 21 The Company is exposed to interest rate risk relating to variable interest rates on its credit facilities. As part of its overall strategy to manage the level of exposure to the risk of interest rate fluctuations, the Company uses interest rate swaps, caps and collars, which qualify and are designated as cash flow hedges. The Company also uses swaptions to manage interest rate risk, which have not been designated as cash flow hedges. During the nine months ended September 30, 2001, the Company recorded an unrealized loss, excluding the charge for the cumulative effect of adopting SFAS No. 133, of approximately $21.1 million (net of a tax benefit of approximately $11.4 million) in other comprehensive loss for the change in fair value of cash flow hedges and reclassified $6.1 million (net of a tax benefit of approximately $3.3 million) into results of operations. Hedge ineffectiveness resulted in a gain of approximately $1.6 million for the nine months ended September 30, 2001 and was recorded in "interest income and other, net". The Company records the changes in fair value of its derivative instruments that are not accounted for as hedges in "interest income and other, net". At September 30, 2001 the fair value of the Company's derivative instruments represented a liability of approximately $39.8 million and is included in "other long-term liabilities". The Company estimates that approximately $16.5 million of derivative losses (net of tax benefit) included in other comprehensive loss will be reclassified into the statement of operations within the next twelve months. In June 2001, SFAS No. 141, "Business Combinations" was approved by the Financial Accounting Standards Board (FASB). SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. Goodwill and certain intangible assets will remain on the balance sheet and not be amortized. On an annual basis, and when there is reason to suspect that their values have been diminished or impaired, these assets must be tested for impairment, and write-downs may be necessary. The Company has not determined the impact that this statement will have on its consolidated financial position or results of operations. In June 2001, SFAS No. 142, "Goodwill and Other Intangible Assets" was approved by the FASB. SFAS No. 142 changes the accounting for goodwill and certain other intangibles from an amortization method to an impairment-only approach. Amortization of goodwill and certain other intangibles will cease upon adoption of this statement. The Company is required to implement SFAS No. 142 on January 1, 2002 and it has not determined the impact that this statement will have on its consolidated financial position or results of operations. 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. This number could be affected by the easing of spectrum limitation restrictions by the FCC; . 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; 22 . zoning, environmental and other government regulations; . any new legislation, or interpretation of existing federal communications laws, that would give wireless service providers the right to place their antennae on public utility poles and other structures at regulated rates; 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. CONTINUATION OF THE CURRENT U.S. ECONOMIC SLOW DOWN COULD MATERIALLY AND ADVERSELY AFFECT OUR BUSINESS The significant general slow down in the U.S. economy has negatively affected the factors described in the prior heading, influencing demand for tower space and tower related services. For example, this slow down could reduce consumer demand for wireless services, or negatively impact the debt and equity markets, thereby causing providers to delay or abandon implementation of new systems and technologies. We believe that the economic slow down in 2001 has already harmed, and may continue to harm, the financial condition of some wireless service providers, certain of which, including customers of ours, have filed for bankruptcy. OUR SUBSTANTIAL LEVERAGE AND DEBT SERVICE OBLIGATIONS MAY ADVERSELY AFFECT OUR CASH FLOW AND OUR ABILITY TO MAKE PAYMENTS ON OUR INDEBTEDNESS As of September 30, 2001, we had outstanding $3.5 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, primarily for our reduced but nevertheless significant construction program. 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 DOMESTIC CREDIT FACILITIES AND OUR SENIOR NOTES COULD ADVERSELY AFFECT OUR BUSINESS BY LIMITING FLEXIBILITY The indenture for our senior notes and our domestic credit facilities contain restrictive covenants that limit our ability to borrow funds and to take various other 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; 23 . issuing stock of some types of subsidiaries; . making specified types of 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. In particular, if our debt covenants restricted our ability to borrow additional funds we might be required to curtail our construction activities with adverse consequences. See "If we are unable to construct or acquire new towers at the pace, in the locations and at the costs we desire, our business would be adversely affected" below. 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 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, 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 CONSTRUCTION PROGRAM INCREASES OUR EXPOSURE TO RISKS THAT COULD INCREASE COSTS AND ADVERSELY AFFECT OUR EARNINGS AND GROWTH Our construction activities involve substantial risks. These risks include: . increasing our debt and the amount of payments required on it; . 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 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, thereby incurring substantial penalties and possibly contract terminations. In addition, 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; 24 . 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 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 teleport businesses. We cannot assure you, however, that we will be able to integrate successfully acquired businesses and assets into our existing business. Our growth has placed, and will continue to place, a significant strain on our management and our 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. EXPANDING OPERATIONS INTO FOREIGN COUNTRIES COULD CREATE EXPROPRIATION, GOVERNMENTAL REGULATION, FUNDS INACCESSIBILITY, FOREIGN EXCHANGE EXPOSURE AND MANAGEMENT PROBLEMS Our expansion into Mexico and Brazil, 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 have acquired and are constructing a sizable number of towers in that country. We also acquired the rights to 156 communications towers in Brazil and entered into a build-to-suit agreement for an additional 400 towers in that country. As a result of acquisitions by Verestar, we have network operation centers in Europe, Asia, South America and Africa. 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 these operations. 25 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 Communications 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 As the owner, lessee and operator of real property and facilities, we are subject to federal, state and local and foreign environmental laws relating to the management, use, storage, disposal, emission and remediation of, and exposure to, hazardous and non-hazardous substances, materials and waste. We are also subject to related registration, permitting, record keeping and financial assurance requirements. See "Legal Proceedings" for a description of a civil complaint filed against us by the District Attorney for the County of Santa Clara, California regarding certain alleged recordkeeping, registration, hazardous materials management and filing violations under California environmental laws. Various environmental laws require us to investigate, remove or remediate soil and groundwater contaminated by hazardous substances or wastes on property we own or lease or which is associated with tower operations, and may subject us to penalties and fines for violations of those environmental laws. Some of those laws impose cleanup responsibility and liability without regard to whether the owner, lessee or operator of the property or facility knew of or was responsible for the contamination, or whether operations at the property have been discontinued or the property has been transferred. The owner, lessee or operator of contaminated property 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, lease or operation of our properties, we may be liable for those types of environmental costs. Fines or penalties resulting from any failure to comply with those environmental laws and addressing claims or obligations arising under them could have a material adverse effect on our financial condition, results of operations and liquidity. OUR BUSINESS IS SUBJECT TO GOVERNMENT REGULATIONS AND CHANGES IN CURRENT OR FUTURE LAWS OR REGULATIONS COULD HARM OUR BUSINESS 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 licenses and regulates wireless communication devices and television and radio stations operating from towers. Similar regulations exist in Mexico and other foreign jurisdictions regarding wireless communications and the operation of communications towers. As previously disclosed, we entered into a Consent Decree with the FCC in August 2001 which requires us to maintain an approved compliance program for 3 years. Failure to comply with these applicable regulatory requirements and the terms of the Consent Decree may lead to monetary penalties and other sanctions, including being disqualified from holding licenses for our Verestar business or registrations for our towers 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. 26 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. 27 Information Presented Pursuant to the Indenture for the Senior Notes 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 for us on a consolidated basis and on a restricted group basis, which means only for the Company and its subsidiaries that comprise the restricted group under the indenture. 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.
Three months ended Nine months ended September 30, 2001 September 30, 2001 ----------------------- ----------------------- Restricted Restricted Consolidated Group (1) Consolidated Group(1) ------------ ---------- ------------ ---------- Statement of Operations Data (in thousands): Operating revenues........... $ 296,196 $ 238,794 $ 821,632 $ 643,441 --------- --------- --------- --------- Operating expenses: Operating expenses excluding depreciation and amortization, and development and corporate general and administrative expenses.................... 219,567 164,214 615,399 445,932 Depreciation and amortization................ 118,898 100,296 317,853 267,327 Development expense.......... 1,736 1,701 7,038 6,303 Corporate general and administrative expense...... 7,353 7,353 18,887 18,887 --------- --------- --------- --------- Total operating expenses... 347,554 273,564 959,177 738,449 --------- --------- --------- --------- Loss from operations......... (51,358) (34,770) (137,545) (95,008) Interest expense............. (73,483) (70,543) (210,223) (202,014) Interest income and other, net......................... 720 4,331 13,578 17,339 Interest income, TV Azteca, net of interest expense of $289 and $873 for the three and nine months ended September 30, 2001, respectively................ 3,627 3,627 10,747 10,747 Loss on investment in US Wireless.................... (1,182) (1,182) (23,408) (23,408) Note conversion expense...... (26,336) (26,336) (26,336) (26,336) Minority interest in net earnings of subsidiaries.... (19) (19) (16) (16) --------- --------- --------- --------- Loss before income taxes and extraordinary losses........ $(148,031) $(124,892) $(373,203) $(318,696) ========= ========= ========= ========= - -------- (1) Corporate overhead allocable to Verestar and interest expense related to intercompany borrowings by Verestar (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 and restricted cash and investments. 28
September 30, 2001 ----------------------------- Consolidated Restricted Group ------------ ---------------- Balance Sheet Data (in thousands): Cash and cash equivalents....................... $ 276,094 $ 264,311 Restricted cash and investments................. 62,225 62,225 Property and equipment, net..................... 3,177,651 2,884,786 Total assets.................................... 6,918,509 6,286,804 Long-term obligations, including current portion........................................ 3,548,187 3,431,700 Net debt(2)..................................... 3,209,868 3,105,164 Total stockholders' equity...................... 3,016,023 3,016,023 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 senior notes, are as follows: 29
Tower Cash Flow, for the three months ended September 30, 2001..... $ 65,054 ========= Consolidated Cash Flow, for the twelve months ended September 30, 2001.............................................................. $ 255,568 Less: Tower Cash Flow, for the twelve months ended September 30, 2001............................................................ (219,905) Plus: four times Tower Cash Flow, for the three months ended September 30, 2001.............................................. 260,216 --------- Adjusted Consolidated Cash Flow, for the twelve months ended September 30, 2001................................................ $ 295,879 ========= Non-Tower Cash Flow, for the twelve months ended September 30, 2001.............................................................. $ 25,342 ========= ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risk from changes in interest rates on our long- term debt obligations. We attempt to reduce these risks by utilizing derivative financial instruments, namely interest rate caps, swaps, collars and swaptions pursuant to our policies. All derivative financial instruments are for purposes other than trading. For the nine months ended September 30, 2001, we increased our borrowings under our credit facilities by approximately $95.0 million. In addition, we completed a private placement of $1.0 billion of our senior notes issued at 100% of their face amount. The proceeds from the above have and will be used to finance construction and acquisitions. In the short-term, we invested any unused proceeds in marketable debt securities, commercial paper and cash and cash equivalents. In June 2001 we entered into an interest rate collar agreement with a total notional amount of $47.5 million expiring in June 2003. Lastly, in August 2001 the Company acquired an aggregate of $82.5 million face amount ($61.6 million carrying amount) of its 2.25% convertible notes for shares of its Class A common stock. The following table provides information as of September 30, 2001 about our market risk exposure associated with changing interest rates. For long-term debt obligations, the table presents principal cash flows and related average interest rates by contractual maturity dates. For interest rate caps, swaps, collars and swaptions, the table presents notional principal amounts and weighted-average interest rates by contractual maturity dates. Twelve Month Period Ended September 30, Principal Payments and Interest Rate Detail by Contractual Maturity Dates (in thousands) - -------- (a) September 30, 2001 variable rate debt consists of our domestic and Mexican credit facilities ($1.45 billion) and fixed rate debt consists of the 2.25% and 6.25% convertible notes ($415.2 million), the 5.0% convertible notes ($450.0 million) and the senior notes ($1.0 billion). Interest on the credit facilities is payable in accordance with the applicable London Interbank Offering Rate (LIBOR) agreement or quarterly and accrues at our option either at LIBOR plus margin (as defined) or the Base Rate plus margin (as defined). The average interest rate in effect at September 30, 2001 for the credit facilities was 6.54%. For the nine months ended September 30, 2001, the weighted average interest rate under the credit facilities was 7.91%. 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%. Interest on the 2.25% and 6.25% notes is payable semiannually on April 15 and October 15 of each year. The 5.0% convertible notes bear interest at 5.0% which is payable semiannually on February 15 and August 15 of each year. The senior notes bear interest at 9 3/8% which is payable semiannually on February 1 and August 1 of each year beginning August 1, 2001. (b) Represents the weighted-average fixed 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 and $47,500 that will expire in May and June 2003, respectively. 30
Long-Term Debt 2002 2003 2004 2005 2006 Thereafter Total Fair Value - -------------- ---------- ---------- -------- -------- -------- ---------- ---------- ---------- Fixed Rate Debt(a)...... $ $ $ $ $ $1,865,211 $1,865,211 $1,493,128 Average Interest Rate(a)................ 7.62% Variable Rate Debt(a)... $ $ 137,000 $158,000 $230,250 $252,563 $ 667,187 $1,445,000 $1,445,000 Aggregate Notional Amounts Associated with Interest Rate Caps, Swaps, Collars and Swaptions in Place during the Twelve Month Period Ended September 30, and Interest Rate Detail by Contractual Maturity Dates (in thousands) Interest Rate CAPS - ------------------ Notional Amount......... $364.980(c) Cap Rate................ 9.00% Interest Rate SWAPS - ------------------- Notional Amount......... $395,000(d) $365,000(e) $ (20,427) Weighted- Average Fixed Rate Payable(b)............. 6.69% 6.67% Interest Rate COLLARS - --------------------- Notional Amount......... $512,500(f) $232,500(g) $ (19,404) Weighted- Average Below Floor Rate Payable, Above Cap Rate Receivable(b)..... 6.14%-8.54% 5.51%-7.62% As discussed above, we maintain a portion of our cash and cash equivalents and short-term investments in financial instruments that are subject to interest rate risks. Due to the relatively short duration of such instruments, fluctuations in interest rates should not materially affect our financial condition or results of operations. The effect of foreign currency fluctuations on our foreign operations, which primarily include Mexico and Brazil, have not been significant to date. This has been the case in Mexico primarily because most contracts are denominated in U.S. dollars, and in Brazil because we are in the early stages of developing our network. Accordingly, foreign currency risk has not been material for the nine months ended September 30, 2001. 31 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS As previously disclosed by the Company in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2001, on April 23, 2001 the District Attorney for the County of Santa Clara, California filed a civil complaint against the Company in the Superior Court of California. The complaint alleges record keeping, registration, hazardous materials management and filing violations under California environmental laws. The complaint does not allege any contamination of the environment occurred as a result of the alleged violations. The Company has taken measures to ensure that these sites are in compliance with applicable California environmental laws and believes that they are currently in compliance with such laws. On May 23, 2001, the Company filed an answer to the complaint formally denying the allegations. The Company believes that the resolution of the violations alleged in the complaint will not have a material adverse effect on its financial conditions or results of operations. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS In the third quarter of 2001, the Company entered into exchange agreements with a limited number of holders of the Company's 2.25% convertible notes due 2009 (the "2.25% Notes"). Pursuant to the exchange agreements, the noteholders exchanged an aggregate of $82.5 million face amount of the Company's 2.25% Notes for an aggregate of 3,962,537 shares of the Company's Class A common stock in reliance upon the exemption from registration set forth in Section 3(a)(9) of the Securities Act. No underwriters were engaged in connection with such issuances. On October 4, 2001, the Company consummated an acquisition pursuant to which the Company issued an aggregate of 35,325 shares of Class A Common Stock as consideration for the acquisition. The Company issued these shares in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933. As a basis for doing so, the Company relied on the following facts: (1) the Company offered the securities to a limited number of offerees without any general solicitation, (2) the Company obtained representations from the purchasers regarding their financial suitability and investment intent, and (3) the Company issued all of the securities with restrictive legends on the certificates to limit resales. ITEM 5. OTHER INFORMATION The following information updates the status of the ALLTEL transaction as previously disclosed by us in Current Reports on Form 8-K filed on December 20, 2000, April 17, 2001, June 11, 2001, July 9, 2001, September 14, 2001 and October 4, 2001 and in Quarterly Reports on Form 10-Q filed by us on May 15, 2001 and August 14, 2001. On November 2, 2001, we closed on the sublease of 149 towers pursuant to our agreement with ALLTEL. These towers were used by ALLTEL primarily in connection with its business of providing consumer wireless services. We plan to lease space on the towers to third parties. In connection with this closing, we paid consideration of approximately $44.7 million in cash. The amount of consideration and the terms of the agreement were based upon arms- length negotiations between unaffiliated parties. There are no material relationships between us and ALLTEL or any of its respective affiliates, officers or directors. We financed the transaction through available cash-on- hand, including proceeds from our January 2001 equity and debt financings. For more information about our agreement with ALLTEL, see our Current Reports on Form 8-K filed on December 20, 2000, April 17, 2001, June 11, 2001, July 9, 2001, September 14, 2001 and October 4, 2001; our Quarterly Reports on Form 10-Q filed May 15, 2001 and August 14, 2001; note 4 to the condensed consolidated financial statements set forth herein; and the exhibits incorporated by reference into this Quarterly Report on Form 10-Q. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. Listed below are the exhibits which are filed as part of this Form 10-Q (according to the number assigned to them in Item 601 of Regulation S-K). 32 (b) Reports on Form 8-K. During the quarter ended September 30, 2001, the Registrant filed with the Commission the following Current Reports on Form 8-K: 1.Form 8-K (Item 2) filed on July 9, 2001. 2.Form 8-K (Item 9) filed on September 6, 2001. 3.Form 8-K (Item 2) filed on September 14, 2001. 33
Exhibit No. Description of Exhibit ----------- ---------------------- 10.1 Amended and Restated Registration Rights Agreement, dated as of February 25, 1999, by and among American Tower Corporation and each of the Parties named therein. 10.2 Amended and Restated Loan Agreement dated as of January 6, 2000, by and 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 (incorporated by reference to Exhibit 10.1 from the Registrant's Current Report on Form 8-K (File No. 001-14195) filed on January 28, 2000). 10.3 First Amendment and Waiver Agreement, dated as of February 9, 2000, by and 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 (incorporated by reference to Exhibit 10.1 from the Registrant's Quarterly Report on Form 10-Q (File No. 001-14195) filed on November 13, 2000). 10.4 Second Amendment to Amended and Restated Loan Agreement, dated as of May 11, 2000, by and 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 (incorporated by reference to Exhibit 10.2 from the Registrant's Quarterly Report on Form 10-Q (File No. 001- 14195) filed on November 13, 2000). 10.5 Waiver and Third Amendment to Amended and Restated Loan Agreement, dated as of October 13, 2000, by and 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 (incorporated by reference to Exhibit 10.3 from the Registrant's Quarterly Report on Form 10-Q (File No. 001- 14195) filed on November 13, 2000). 10.6 Fourth Amendment to Amended and Restated Loan Agreement, dated as of January 23, 2000, by and among American Tower, L.P., American Towers, Inc. and Verestar, Inc., as Borrowers, and Toronto Dominion (Texas) Inc., as Administrative Agent, and the banks party thereto (incorporated by reference to Exhibit 10.5 from the Registrants' Registration Statement on Form S-4 (File No. 333-59852)). 10.7 Fifth Amendment and Waiver to Amended and Restated Loan Agreement, dated as of March 26, 2001, by and among American Tower, L.P., American Towers, Inc. and Verestar, Inc., as Borrowers, and Toronto Dominion (Texas) Inc., as Administrative Agent, and the banks party thereto (incorporated by reference to Exhibit 10.6 from the Registrants' Registration Statement on Form S-4 (File No. 333-59852)). 10.8 Sixth Amendment to Amended and Restated Loan Agreement, dated as of October 26, 2001, by and among American Tower, L.P., American Towers, Inc., Verestar, Inc., and Towersites Monitoring, Inc., as Borrowers and Toronto Dominion (Texas) Inc., as Administrative Agent, and the banks party thereto. 10.9 Notice of Incremental Facility Commitment, dated as of October 26, 2001, by and among American Towers, Inc., American Tower, L.P., Verestar, Inc., Towersites Monitoring, Inc., and American Tower International, Inc., as Borrowers and Toronto Dominion (Texas) Inc., as Administrative Agent, and the banks party thereto.SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. American Tower Corporation By: /s/ Joseph L. Winn Date: November 14, 2001 ---------------------------------- Joseph L. Winn Chief Financial Officer and Treasurer (Duly Authorized Officer) Date: November 14, 2001 By: /s/ Justin D. Benincasa ---------------------------------- Justin D. Benincasa Senior Vice President and Corporate Controller (Duly Authorized Officer) 34
Exhibit 10.1 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT AMONG AMERICAN TOWER CORPORATION and THE STOCKHOLDERS NAMED HEREIN February 25, 1999 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT This Amended and Restated Registration Rights Agreement (this "Agreement") is made and entered into as of February 25, 1999, by and among American Tower Corporation, a Delaware corporation ("ATC"), and the undersigned Persons which have heretofore agreed to acquire or have acquired the Registrable Securities (individually a "Stockholder" and collectively the "Stockholders" which term is further defined in Section 12(a)). WHEREAS, American Tower Systems Corporation (now known as American Tower Corporation) and certain of the Stockholders are parties to a Registration Rights Agreement, dated as of January 22, 1998 (the "Original Registration Rights Agreement"); and WHEREAS, ATC and the Stockholders desire to amend and restate the Original Registration Rights Agreement in its entirety to make certain changes to the Original Registration Rights Agreement; and WHEREAS, ATC has entered into and may in the future enter into agreements pursuant to which it has agreed or will have agreed to issue securities the holders of which have required or will require registration rights of a nature set forth in this Agreement; NOW, THEREFORE, in consideration of the recitals, the mutual covenants and agreements herein contained, and other valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby covenant and agree as follows: 1. Registration of Securities. (a) Registration by ATC. If at any time or from time to time ATC shall propose to file on its behalf or on behalf of any of its security holders a registration statement under the Securities Act with respect to any class of Common Stock, except in connection with an Excluded Offering, ATC shall, except to the extent not required to do so pursuant to the provisions of Section 1(d) or 1(e), in each case: (i) promptly give written notice to each Stockholder at least thirty (30) days (or such shorter period as ATC deems reasonable under the circumstances) before the anticipated filing date. Such notice shall include the anticipated offering price or range thereof and the plan of distribution; (ii) include in such registration (and any related qualification under blue sky or other state securities laws), and, at the request of a Stockholder, in any underwriting involved therein, all Registrable Securities specified in a written request or requests, made within ten (10) business days after such written notice from ATC, by any Stockholder; and (iii) use its reasonable business efforts to cause the managing underwriter or underwriters of any proposed underwritten offering of any class of Common Stock to permit the Registrable Securities requested to be included in the Registration Statement for such offering on the same terms and conditions as the Common Stock of ATC included therein. Notwithstanding the foregoing, if the managing underwriters of such offering deliver a written opinion to the holders of such Registrable Securities that marketing considerations require a limitation on the Registrable Securities included in any Registration Statement filed under this Section, then, subject to the advice of said managing underwriter or underwriters as to the size and composition of the offering, and subject to the provisions of Section 1(d), such limitation will be imposed pro rata (based upon the relative proposed public offering price of the Registrable Securities proposed to be included) among all holders of Registrable Securities who requested inclusion in the registration pursuant to this Section. If any Stockholder desires to have Registrable Securities registered under this Section, it shall be required so to advise ATC in writing within ten (10) business days after the date of ATC's notice, setting forth the number or amount of Registrable Securities for which registration is so requested. Neither the delivery of the notice by ATC nor of the request by any Stockholders shall in any way obligate ATC to file a Registration Statement and, notwithstanding such filing, ATC may, at any time prior to the effective date thereof, determine not to offer the securities to which the registration statement relates without liability to any of the Stockholders. No registration of Registrable Securities effected under this Section shall relieve ATC of its obligation to effect registration of Registrable Securities upon any request made pursuant to the provisions of Section 1(b). Anything in this Section 1(a) to the contrary notwithstanding, the provisions of this Section 1(a) shall not apply to any registration statement filed by ATC under the Securities Act pursuant to the provisions of the CSFB Agreement. (b) Registration at Stockholders' Request'. Upon the written request of any Significant Stockholder requesting that ATC effect the registration under the Securities Act of all or part of the Registrable Securities held by such Stockholder, specifying the intended method or methods of disposition of such Registrable Securities, ATC shall, except to the extent not required to do so pursuant to the provisions of this Section 1(b) or Section 1(d) or (e), promptly (and in any event within five (5) business days) give written notice of such requested registration to all holders of Registrable Securities and thereupon will expeditiously prepare and, within forty-five (45) days, use its reasonable business efforts to file under the Securities Act a registration statement and effect the registration of: (i) the Registrable Securities which ATC has been so requested to register by such Stockholders, for disposition in accordance with the intended method of disposition stated in such request, and (ii) all other Registrable Securities which ATC has been requested to register by the holders of Registrable Securities by written request delivered to ATC within ten (10) business days after the giving of such notice by ATC (which request shall specify the intended method of disposition of such Registrable Securities). Each registration requested pursuant to this Section shall be effected by the filing of a Registration Statement on Form S-1 (or such other form as the Commission may from time to time require in order to effectuate a public offering of common stock of a company such as ATC and in a method of disposition such as that proposed), unless the use of a different form has been agreed upon in writing by holders of not less than a majority in value (based upon the proposed public offering price) of the Registrable Securities as to which registration has so been requested. Notwithstanding the preceding sentence, ATC need not so cause a Registration Statement so filed pursuant to the provisions of this Section on a Form S-1 (or any successor form) to become effective under the Securities Act on more than four (4) occasions, one of which can be initiated only by or with the consent of Cox; provided, however, that there shall be no limit on the number of times ATC is obligated to file Registration Statements on Form S-2 or S-3 (or any successor forms) pursuant to the provisions of this Section (except as contemplated by the definition of Significant Stockholder); and provided further, however, that any registration of Registrable Securities requested by one or more Stockholders pursuant to this Section -2- which shall not have become and remained effective in accordance with the provisions of Section 1(c) shall not be deemed to be a registration for purposes of this Section. ATC shall not grant to any person the right to request ATC to register, nor shall ATC include in any registration pursuant to this Section, any securities other than the Registrable Securities, without the written consent of holders of not less than a majority in value (based upon the proposed public offering price) of the Registrable Securities as to which registration has been so requested. Whenever registration requested by one or more Stockholders pursuant to this Section is for an underwritten offering, only Registrable Securities which are to be distributed by the underwriters designated by such Stockholders may be included in such registration, without the written consent of holders of not less than a majority in value (based upon the proposed public offering price) of the Registrable Securities as to which registration has been so requested. If Stockholders holding not less than a majority in value of the Registrable Securities (based upon the proposed public offering price) to be included in such registration shall determine that the number of Registrable Securities should be limited due to market conditions or otherwise, all holders of Registrable Securities proposing to sell Registrable Securities in such underwritten offering shall share pro rata in the number of Registrable Securities to be excluded from such underwritten offering, such sharing to be based on the value (based upon the proposed public offering price) of the respective numbers of Registrable Securities as to which registration has been requested by such Stockholders. (c) Registration Generally. If and when ATC shall be required by the provisions of this Section to effect the registration of Registrable Securities under the Securities Act, ATC will use its reasonable business efforts to effect such registration to permit the sale of such Registrable Securities in accordance with the intended method or methods of disposition thereof, and pursuant thereto it will, subject to the provisions of Section 1(d) and 1(e), as expeditiously as possible: (i) before filing a Registration Statement or Prospectus or any amendments or supplements thereto, furnish to the holders of the Registrable Securities covered by such Registration Statement and the managing underwriters, if any, copies of all such documents proposed to be filed, which documents will be made available, on a timely basis, for review by such holders and underwriters, and their respective counsel, and ATC will not file any Registration Statement or amendment thereto or any Prospectus or any supplement thereto to which the holders of not less than a majority in value (based upon the proposed public offering price) of the Registrable Securities covered by such Registration Statement or the managing underwriters, if any, shall reasonably have objected; (ii) prepare and file with the Commission such amendments and post- effective amendments to any Registration Statement, and such supplements to the Prospectus, as may be reasonably requested by any holder of Registrable Securities included in such Registration Statement or any underwriter of Registrable Securities or as may be required by the rules, regulations or instructions applicable to the registration form utilized by ATC or by the Securities Act, the Exchange Act or otherwise necessary to keep such Registration Statement effective for the applicable period and cause the Prospectus as so supplemented to be filed pursuant to Rule 424 under the Securities Act; and comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of disposition by the holders of such Registrable Securities set forth in such Registration Statement or Prospectus as so supplemented; -3- (iii) notify the selling holders of Registrable Securities and the managing underwriters, if any, promptly, and (if requested by any such Person) confirm such advice in writing, (A) when the Prospectus or any supplement thereto or any amendment or post-effective amendment to the Registration Statement has been filed, and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective, (B) of any request by the Commission for amendments or post- effective amendments to the Registration Statement or supplements to the Prospectus or for additional information, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation or threatening of any proceeding for such purpose, (D) if at any time the representations and warranties of ATC contemplated by paragraph (xv) below cease to be true and correct in all material respects, (E) of the receipt by ATC of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, and (F) of the existence of any Event which results in the Registration Statement, the Prospectus or any document incorporated therein by reference containing an untrue statement of material fact or omitting to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (iv) use its reasonable business efforts to obtain the withdrawal of any order suspending the effectiveness of the Registration Statement or any qualification referred to in paragraphs (iii)(C) and (iii)(E) at the earliest possible moment; (v) if requested by the managing underwriters or a holder of Registrable Securities being sold in connection with an underwritten offering, immediately incorporate in a Prospectus supplement or post- effective amendment to the Registration Statement such information as the managing underwriters or the holders of not less than a majority in value (based upon the proposed public offering price) of the Registrable Securities being sold reasonably request to have included therein relating to the plan of distribution with respect to such Registrable Securities, including, without limitation, information with respect to the amount of other Registrable Securities being sold to such underwriters, the purchase price being paid therefor by such underwriters and with respect to any other terms of the underwritten (or best efforts underwritten) offering of the Registrable Securities to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment promptly after being notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment; -4- (vi) at the request of any selling holder of Registrable Securities, furnish to such selling holder of Registrable Securities and each managing underwriter, if any, without charge, at least one signed copy of the Registration Statement and any post-effective amendment thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference); (vii) deliver to each selling holder of Registrable Securities and the underwriters, if any, without charge, as many copies of the Registration Statement, each Prospectus (including each preliminary prospectus) and any amendment or supplement thereto (in each case including all exhibits, except that ATC shall not be obligated to furnish any such selling holder more than two copies of such exhibits other than incorporation documents), as such persons may reasonably request, together with such documents incorporated by reference in such Registration Statement or Prospectus, and such other documents as such selling holder or underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities covered by such registration statement; ATC consents to the use of each Prospectus or any supplement thereto by each selling holder of Registrable Securities and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by each Registration Statement or any amendment thereto; (viii) prior to any public offering of Registrable Securities, use its reasonable business efforts to register or qualify or cooperate with the selling holders of Registrable Securities, the underwriters, if any, and their respective counsel in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions as any selling holder or underwriter reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, however, that ATC 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; (ix) cooperate with the selling holders of Registrable Securities and the underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; and enable such Registrable Securities to be in such denominations and registered in such names as the underwriters may reasonably request at least two (2) business days prior to any sale of Registrable Securities to the underwriters; (x) use its reasonable business efforts to cause the Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary or advisable to enable the sellers thereof or the underwriters, if any, to consummate the disposition of such Registrable Securities; (xi) if any event contemplated by paragraph (iii) (F) above shall exist, prepare and furnish to such holders a post-effective amendment to the Registration Statement or supplement to the Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; -5- (xii) cause all Registrable Securities covered by the Registration Statement to be listed on each securities exchange or other trading market on which securities of the same class are then listed or traded or, if the Registrable Securities are not then listed on a securities exchange, and if the NASD is reasonably likely to permit the inclusion of the Registrable Securities on NASDAQ, use its reasonable business efforts to facilitate the inclusion of the Registrable Securities on NASDAQ; (xiii) not later than the effective date of the Registration Statement, provide a CUSIP number for all Registrable Securities and provide the applicable transfer agent or agents with printed certificates or instruments for the Registrable Securities which are in a form eligible for deposit with Depository Trust Company or other transferee and otherwise meeting the requirements of any securities exchange or other trading market on which such Registrable Securities are listed or traded; (xiv) pay all Registration Expenses in connection with any registration pursuant to the provisions of this Section. Without limiting the generality of the foregoing, in connection with each Registration Statement required hereunder, ATC will reimburse the holders of Registrable Securities being registered pursuant to such Registration Statement for the reasonable fees and disbursements of not more than one counsel (or more than one counsel if a conflict exists among such selling holders in the exercise of the reasonable judgment of counsel for the selling holders and counsel for ATC, provided that such selling holders shall use their reasonable business efforts to minimize conflicts of counsel) chosen by the holders of not less than a majority in value (based on the proposed public offering price) of the Registrable Securities being sold; (xv) enter into agreements (including underwriting agreements) and take all other appropriate actions in order to expedite or facilitate the disposition of such Registrable Securities and in such connection, whether or not an underwriting agreement is entered into and whether or not the offer and sale of the Registrable Securities is an underwritten offering: (A) make such representations and warranties to the holders of such Registrable Securities and the underwriters, if any, in form, substance and scope, reasonably satisfactory to such holders and underwriters, as are customarily made by issuers to underwriters in primary underwritten offerings; (B) obtain opinions and updates thereof of counsel which counsel and opinions to ATC (in form, scope and substance) shall be reasonably satisfactory to the underwriters, if any, and the holders of not less than a majority in value (based on the proposed public offering price) of the Registrable Securities being sold, addressed to each selling holder and the underwriters, if any, covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such holders and underwriters; (C) obtain so-called "cold comfort" letters and updates thereof from ATC's independent public accountants addressed to the selling holders of Registrable Securities and the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters to underwriters in connection with primary underwritten offerings and such other matters as may be reasonably requested by such holders and underwriters; -6- (D) if an underwriting agreement is entered into, cause the same to set forth in full the indemnification provisions and procedures of Section 3 (or such other substantially similar provisions and procedures as the underwriters shall reasonably request) with respect to all parties to be indemnified pursuant to said Section; and (E) deliver such documents and certificates as may be reasonably requested by the holders of not less than a majority in value (based on the proposed public offering price) of the Registrable Securities being sold or the underwriters, if any, to evidence compliance with the provisions of this Section and with any customary conditions contained in the underwriting agreement or other agreement entered into by ATC. The requirements of subparagraphs (B), (C) and (D) of this paragraph (xv) shall be complied with at the effectiveness of such Registration Statement, each closing under any underwriting or similar agreement as and to the extent required thereunder and from time to time as may reasonably be requested by a majority in value (based on the proposed public offering price) of Registrable Securities being sold pursuant to such Registration Statement, all in a manner consistent with customary industry practice; (xvi) make available to a representative of the holders of not less than a majority in value (based on the proposed public offering price) of the Registrable Securities, any underwriter participating in any disposition pursuant to such Registration Statement, and any attorney or accountant retained by such holders or underwriter, all financial, corporate and other records and documents of ATC, and cause ATC's officers, directors and employees to supply all information reasonably requested by any such representatives, underwriter, attorney or accountant in connection with the registration, with respect to each at such time or times as the person requesting such information shall reasonably determine; provided, however, that any records, information or documents that are designated by ATC in writing as confidential shall be kept confidential by such persons unless disclosure of such records, information or documents is required by court or administrative order or applicable law or otherwise becomes public without breach of the provisions of this paragraph; (xvii) otherwise use its reasonable business efforts to comply with the Securities Act, the Exchange Act, all applicable rules and regulations of the Commission and all applicable state blue sky and other securities laws, rules and regulations, and make generally available to its security holders, earnings statements satisfying the provisions of Section 11(a) of the Securities Act, no later than thirty (30) days after the end of any 12- month period (or ninety (90) days if the end of such 12-month period coincides with the end of a fiscal quarter or fiscal year, respectively) of ATC (A) commencing at the end of any month in which Registrable Securities are sold to underwriters in an underwritten offering, or, if not sold to underwriters in such an offering, (B) beginning with the first month commencing after the effective date of the Registration Statement, which statements shall cover said 12-month periods; (xviii) cooperate and assist in any filings required to be made with the NASD and in the performance of any due diligence investigation by any underwriter (including any "qualified independent underwriter" that is required to be retained in accordance with the rules and regulations of the NASD); -7- (xix) promptly prior to the filing of any document which is to be incorporated by reference into the Registration Statement or the Prospectus (after the initial filing of the Registration Statement) provide copies of such document to the selling holders of Registrable Securities, the underwriters, if any, and their respective counsel, make ATC's representatives available for discussion of such document with such persons and make such changes in such document prior to the filing thereof as any such persons may reasonably request; and (xx) cooperate and assist in any filings required to be made with the FCC, including without limitation the obtaining of any consents of the FCC required in connection with any change in control of ATC. (d) Restrictions on Registration. Anything in Section 1 to the contrary notwithstanding, ATC shall not be required to register Registrable Securities on behalf of any Stockholder to the following extent and subject to the following conditions: in the case of any registration initially proposed to be filed solely on behalf of ATC if, in the opinion of the managing underwriters of the proposed public offering (a copy of which opinion shall have been furnished to any Stockholder requesting registration (or each such holder if ATC has elected not to notify the holders of Registrable Securities pursuant to the provisions of Section 1(a) because it is not required to include any Registrable Securities in such registration pursuant to the provisions of this Section)), such registration (or such portion thereof as may be specified in such opinion) would adversely affect the proposed public offering price or the plan of distribution contemplated by the proposed ATC offering, in which event ATC shall (unless in the opinion of such managing underwriters (a copy of which shall be similarly furnished) to do so would materially and adversely affect the proposed public offering price or such plan of distribution)) cause such Registration Statement to remain in effect and to be phrased in such a manner so that the Stockholders requesting registration thereunder may, during a period commencing not less than sixty (60) days or more than ninety (90) days (or such other period as such managing underwriters may approve as not so adversely affecting the proposed public offering price or such plan of distribution) after the closing of the sale to the underwriters pursuant to the original distribution thereunder, offer and sell under such Registration Statement the Registrable Securities referred to in the request of registration pursuant to this Section 1. (e) Additional Restrictions on Registration. Anything in this Agreement to the contrary notwithstanding, ATC shall not be required to file a registration statement requested pursuant to this Section 1 if ATC has furnished, to the Stockholders requesting a registration statement to be filed, a certificate signed by the Chief Executive Officer or the Chief Financial Officer of ATC 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 has a bona fide business purpose for preserving as confidential and that is not then otherwise required to be disclosed; provided, however, that ATC's obligation to use its reasonable business efforts to effect a registration pursuant to this Section 1 may not be deferred pursuant to this paragraph (e) for more than ninety (90) days from the date of receipt of a written request from such Stockholders, and provided further, however, that ATC shall not utilize this right more than once during any twelve (12) month period unless the Stockholders requesting such registration have been afforded a reasonable period (not less than ninety (90) days) during such twelve (12) month period to effect such registration. 2. Conditions to Registration. -------------------------- Each Stockholder's right to have Registrable Securities included in any Registration Statement filed by ATC in accordance with the provisions of Section 1 shall be subject to the following conditions: -8- (a) The holders on whose behalf such Registrable Securities are to be included shall be required to furnish ATC in a timely manner with all information required by the applicable rules and regulations of the Commission concerning the proposed method of sale or other disposition of such Registrable Securities, the identity of and compensation to be paid to any proposed underwriters to be employed in connection therewith, and such other information as may be reasonably requested by ATC or its counsel properly to prepare and file such Registration Statement in accordance with applicable provisions of the Securities Act; (b) If any such holder desires to sell and distribute Registrable Securities over a period of time, or from time to time, at then prevailing market prices, then any such holder shall execute and deliver to ATC such written undertakings as ATC and its counsel may reasonably request in order to assure full compliance with applicable provisions of the Securities Act and the Exchange Act; (c) In the case of any underwritten offering on behalf of the holders of Registrable Securities pursuant to the provisions of Section 1(b), the managing underwriters shall be subject to the approval of ATC, such approval not to be unreasonably withheld, delayed or conditioned; (d) In the case of any registration requested pursuant to the provisions of Section 1(a), the offering price for any Registrable Securities to be so registered shall be no less than for any securities of the same class then to be registered for sale for the account of ATC or other security holders, unless such Registrable Securities are to be offered from time to time based on the prevailing market price; (e) Upon receipt of any notice from ATC of the existence of any event of the nature referred to in paragraph (iii) of Section 1(c), such holder will forthwith discontinue disposition of Registrable Securities until such holders receipt of the copies of the supplemented or amended Prospectus contemplated by such paragraph, or until it is advised in writing by ATC that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings which are incorporated by reference in the Prospectus, and, if so directed by ATC, such holder will deliver to ATC (at its expense) all copies, other than permanent file copies then in such holder's possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice; and (f) In the event any filing with or consent of the FCC is required, cooperate and assist in any such filings, including without limitation providing all information required in obtaining any consents of the FCC required in connection with any change in control of ATC. 3. Indemnification. --------------- (a) Indemnification by ATC. In the event of the registration of any Registrable Securities under the Securities Act pursuant to the provisions hereof, ATC will, to the extent permitted by Applicable Law, indemnify and hold harmless each Stockholder on whose behalf such Registrable Securities shall have been registered, its partners, trustees, advisory committee members, directors, officers, employees, representatives and agents, each underwriter, broker and dealer, if any, who participates in the offering or sale of such Registrable Securities, and each other Person, if any, who controls such Stockholder or any such underwriter, broker or dealer within the meaning of the Securities Act or the Exchange Act (each such person being hereinafter sometimes referred to as an "indemnified person"), from and against any Claims, joint or several, to which such indemnified person may become subject, including without limitation under the Securities Act, the Exchange Act or any state securities or blue sky law, insofar as such Claims arise out of or are based upon any untrue statement or alleged untrue -9- statement of any material fact contained or incorporated by reference in any Registration Statement or Prospectus or any amendment or supplement thereto or in any preliminary prospectus, or any document incorporated by reference therein, or arise out of or based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and will reimburse each such indemnified person for any legal or any other expenses reasonably incurred by such indemnified person in connection with investigating or defending, settling or satisfying any such Claim; provided, however, that ATC will not be liable in any such case to the extent that any such Claim arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made or incorporated by reference in the Registration Statement, Prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to ATC by such indemnified person specifically stating that it is for use in preparation thereof. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified person and shall survive the transfer of such Registrable Securities by such Stockholder (b) Indemnification by Holders of Registrable Securities. In the event of the registration of any Registrable Securities under the Securities Act pursuant to the provisions hereof, each Stockholder on whose behalf such Registrable Securities shall have been registered will, to the extent permitted by Applicable Law, severally but not jointly, indemnify and hold harmless, ATC, each director of ATC, each officer of ATC who signs the registration statement, each underwriter, broker and dealer, if any, who participates in the offering and sale of such Registrable Securities and each other Person, if any, who controls ATC or any such underwriter, broker or dealer within the meaning of the Securities Act or the Exchange Act (each such person including without limitation ATC being hereinafter sometimes referred to as an "indemnified person"), against any Claims, joint or several, to which such indemnified person may become subject, including without limitation under the Securities Act, the Exchange Act or any state securities or blue sky law, insofar as such Claims arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained or incorporated by reference in any Registration Statement or Prospectus or any amendment or supplement thereto or any document incorporated by reference therein, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, provided that such untrue statement or alleged untrue statement or omission or alleged omission has been made or incorporated therein in reliance upon and in conformity with written information furnished to ATC by such Stockholder specifically stating that it is for use in preparation thereof, and will reimburse each such indemnified person for any legal or any other expenses reasonably incurred by ATC or such indemnified person in connection with investigating or defending, settling or satisfying any such Claim. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified person and shall survive the transfer of such Registrable Securities by such Stockholder. In no event shall the liability of any such Stockholder hereunder be greater in amount than the dollar amount of the proceeds received by such Stockholder upon the sale of the Registrable Securities giving rise to such indemnification obligation. (c) Procedure. Promptly after receipt by an indemnified party of notice of the commencement of any action (including any governmental investigation or inquiry), such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party, give written notice to such indemnifying party of the commencement thereof, but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than pursuant to the provisions of this Section and then only to the extent such indemnifying party has been prejudiced, or otherwise adversely affected thereby and in no event shall such failure relieve the indemnifying party from any other liability which it may have to the indemnified party. In case any such -10- action is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate in, and to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party, the indemnifying party shall not, except as hereinafter provided, be responsible for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof, other than reasonable cost of investigation. No indemnifying party will consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such Claim. Such indemnified party shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall be the expense of such indemnified party, unless (i) the indemnifying party has agreed to pay such fees and expenses, (ii) the indemnifying party shall have failed to assume the defense of such action or proceeding or has failed to employ counsel reasonably satisfactory to such indemnified party in any such action or proceeding, or (iii) the named parties to any such action or proceeding (including any impleaded parties) include both such indemnified party and the indemnifying party, and such indemnified party shall have been advised in writing by counsel that representation of both parties by the same counsel would be inappropriate due to actual or potential material differing interests between them (in which case, if such indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such action or proceeding on behalf of such indemnified party, it being understood, however, that the indemnifying party shall not, in connection with any one such action or proceeding or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys at any time for such indemnified party and any other indemnified parties, which firm shall be designated in writing by such indemnified parties). The indemnifying party shall not be liable for any settlement of any such action or proceeding effected without its written consent, but if settled with its written consent, or if there be a final judgment for the plaintiff in any such action or proceeding, the indemnifying party agrees to indemnify and hold harmless such indemnified parties from and against any loss or liability by reason of such settlement or judgment. (d) Contribution. If the indemnification provided for in this Section or in Section 4 is unavailable, because prohibited or restricted by Applicable Law, to a party that would have been an indemnified party under either such Section in respect of any Claims referred to therein, then each party that would have been an indemnifying party thereunder shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such Claims in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and such indemnified party on the other in connection with the statement or omission which resulted in such Claims, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or such indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. Notwithstanding the provisions of this Section, a holder of Registrable Securities shall not, as an indemnified party, be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities sold by such indemnified party or its Affiliates and distributed to the public were offered to the public exceeds the amount of any damages which such indemnified party or its Affiliates have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. ATC and each -11- holder of Registrable Securities agrees that it would not be just and equitable if contribution pursuant to this Section were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section. The amount paid or payable by an indemnified party as a result of the Claims referred to above in this Section or Section 4 shall include any legal or other expenses reasonably incurred by such indemnified party in connection with investigation or defending any such action or claim (which shall be limited as provided in Section 3(c) if the indemnifying party has assumed the defense of any such action in accordance with the provisions thereof). The obligations of each Stockholder under this Section 3(d) are several and not joint. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. Indemnification or, if appropriate, contribution, similar to that specified in the preceding provisions of this Section (with appropriate modifications) shall be given by ATC and each seller of Registrable Securities with respect to any required registration or other qualification of Registrable Securities under any Applicable Law other than the Securities Act. In the event of any underwritten offering of Registrable Securities under the Securities Act pursuant to the provisions of Section 1, ATC and each Stockholder on whose behalf Registrable Securities shall have been registered agree to enter into an underwriting agreement, in standard form, with the underwriters, which underwriting agreement may contain additional provisions with respect to indemnification and contribution in lieu of the provisions of this Section. 4. Exchange Act Registration. ------------------------- ATC covenants and agrees that, at its expense, until such time as the Stockholders no longer hold any Registrable Securities: (a) it will, if required by law, maintain a registration statement (containing such information and documents as the Commission shall specify) with respect to the Common Stock of ATC under Section 12(b) or 12(g) of the Exchange Act effective and will file on time such information, documents and reports as the Commission may require or prescribe for companies whose stock has been registered pursuant to said Section 12(b) or 12(g); (b) it will, if a registration statement with respect to the Common Stock of ATC under Section 12(b) or Section 12(g) is effective, upon the request of any Stockholder, make whatever other filings with the Commission or otherwise make generally available to the public such financial and other information as any Stockholder may deem necessary or advisable in order to enable him to be permitted to sell shares of Common Stock pursuant to the provisions of Rule 144 promulgated under the Securities Act (or any successor rule or regulation thereto or any statute hereafter adopted to replace or to establish the exemption that is now covered by said Rule 144); (c) it will, if not subject to Section 13 to 15(d) of the Exchange Act, upon the request of any Significant Stockholder made on or after December 31, 1998, make publicly available the information specified in subparagraph (c)(2) of said Rule 144, and will take such further action as any Stockholder may reasonably request, all to the extent required from time to time to enable such Stockholder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by said Rule 144 (or any successor rule or -12- regulation to either thereof or any statute hereafter adopted to replace or to establish the exemption that is now covered by said Rule 144); and (d) it will, if not subject to Section 13 to 15(d) of the Exchange Act, upon the request of any Stockholder agree to furnish to a prospective purchaser (subject to the execution by it of a confidentiality agreement in form, scope and substance reasonably satisfactory to ATC) the information specified in subparagraph (d)(4) of Rule 144A promulgated under the Securities Act (or any successor rule or regulation thereto or any statute hereafter adopted to replace or to establish the exemption that is now covered by said Rule 144A), and will take such further action as any Stockholder may reasonably request, all to the extent required from time to time to enable such Stockholder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by said Rule 144A (or any successor rule or regulation thereto or any statute hereafter adopted to replace or to establish the exemption that is now covered by said Rule 144A); and (e) upon the request of any Stockholder, it will deliver to such Stockholder a written statement as to whether it has complied with the requirements of this Section. ATC represents and warrants that any such registration statement or any information, documents or report filed with the Commission in connection therewith or any information so made public shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading. ATC shall, to the extent permitted by Applicable Law, indemnify and hold harmless (or to the extent the same is not enforceable, make contribution to) the Stockholders, their partners, trustees, advisory committee members, officers, directors, employees, representatives and agents, each broker, dealer or underwriter (within the meaning of the Securities Act) acting for any Stockholder in connection with any offering or sale by such Stockholder of Registrable Securities or any person, firm or corporation controlling (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) such Stockholder or any such broker, dealer or underwriter from and against any and all Claims arising out of or resulting from any breach of the foregoing representation or warranty, all on terms and conditions comparable to those set forth in Section 3; provided, however, that ATC shall be given written notice and an opportunity to participate in, and, to the extent that it may wish, to assume on terms and conditions comparable to those set forth in Section 3, the defense thereof. 5. Termination of Registration Obligations. The obligations of ATC to any Stockholder with respect to its rights of registration provided for in Section 1: (a) shall continue until such time as Sullivan & Worcester LLP, or other counsel for ATC knowledgeable in securities law matters and reasonably acceptable to such Stockholder has delivered a written opinion to ATC and such Stockholder to the effect that either (i) such Stockholder has no further obligation to comply with the registration requirements of the Securities Act or to deliver a prospectus meeting the requirements of Section 10(a)(3) of the Securities Act in connection with further sales by such Stockholder of Registrable Securities or (ii) such Stockholder is able to sell all of the Registrable Securities owned by him pursuant to the provisions of Rule 144 under the Securities Act in a three-month period; and (b) shall not apply to any proposed sales or other dispositions or offers therefor of any Registrable Securities with respect to which Sullivan & Worcester LLP, or other counsel for ATC knowledgeable in securities law matters and reasonably acceptable to such Stockholder has -13- delivered a written opinion to ATC and the Stockholder proposing to make such offer, sale or other disposition to the effect that such Stockholder has no obligation to comply with the registration requirements of the Securities Act or to deliver a prospectus meeting the requirements of Section 10(a)(3) of the Securities Act. Any such opinion (a copy of which shall be addressed to such Stockholder) shall be reasonably satisfactory (in the case of such opinion as to form, scope and substance) to such Stockholder. ATC shall, to the extent permitted by Applicable Law, indemnify and hold harmless each Stockholder, its partners, trustees, advisory committee members, officers, directors, employees, representatives and agents and each person, if any, who controls such Stockholder within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, against any Claims to which such Stockholder, or such partners, trustees, advisory committee members, officers, directors, employees, representatives and agents or controlling persons may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Claims arise out of or are based upon the failure to register the Registrable Securities because of the invocation by ATC of the provisions of this Section under the Securities Act, all on terms and conditions comparable to those set forth in Section 3; provided, however, that ATC shall be given written notice and an opportunity to participate in, and to the extent that it may wish, to assume, on terms and conditions comparable to those set forth in Section 3, the defense thereof. The indemnification and contributions provisions of Sections 3 and 4 and this Section, and the obligations of each Stockholder pursuant to the provisions of Section 9, shall survive any termination of ATC's obligations pursuant to this Section. 6. Registration Rights of Others. ATC represents and warrants that it has not previously entered into any agreement with respect to its securities granting any registration rights to any Person. 7. Mergers, etc. ------------ In addition to any other restrictions on mergers, consolidations and reorganizations contained in the Restated Certificate of Incorporation, by-laws or agreements of ATC, ATC covenants and agrees that it shall not, directly or indirectly, enter into any merger, consolidation, sale of all or substantially all of its assets or business, liquidation, dissolution or reorganization in which ATC shall not be the surviving corporation unless the surviving corporation shall, prior to such merger, consolidation or reorganization, agree in a writing to assume all of the obligations of ATC under this Agreement, and for that purpose references hereunder to "Registrable Securities" shall be deemed to include the securities which such holders would be entitled to receive in exchange for Registrable Securities pursuant to any such merger, consolidation, sale of all or substantially all of its assets or business, liquidation, dissolution or reorganization. 8. Annual and Quarterly Reports; Other Information. ATC will deliver to each Stockholder so long as such Stockholder holds any Registrable Securities: (a) as soon as practicable after the end of each fiscal year and each quarter, audited annual and unaudited consolidated quarterly financial statements of ATC, including a consolidated balance sheet, a consolidated statement of operations, and a consolidated statement -14- of cash flow, for such year or quarter, all prepared in accordance with generally accepted accounting principles; (b) as soon as available, copies of all documents filed with the Commission; and (c) such other financial and other information as may, from time to time, be reasonably requested by any Significant Stockholder. 9. Lock-Up Agreement. ----------------- Each Stockholder (other than any Stockholder who is not a director and owns, at such time, 2% or less of all of the Common Stock) agrees that, if required in connection with the contemplated offering by the managing underwriter, (a) it and the Restricted Securities shall be bound by any "lock- up" or other agreement between ATC and any underwriter of Common Stock (or other equity securities of ATC) which may be entered into in connection with each underwritten public offering of the Common Stock (or other equity securities of ATC) so long as the "lock-up" period does not exceed ninety (90) days (or such longer period (not exceeding one hundred and eighty (180) days) in connection with the initial underwritten public offering of Class A Common Stock as the managing underwriters shall have requested) following the commencement of the public offering, and (b) it will execute such agreements or other documents as may be reasonably requested by any such underwriter in order to evidence its agreement set forth in this Section. 10. Withdrawals. ----------- Any Stockholder may at any time withdraw any request made pursuant to Section 1 for registration of its Registrable Securities; provided, however, that to the extent that such withdrawal or withdrawals result in a termination of any offering proposed to be made pursuant to Section 1, ATC shall be deemed to have consummated such offering for purposes of Section 1 unless such Stockholder(s) agree to reimburse ATC for all Registration Expenses incurred by ATC in connection with such terminated offering. Notwithstanding anything in the foregoing provisions of this Section to the contrary, the provisions of this Section shall not be applicable in the event that any such withdrawal or withdrawals resulting in such termination is or are effected on account of (a) ATC's failure to disclose any material fact required to be disclosed in the registration statement or any prospectus relating to such offering or (b) any material adverse change in ATC, its business, assets or condition (financial or other). 11. Definitions. ----------- As used herein, unless the context otherwise requires, the terms (or any variant in the form thereof) set forth in this Agreement shall have the respective meanings so set forth. Terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa, and the reference to any gender shall be deemed to include all genders. Unless otherwise defined or the context otherwise clearly requires, terms for which meanings are provided in this Agreement shall have such meanings when used in each agreement, notice, certificate, communication, opinion or other document executed or required to be executed pursuant hereto or thereto or otherwise delivered, from time to time, pursuant hereto or thereto. "AFFILIATE" of any Person shall mean any Person which, directly or indirectly, owns or controls, is under common ownership or control with, or is owned or controlled by, such Person. A Person shall be deemed to be "controlled by" any other Person if such other Person possesses, directly or indirectly, power to direct or cause the direction of the management or policies of such Person or the disposition of -15- its assets or property, whether by stock, equity or other ownership, contract, arrangement or understanding, or otherwise. "AGREEMENT" is defined in the first paragraph. "APPLICABLE LAW" shall mean any Law of any Authority, whether domestic or foreign, including without limitation all federal and state Laws, to which the Person in question is subject or by which it or any of its business or operations is subject or any of its property is bound. "ARS" shall mean American Radio Systems Corporation, a Delaware corporation. "ARS AGREEMENT" shall mean the Registration Rights Agreement, dated as of November 1, 1993 by and among ARS and certain of the Stockholders named therein, as amended and restated by the Original Registration Rights Agreement. "ARS MERGER AGREEMENT" shall mean the Agreement and Plan of Merger, dated as of September 19, 1997, as amended and restated as of December 18, 1997, by and among ARS, CBS Corporation (formerly, Westinghouse Electric Corporation) and R Acquisition Corp. "ATC" is defined in the first paragraph. "ATC STOCK PURCHASE AGREEMENT" shall mean the Stock Purchase Agreement, dated as of January 8, 1998, by and between ATC and certain of the Stockholders named therein. "AUTHORITY" shall mean any governmental or quasi-governmental authority, whether executive, legislative, judicial, administrative or other, or any combination thereof, including without limitation any federal, state, territorial, county, municipal or other government or governmental or quasi- governmental agency, arbitrator, board, body, branch, bureau or comparable agency or Entity, commission, corporation, court, department, instrumentality, mediator, panel, system or other political unit or subdivision or other Entity of any of the foregoing, whether domestic or foreign. "CLAIMS" shall mean, with respect to any Person, any and all debts, liabilities, obligations, losses, damages, deficiencies, assessments and penalties of or against such Person, together with all Legal Actions, pending or threatened, claims and judgments of whatever kind and nature relating thereto, and all fees, costs, expenses and disbursements (including without limitation reasonable attorneys' and other legal fees, costs and expenses) relating to any of the foregoing. "COMMON STOCK", "CLASS A COMMON", "CLASS B COMMON" or "CLASS C COMMON", shall mean those respective securities described in the Restated Certificate of Incorporation of ATC. "COMMISSION" shall mean the Securities and Exchange Commission or any successor Authority. "COX" shall mean Cox Telecom Towers, Inc., a Delaware corporation, and shall include any Affiliate of Cox to whom it shall have transferred Registrable Securities in a transaction not involving a registration of such securities under the Securities Act. "CSFB AGREEMENT" shall mean the registration rights agreement, dated as of February 4, 1999, by and between ATC and Credit Suisse First Boston, as from time to time amended in accordance with its terms. -16- "ENTITY" shall mean any corporation, firm, unincorporated organization, association, partnership, a trust (inter vivos or testamentary), an estate of a deceased, insane or incompetent individual, business trust, joint stock company, joint venture or other organization, entity or business, whether acting in an individual, fiduciary or other capacity, or any Authority. "EQUITY AGREEMENT" shall mean any one of (i) the ARS Agreement, (ii) the ATC Stock Purchase Agreement; (iii) the Gearon Agreement, (iv) the ARS Merger Agreement, and (v) any other agreements approved from time to time by Board of Directors of ATC pursuant to which Common Stock of ATC may be issued. "EQUITY AGREEMENTS" shall mean all of the foregoing agreements. "EVENT" shall mean the existence or occurrence of any act, action, activity, circumstances, condition, event, fact, failure to act, omission, incident or practice, or any set or combination of any of the foregoing. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, and the rules and regulations of the Commission thereunder, all as from time to time in effect, or any successor law, rules or regulations, and any reference to any statutory or regulatory provision shall be deemed to be a reference to any successor statutory or regulatory provision. "EXCLUDED OFFERING" shall mean (a) an offering relating solely to dividend reinvestment plans or stock option or other employee benefit plans, (b) any merger, consolidation or acquisition, (c) any exchange or tender offer, whether with existing security holders of ATC or any other Person, or (d) a firm underwritten offering relating solely to convertible securities or units consisting of securities senior to Common Stock and warrants, options and rights to acquire Common Stock in which the managing underwriters shall have objected to the inclusion of any Registrable Securities. "FCC" shall mean the Federal Communications Commission or any successor Authority. "GEARON AGREEMENT" shall mean the Agreement and Plan of Merger, dated as of November 21, 1997, by and among ATC, American Tower Systems, Inc. (now known as American Towers, Inc.), Gearon & Co., Inc. and J. Michael Gearon, Jr. "GEARON STOCKHOLDERS" shall mean the parties who received ATC Class A Common Stock in exchange for their capital stock in Gearon & Co., Inc. pursuant to terms and provisions of the Gearon Agreement. All registration decisions of the Gearon Stockholders under this Agreement shall be made by the holders of not less than a majority in value (based on the proposed public offering) of the Registrable Securities held by such Gearon Stockholders. "LAW" shall mean any (a) administrative, judicial, legislative or other action, code, consent decree, constitution, decree, directive, enactment, finding, law, injunction, interpretation, judgment, order, ordinance, policy statement, proclamation, promulgation, regulation, requirement, rule, rule of law, rule of public policy, settlement agreement, statute, or writ of any Authority, domestic or foreign; (b) the common law, or other legal precedent; or (c) arbitrator's, mediator's or referee's award, decision, finding or recommendation. "LEGAL ACTION" shall mean, with respect to any Person, any and all litigation or legal or other actions, arbitrations, counterclaims, investigations, proceedings, requests for material information by or pursuant to the order of any Authority or suits, at law or in arbitration, equity or admiralty, whether or not purported to be brought on behalf of such Person, affecting such Person or any of such Person's business, property or assets. -17- "NASD" shall mean the National Association of Securities Dealers, Inc. "NASDAQ" shall mean the automatic quotation system of NASD. "ORIGINAL REGISTRATION RIGHTS AGREEMENT" is defined in the first Whereas clause. "PERSON" shall mean any natural individual or any Entity. "PROSPECTUS" shall mean each prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement and by all other amendments and supplements to the prospectus, including each preliminary prospectus and post- effective amendments and all material incorporated by reference in such prospectus. "REGISTRABLE SECURITIES" shall mean (a) all shares of Class A Common Stock acquired by any of the Stockholders (i) pursuant to any of the Equity Agreements, or (ii) directly or indirectly through one or more such conversions or exchanges, upon the exercise of conversion or exchange provisions set forth in other securities of ATC issued pursuant to the provisions of any of the Equity Agreements, or pursuant to the redemption or repurchase of any such securities, and (b) all shares of Common Stock of whatever series or class or other equity securities of ATC derived from the Registrable Securities, whether as a result of merger, consolidation, stock split, stock dividend, stock distribution, stock combination, recapitalization or similar event. "REGISTRATION EXPENSES" shall mean all (or where appropriate any one or more) of the following: (a) all registration, filing and listing fees; (b) fees and expenses of compliance with securities or blue sky laws (including without limitation reasonable fees and disbursements of counsel for the underwriters or selling holders in connection with blue sky and state securities qualifications of the Registrable Securities under the laws of such jurisdictions as the managing underwriters or the holders of not less than a majority in value (based on the proposed public offering price) of the Registrable Securities being sold may designate); (c) printing (including without limitation expenses of printing or engraving certificates for the Registrable Securities in a form eligible for deposit with Depositary Trust Company and otherwise meeting the requirements of any securities exchange on which they are listed and of printing Prospectuses), word processing, messenger, telephone and delivery expenses; (d) fees and disbursements of counsel for ATC, and reasonable fees and disbursements of counsel for the underwriters and for the selling holders of the Registrable Securities in accordance with the provisions of Section 1(c)(xiv) (subject to any provisions to the contrary in this Agreement); (e) fees and disbursements of all independent public accountants of ATC (including without limitation the expenses of any annual or special audit and "cold comfort" letters required by the provisions of this Agreement); (f) fees and disbursements of underwriters (excluding discounts, commissions or fees of underwriters), selling brokers, dealer managers or similar securities industry professionals -18- relating to the distribution of the Registrable Securities or legal expenses of any Person other than ATC, the underwriters and the selling holders; (g) securities act liability insurance if ATC so desires or if the underwriters or the holders of not less than a majority in value (based on the proposed public offering price) of the Registrable Securities being sold so require; (h) fees and expenses of other Persons, including any experts, retained by ATC; (i) fees and expenses incurred in connection with the listing of the Registrable Securities on each securities exchange on which securities of the same class are then listed; (j) fees and expenses associated with any NASD filing required to be made in connection with any Registration Statement, including, if applicable, the fees and expenses of any "qualified independent underwriter" (and its counsel) that is required to be retained in accordance with the rules and regulations of the NASD; (k) ATC's internal expenses (including without limitation all salaries and expenses of its officers and employees performing legal or accounting duties); and (l) all other costs and expenses normally associated with the issuance and sale of newly issued public securities. "REGISTRATION STATEMENT" shall mean any registration statement of ATC which covers Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments, including post-effective amendments to such registration statement, and supplements to such Prospectus and all exhibits and all material incorporated by reference in such registration statement. "SECURITIES ACT" shall mean the Securities Act of 1933, and the rules and regulations of the Commission thereunder, all as from time to time in effect, or any successor law, rules or regulations, and any reference to any statutory or regulatory provision shall be deemed to be a reference to any successor statutory or regulatory provision. "SIGNIFICANT STOCKHOLDER" shall mean any Stockholder, or group of Stockholders acting together, which owns not less than the following percentage or amount of Common Stock: (a) if ATC is not then subject to Section 13 or 15(d) of the Exchange Act, (i) shares of Common Stock with a market value (based on the proposed public offering price if the Common Stock is not, at the time, publicly traded) of not less than $25,000,000, or (ii) 15.38% of the outstanding shares of Common Stock (on a fully diluted basis); (b) if ATC is then so subject to Section 13 or 15(d) of the Exchange Act, shares of Common Stock with a market value of not less than $10,000,000; provided, however, that notwithstanding the foregoing, in the event ATC is, at the time of any request made pursuant to the provisions of Section 1(b), eligible to file a Registration Statement on Form S-3 (or any successor form) with respect to the proposed disposition of the Registrable Securities with respect to which such request has been made, and such form is acceptable to the holders making such request, the minimum market value of the Registrable Securities shall be not less than $5,000,000; and -19- (c) J. Michael Gearon, Jr. so long as he holds not less than fifty percent (50%) of the shares of Registrable Securities received by him pursuant to the consummation of the Gearon Agreement and proposes to register shares of Registrable Securities with a market value of not less than $10,000,000. "STOCKHOLDERS" shall mean those persons who executed this Agreement or who hereafter become parties to this Agreement by executing a counterpart hereof, and is further defined in Section 12(a). "SUBSIDIARY" shall mean, with respect to any Person, any Entity a majority of the capital stock ordinarily entitled to vote for the election of directors, or if no such voting stock is outstanding a majority of the equity interests, of which is owned directly or indirectly by such Person or any Subsidiary of such Person. 12. Miscellaneous. ------------- (a) Assignment; Successors and Assigns. In the event that ATC shall be merged with, or consolidated into, any other Entity or in the event that it shall sell and transfer substantially all of its assets to another Entity, the terms of this Agreement shall inure to the benefit of, and be assumed by, the Entity resulting from such merger or consolidation, or to which ATC's assets shall be sold and transferred. Anything in this Agreement to the contrary notwithstanding, the term "Stockholders" as used in this Agreement shall be deemed to include the holders from time to time of any of the Registrable Securities, whether or not they become parties to this Agreement, except for holders who have acquired Registrable Securities in connection with an offering registered under the Securities Act or pursuant to sales made in accordance with Rule 144 (or any successor rule or regulation or statute in substitution therefor). The rights to cause ATC to register Registrable Securities pursuant to Section 1 may be assigned in connection with any transfer or assignment by a holder of Registrable Securities; provided, however, that (i) such transfer may otherwise be effected in accordance with applicable securities laws and (ii) such transfer is effected in compliance with the restrictions on transfer contained in any agreement between ATC and such holder. ATC's obligations under this Agreement shall not be assigned, and its duties under this Agreement shall not be delegated, except as provided in the first sentence of this Section. Nothing in this Agreement expressed or implied is intended to and shall not be construed to confer upon or create in any Person (other than the parties hereto and their permitted successors and assigns) any rights or remedies under or by reason of this Agreement, including without limitation any rights to enforce this Agreement. (b) Specific Performance; Other Rights and Remedies. Each party recognizes and agrees that the other parties' remedies at law for any breach of the provisions of this Agreement would be inadequate and agrees that for breach of such provisions, each such party shall, in addition to such other remedies as may be available to it at law or in equity or as provided in this Agreement, be entitled to injunctive relief and to enforce its rights by an action for specific performance to the extent permitted by 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 for such breach or threatened breach, including without limitation the recovery of damages. (c) Expenses. Each party shall pay its own expenses incident to the negotiation, preparation, performance and enforcement of this Agreement (including all fees and expenses of its counsel, accountants and other consultants, advisors and representatives for all activities of such persons undertaken pursuant to this Agreement), except to the extent otherwise specifically set forth in this Agreement. -20- (d) Entire Agreement. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements, arrangements, covenants, promises, conditions, understandings, inducements, representations and negotiations, expressed or implied, oral or written, among them as to such subject matter. (e) Waivers; Amendments. Notwithstanding anything in this Agreement to the contrary, amendments to and modifications of this Agreement may be made, required consents and approvals may be granted, compliance with any term, covenant, agreement, condition or other 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 written consent of ATC (to the extent it is entitled to the benefit thereof) and (i) with respect to the rights of the Stockholders set forth in Section 1(b), including without limitation the definition of Significant Stockholder (except with respect to clause (c) of the definition of Significant Stockholder which cannot be amended or modified without the prior written consent of J. Michael Gearon, Jr., or his respective successors or assigns), two-thirds (2/3) in interest of the Stockholders, and (ii) with respect to all other rights and obligations of the Stockholders, a majority in interest of the Stockholders (to the extent they are entitled to the benefit thereof or obligated thereby); provided, however, that (x) in the event any such amendment, modification, consent, approval or waiver shall be for the benefit of or materially adverse to less than all of the Stockholders, such amendment, modification, consent, approval or waiver shall require a majority in interest of those Stockholders who are not so benefitted or who are so materially adversely affected and (y) ATC may from time to time amend this Agreement solely to add Stockholders to this Agreement, subject only to the approval of the Board of Directors in accordance with Section 6. (f) Notices. All notices and other communications which by any provision of this Agreement are required or permitted to be given shall be given in writing and shall be (a) mailed by first-class or express mail, postage prepaid, (b) sent by telex, telegram, telecopy or other form of rapid transmission, confirmed by mailing (by first class or express mail, postage prepaid) written confirmation at substantially the same time as such rapid transmission, or (c) personally delivered to the receiving party (which if other than an individual shall be an officer or other responsible party of the receiving party). All such notices and communications shall be mailed, sent or delivered as follows: If to American Tower Corporation, at 116 Huntington Avenue Boston, MA 02116 Attention: Steven B. Dodge, Chairman of the Board and Chief Executive Officer Facsimile: (617) 375-7575 with a copy to: Sullivan & Worcester LLP One Post Office Square Boston, MA 02109 Attention: Norman A. Bikales, Esq. Facsimile: (617) 338-2880 If to any Stockholder, at his address as it appears on the stock records of ATC, and/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 parties. -21- (g) Severability. If any provision of this Agreement shall be held or deemed to be, or shall in fact be, invalid, inoperative, illegal or unenforceable as applied to any particular case in any jurisdiction or jurisdictions, or in all jurisdictions or in all cases, because of the conflicting of any provision with any constitution or statute or rule of public policy or for any other reason, such circumstance shall not have the effect of rendering the provision or provisions in question invalid, inoperative, illegal or unenforceable in any other jurisdiction or in any other case or circumstance or of rendering any other provision or provisions herein contained invalid, inoperative, illegal or unenforceable to the extent that such other provisions are not themselves actually in conflict with such constitution, statute or rule of public policy, but this Agreement shall be reformed and construed in any such jurisdiction or case as if such invalid, inoperative, illegal or unenforceable provision had never been contained herein and such provision reformed so that it would be valid, operative and enforceable to the maximum extent permitted in such jurisdiction or in such case, except when such reformation and construction could operate as an undue hardship on either party, or constitute a substantial deviation from the general intent and purpose of such party as reflected in this Agreement. The parties shall endeavor in good faith negotiations to replace the invalid, inoperative, illegal or unenforceable provisions with valid, operative, legal and enforceable provisions the economic effect of which comes as close as possible to that of the invalid, inoperative, illegal or unenforceable provisions. (h) 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 the parties hereto. In pleading or proving any provision of this Agreement, it shall not be necessary to produce more than one of such counterparts. (i) 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. (j) Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the applicable laws of the United States of America and the domestic substantive laws of the State of New York 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. (k) Further Acts. Each party agrees that at any time, and from time to time, before and after the consummation of the transactions contemplated by this Agreement, it will do all such things and execute and deliver all such agreements, assignments, instruments, other documents and 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 contemplated hereby or to facilitate the enjoyment of any of the rights created hereby or to be created hereunder. -22- IN WITNESS WHEREOF, the parties have executed or caused to be executed this Agreement as of February 25, 1999. American Tower Corporation By: _____________________________________ Name: Steven B. Dodge Title: Chairman of the Board and Chief Executive Officer _________________________________________ Steven B. Dodge Thomas S. Dodge Irrevocable Trust By:______________________________________ Name: Title: Kristen A. Dodge Irrevocable Trust By:______________________________________ Name: Title: Benjamin P. Dodge Irrevocable Trust By:______________________________________ Name: Title: _________________________________________ Norman A. Bikales _________________________________________ Alan L. Box _________________________________________ Charlton H. Buckley Chase Equity Associates, L.P. By Chase Capital Partners, General Partner By: _____________________________________ Name: Arnold L. Chavkin Title: General Partner _________________________________________ James S. Eisenstein _________________________________________ Arthur C. Kellar _________________________________________ Michael B. Milsom _________________________________________ Steven J. Moskowitz _________________________________________ Joseph L. Winn _________________________________________ Thomas H. Stoner Thomas H. Stoner and Bessemer Trust Company, Trustees of Ruth H. Spencer Irrevocable Trust By:______________________________________ Bessemer Trust Company, Trustee of Thomas H. Stoner Irrevocable Trust, By:______________________________________ _________________________________________ Katharine E. Stoner _________________________________________ Ruth Rochelle Stoner _________________________________________ Thomas Stoner, Jr. _________________________________________ Theodore A. Stoner _________________________________________ Katharine E. Stoner, Trustee of Alden Ellsworth Stoner 30 Trust _________________________________________ Katharine E. Stoner, Trustee of Lavonne Elizabeth Ellsworth 21 Trust Bessemer Trust Company, Trustee of Alden Elizabeth Stoner 35 Trust By:______________________________________ Name: Title: Katharine and Thomas Stoner Foundation By:______________________________________ Name: Title: Thomas H. Stoner Charitable Remainder Unitrust dated May 3, 1993 By:______________________________________ Name: Title: Gearon Stockholders: _________________________________________ J. Michael Gearon, Jr. The 1997 Gearon Family Trust _________________________________________ By: J. Michael Gearon, Sr., Trustee _________________________________________ Dan King Brainard _________________________________________ Jeff Ebihara _________________________________________ Doug Wiest American Tower Corporation Stockholders: _________________________________________ Fred R. Lummis Clear Channel Communications, Inc. By:______________________________________ Name: Title: Chase Manhattan Capital L.P. By:_____________________________________ Name: Arnold L. Chavkin Title: General Partner The Spotted Dog Farm, L.P. By:_____________________________________ General Partner Webbmont Holdings, L.P. By:_____________________________________ General Partner _________________________________________ Jack D. Furst Catherine Forgrave Hicks 1993 Trust By:_______________________________________ John Alexander Hicks 1984 Trust By:_______________________________________ Mack Hardin Hicks 1984 Trust* By:_______________________________________ Robert Bradley Hicks 1984 Trust* By:______________________________________ Thomas O. Hicks Jr. 1984 Trust* By:______________________________________ _________________________________________ Thomas O. Hicks* William Cree Hicks 1992 Trust* By:______________________________________ HMTF/Omni Partners, L.P.* By: Hm3/Omni America Partners, LLC, its General Partner By:_____________________________________ Daniel S. Druss Vice President _________________________________________ Dan H. Blanks* _________________________________________ David R. Deniger* The Melanie Levitt Trust 1996* By:_________________________________________ Michael J. Levitt _________________________________________ Michael J. Levitt* The Stephen A. Levitt Trust 1996* By:______________________________________ Michael J. Levitt _________________________________________ John R. Muse* _________________________________________ Lawrence D. Stuart, Jr.* _________________________________________ Charles W. Tate* Hicks, Muse, Tate & Furst Incorporated* By:______________________________________ * Hicks, Muse, Tate & Furst Incorporated is hereby appointed as agent for this signatory for purposes of this agreement. Cox Telecom Towers, Inc. By:______________________________________ Name: Dean Eisner Title: President TeleCom Towers, Inc. By:______________________________________ Name: Randall N. Smith Title: Chairman and CEO USEI Stockholders ______________________________________ Name: James A.R. Veeder ______________________________________ Name: Daniel E. Murphy ______________________________________ Name: Valrie L. Murphy Veeder Family Trust By:______________________________________ Name: James A.R. Veeder Title: Trustee Galaxy Engineering Services, Inc. Stockholders: __________________________________________ Joseph Forbes Moore Family Holdings, L.P. By:___________________________________________ Name: Title: ___________________________________________ Paul Blaser ___________________________________________ Drew Davis ___________________________________________ Louis Roberts __________________________________________ John Cody Sutherland ___________________________________________ Colin Holland ___________________________________________ Jim Bennett Carl R. Moore Family Holdings Limited By:________________________________________ Name: Carl R. Moore Title: Manager EarleMost Investments, L.P. By:______________________________________ Name: Earle J. Bensing Title: General Partner _________________________________________ David Smartt 1999 Roy J. Moore II Trust By:______________________________________ Carl Moore, as Trustee 1999 Brooke Moore Trust By:______________________________________ Carl Moore, as Trustee 1999 Matthew Moore Trust By:______________________________________ Carl Moore, as Trustee _________________________________________ Joseph Forbes, as custodian for Julia Marie Forbes pursuant to the U/G/M/A _________________________________________ Joseph Forbes, as custodian for Jared Joseph Forbes pursuant to the U/G/M/A Kline Iron & Steel Co., Inc. By:_______________________________________________ Name: Jerome C. Kline Title: President Kline Family Stockholders ___________________________________________________ Jerome C. Kline ___________________________________________________ Sue David Kline, Trustee for Jerome Carl Kline, Jr. ___________________________________________________ Sue David Kline, Trustee for Amy Beth Kline ___________________________________________________ Sue David Kline, Trustee for David Bernard Kline IN WITNESS WHEREOF, the undersigned hereby executes the Agreement, and hereby authorizes this signature page to be attached to a counterpart of such Agreement executed by the other parties thereto. AIRTOUCH COMMUNICATIONS, INC., a Delaware corporation By: _____________________________________ Print Name: Gregory Caligari Title: Assistant Secretary AIRTOUCH CELLULAR, a California corporation By: _____________________________________ Print Name: Gregory Caligari Title: Secretary VODAFONE AIRTOUCH LICENSES LLC, a Delaware limited liability company By: Air Touch Communications, Inc. Its Sole Member By: _____________________________________ Print Name: Gregory Caligari Title: Assistant Secretary NEW PAR, a Delaware general partnership By: AirTouch Cellular, Inc. A general partner By: _____________________________________ Name: Gregory Caligari Title: Secretary COCONINO, ARIZONA RSA LIMITED PARTNERSHIP, an Arizona limited partnership By: AirTouch Communications, Inc. A general partner By: _____________________________________ Print Name: Gregory Caligari Title: Assistant Secretary BOISE CITY MSA LIMTED PARTNERSHIP, a Delaware limited partnership By: AirTouch Communications, Inc. as general partner By: _____________________________________ Print Name: Gregory Caligari Title: Assistant Secretary COLORADO RSA NO. 3 LIMITED PARTNERSHIP, a Delaware limited partnership By: AirTouch Communications, Inc. A general partner By: _____________________________________ Print Name: Gregory Caligari Title: Assistant Secretary YUMA, ARIZONA RSA LIMITED PARTNERSHIP, an Arizona limited partnership By: AT Arizona II, LLC Its: General Partner By: Vodafone AirTouch Licenses LLC, Its: Sole Member By: AirTouch Communications, Inc. Its: Sole Member By: _____________________________________ Print Name: Gregory Caligari Title: Assistant Secretary SPOKANE MSA LIMITED PARTNERSHIP, a Delaware limited partnership By: AirTouch Communications, Inc. A general partner By: _____________________________________ Print Name: Gregory Caligari Title: Assistant Secretary OLYMPIA CELLULAR LIMITED PARTNERSHIP, a Delaware limited partnership By: AirTouch Communications, Inc. A general partner By: _____________________________________ Print Name: Gregory Caligari Title: Assistant Secretary SEATTLE SMSA LIMITED PARTNERSHIP, a Delaware limited partnership By: AirTouch Communications, Inc. as general partner By: _____________________________________ Print Name: Gregory Caligari Title: Assistant Secretary SACRAMENTO VALLEY LIMITED PARTNERSHIP, a California limited partnership By: AirTouch Cellular as general partner By: _____________________________________ Print Name: Gregory Caligari Title: Assistant Secretary OMAHA CELLULAR TELEPHONE COMPANY, a New York general partnership By: AirTouch Nebraska, Inc., A general partner By: _____________________________________ Print Name: Gregory Caligari Title: Secretary DES MOINES MSA GENERAL PARTNERSHIP, an Iowa general partnership By: AirTouch Iowa, Inc. A general partner By: _____________________________________ Print Name: Gregory Caligari Title: Secretary DULUTH MSA LIMITED PARTNERSHIP, a Delaware limited partnership By: AirTouch Minnesota, Inc., as general partner By: _____________________________________ Print Name: Gregory Caligari Title: Secretary ATHENS CELLULAR, INC., a Delaware corporation By: _____________________________________ Print Name: Gregory Caligari Title: Assistant Secretary SPRINGFIELD CELLULAR TELEPHONE COMPANY, an Ohio general partnership By: New Par, a General Partnership, as General Partner By: AirTouch Cellular, Inc. A general partner By: _____________________________________ Print Name: Gregory Caligari Title: Assistant Secretary HAMILTON CELLULAR TELEPHONE COMPANY, an Ohio general partnership By: New Par, a General Partnership, as General Partner By: AirTouch Cellular, Inc. A general partner By: _____________________________________ Print Name: Gregory Caligari Title: Assistant Secretary MUSKEGON CELLULAR PARTNERSHIP, a District of Columbia general partnership By: AirTouch Cellular of Michigan A general partner By: ______________________________________ Print Name: Gregory Caligari Title: Assistant Secretary WASATCH UTAH RSA 2 LIMITED PARTNERSHIP, a Delaware limited partnership By: AirTouch Utah, Inc. as general partner By: ______________________________________ Print Name: Gregory Caligari Title: Secretary REDDING MSA LIMITED PARTNERSHIP, a California limited partnership By: Sacramento Valley Limited Partnership, a Limited Partnership, A general partner By: AirTouch Cellular as general partner By:______________________________________ Print Name: Gregory Caligari Title: Secretary RSA 7 Limited Partnership (IOWA), an Iowa limited partnership By: AirTouch Iowa RSA 7, Inc. A general partner By:______________________________________ Print Name: Gregory Caligari Title: Secretary IDAHO RSA NO. 1 LIMITED PARTNERSHIP, a Delaware limited partnership By: AirTouch Communications, Inc., A general partner By:______________________________________ Print Name: Gregory Caligari Title: Secretary IDAHO RSA NO. 2 LIMITED PARTNERSHIP, a Delaware limited partnership By: AirTouch Idaho, Inc., as general partner By:______________________________________ Print Name: Gregory Caligari Title: Secretary IDAHO RSA 3 LIMITED PARTNERSHIP, a Delaware limited partnership By: AirTouch Idaho, Inc., as general partner By:______________________________________ Print Name: Gregory Caligari Title: Secretary MODOC RSA LIMITED PARTNERSHIP, a California limited partnership By: AirTouch Cellular as general partner By:______________________________________ Print Name: Gregory Caligari Title: Secretary GREAT SALT FLATS GENERAL PARTNERSHIP, an Utah general partnership By: AirTouch Utah, Inc. A general partner By:______________________________________ Print Name: Gregory Caligari Title: Secretary IN WITNESS WHEREOF, the undersigned hereby executes the Amended and Restated Registration Rights Agreement, and hereby authorizes this signature page to be attached to a counterpart of such Agreement executed by the other parties thereto. Publicom Stockholders _____________________________________ Name: Ana M. Diaz Sheridan Dickinson Revocable Trust By:__________________________________ Name: Sheridan Dickinson, Sr. Title: Trustee _____________________________________ Name: Sheridan Dickinson, Jr. _____________________________________ Name: Julian Gonzalez _____________________________________ Name: Jaime Dickinson American Tower Corporation hereby acknowledges and consents to the Publicom Stockholders identified above becoming parties as Stockholders to the Amended and Restated Registration Rights Agreement AMERICAN TOWER CORPORATION By:_________________________ Name: Michael B. Milsom Title: Vice President IN WITNESS WHEREOF, the undersigned hereby executes the Amended and Restated Registration Rights Agreement, and hereby authorizes this signature page to be attached to a counterpart of such Agreement executed by the other parties thereto. Tower Ventures, Inc. stockholders ____________________________________ William P. Collatos ____________________________________ Joseph V. Gallagher ____________________________________ Robert J. Maccini ____________________________________ C. Kevin Landry The Applegate Family Trust ____________________________________ By: Brion B. Applegate Title: Trustee ____________________________________ Linda C. Wisnewski ____________________________________ Kristen S. Maccini American Tower Corporation hereby acknowledges and consents to the Tower Ventures stockholders identified above becoming parties as Stockholders to the Amended and Restated Registration Rights Agreement AMERICAN TOWER CORPORATION By: ______________________ Name: Ross W. Elder Title: Vice President IN WITNESS WHEREOF, the undersigned hereby executes the Agreement, and hereby authorizes this signature page to be attached to a counterpart of such Agreement executed by the other parties thereto. Flash Stockholder ____________________________________ Name: William F. Somers American Tower Corporation hereby acknowledges and consents to the Flash Stockholder identified above becoming a party as Stockholder to the Amended and Restated Registration Rights Agreement AMERICAN TOWER CORPORATION By: _____________________________ Name: Justin D. Benincasa Title: Senior Vice President IN WITNESS WHEREOF, the undersigned hereby executes the Agreement, and hereby authorizes this signature page to be attached to a counterpart of such Agreement executed by the other parties thereto. Modern Stockholder _____________________________ Name: William F. Somers American Tower Corporation hereby acknowledges and consents to the Modern Stockholder identified above becoming a party as Stockholder to the Amended and Restated Registration Rights Agreement AMERICAN TOWER CORPORATION By: _____________________________ Name: Justin D. Benincasa Title: Senior Vice President IN WITNESS WHEREOF, the undersigned hereby executes the Amended and Restated Registration Rights Agreement, and hereby authorizes this signature page to be attached to a counterpart of such Agreement executed by the other parties thereto. Vancomm, Inc. stockholders ____________________________________ Jerry Glaser ____________________________________ Michael Moskowitz ____________________________________ Paul Papay ____________________________________ Peter Papay American Tower Corporation hereby acknowledges and consents to the Vancomm, Inc. stockholders identified above becoming a party as Stockholders to the Amended and Restated Registration Rights Agreement AMERICAN TOWER CORPORATION By:_____________________________ Name: Justin D. Benincasa Title: Senior Vice President IN WITNESS WHEREOF, the undersigned hereby execute the Amended and Restated Registration Rights Agreement, and hereby authorizes this signature page to be attached to a counterpart of such Agreement executed by the other parties thereto. ________________________________________________ Access Technology Partners, L.P. ________________________________________________ Access Technology Partners Brokers Fund, L.P. ________________________________________________ Joseph T. Arsenio II ________________________________________________ Jeffrey Barbakow ________________________________________________ BayStar Capital, L.P. ________________________________________________ Bay Star International Ltd. ________________________________________________ David & Annika Bernstein ________________________________________________ Stanley & Charlotte Bernstein ________________________________________________ Stephen & Gayle Bernstein ________________________________________________ CBK Investments, G.P. ________________________________________________ Hector Chao ________________________________________________ Liz Chow ________________________________________________ City National Bank, Trustee ________________________________________________ David Vaun Crumly ________________________________________________ Crumly Family Partners Limited ________________________________________________ Richard d'Abo ________________________________________________ Delaware Charter Guarantee & Trust Co., Cust. Joseph T. Arsenio II ________________________________________________ Delaware Charter Guarantee & Trust Co., Cust. Joseph T. Arsenio II, IRA ________________________________________________ Delaware Charter Guarantee & Trust Co., Cust. Joseph T. Arsenio II, IRA Rollover ________________________________________________ Delaware Charter Guarantee & Trust Co., Cust. Joseph T. Arsenio II, IRA SEP ________________________________________________ Andrew & Donna Dietz ________________________________________________ Irene B. Dorsey ________________________________________________ Evergreen Trust, U/A/D 6-12-90 ________________________________________________ Bruce and Patricia Fisher ________________________________________________ Jonathan Gans ________________________________________________ Rock Steven Gnatovich ________________________________________________ David Golden ________________________________________________ Howard Goldman ________________________________________________ Gotel Investments Ltd. ________________________________________________ Bruce J. Greenbaum & Teri Greenbaum, Trustees ________________________________________________ Ruth Greenbaum & Monroe A. Greenbaum, Trustees ________________________________________________ Scott D. & Susan B. Greenbaum ________________________________________________ Eliezer A. Gurfel III ________________________________________________ Barry L. Guterman and Sheryl L. Guterman, Co-Trustees ________________________________________________ Ken Halloway ________________________________________________ Hambrecht & Quist California ________________________________________________ Hambrecht & Quist Employee Venture Fund L.P. II ________________________________________________ Terry Hanson ________________________________________________ Peter Hartz, Trustee U/A dtd 9/20/90 by Hartz Revocable Trust ________________________________________________ Carl Hirsch ________________________________________________ Intel Corporation ________________________________________________ Charles Isgar ________________________________________________ Yolanta Jakubiec ________________________________________________ June Investments, LLC ________________________________________________ Kinda Associates, a Massachusetts General Partnership ________________________________________________ James Koisrud ________________________________________________ James Koisrud & Sookhi Ro ________________________________________________ Donald J. Kula ________________________________________________ Mike Labriola ________________________________________________ Evelyn Lee ________________________________________________ Sandra J. Levin ________________________________________________ James and Linda Lippman 1989 Trust: James Lippman ________________________________________________ Max Loubiere ________________________________________________ Jon Mansey ________________________________________________ Steve Meepos ________________________________________________ Brett Messing ________________________________________________ Brian Messing ________________________________________________ Brian and Sandy Messing ________________________________________________ Debra Messing ________________________________________________ Natalie Messing, UGMA, Brett Messing, Custodian ________________________________________________ Samantha Messing, UGMA, Brett Messing, Custodian ________________________________________________ Steven J. Miller ________________________________________________ Carlos Moran ________________________________________________ Chris Mulhern ________________________________________________ Mia Mulhern ________________________________________________ Tom Mulhern ________________________________________________ Michael Nesmith ________________________________________________ Newberg Family Trust dated 12-18-90 ________________________________________________ Barry Newburger ________________________________________________ Mira Nikolic ________________________________________________ Norman Pattiz, Trustee, Pattiz Family Trust ________________________________________________ Philip Michael Nunez & Debora Weston Nunez ________________________________________________ Alyssa Pearlstein, UGMA, David Pearlstein, Custodian ________________________________________________ David and Gina Pearlstein ________________________________________________ Nicole Pearlstein, UGMA, David Pearlstein, Custodian ________________________________________________ Sonny Pearlstein ________________________________________________ Sonny and Marsha Pearlstein ________________________________________________ Zachary Pearlstein, UGMA, David Pearlstein, Custodian ________________________________________________ Jim Petit ________________________________________________ Pequot Private Equity Fund II, L.P. ________________________________________________ R&M Interpacket Investors, G.P. ________________________________________________ Bruce Raben ________________________________________________ Josh Rafner ________________________________________________ Mitchell S. Rosenzweig ________________________________________________ Alan Rothenberg ________________________________________________ Mark Rubin ________________________________________________ Allen Sciarillo ________________________________________________ Robert Schiowitz ________________________________________________ The Sear Family Trust ________________________________________________ Lori Segaux ________________________________________________ Michael J. Shepard ________________________________________________ Steven & Janine Simenhoff ________________________________________________ Julie Spira, as Trustee, The Julia Spira Inter Vivos Trust dated June 22, 2000 ________________________________________________ Jeffrey Sudikoff ________________________________________________ Timothy F. Sylvester ________________________________________________ George & Lenore Travis ________________________________________________ Bruce Tyson, Trustee for Evergreen Trust, U/A/D 6-12-90 ________________________________________________ Juliana Long Tyson, UGMA Bruce Tyson, Custodian ________________________________________________ VF Family Partnership ________________________________________________ Paul Vogel ________________________________________________ Gary Vollen ________________________________________________ W2 Ventures Partners, LLC ________________________________________________ Alan E. & Stephanie C. Weston, Trustees ________________________________________________ Craig E. Weston ________________________________________________ Rodney & Judith Williams ________________________________________________ William Wisniewski ________________________________________________ Bob Wotherspoon ________________________________________________ John Yona ________________________________________________ Loveday Ziluca ________________________________________________ Kenneth H. Zimble ________________________________________________ Lisa Zimble ________________________________________________ Oliver Zimble, UGMA, Peter Zimble, Custodian ________________________________________________ Patricia E. Cohen Zimble Trust ________________________________________________ Peter Zimble ________________________________________________ Shari Zimble American Tower Corporation hereby acknowledges and consents to the above named holders of InterPacket Stock becoming a party as a Stockholder to the Amended and Restated Registration Rights Agreement AMERICAN TOWER CORPORATION By:______________________________ Authorized Officer: IN WITNESS WHEREOF, the undersigned hereby execute the Agreement, and hereby authorize this signature page to be attached to a counterpart of such Agreement executed by the other parties thereto. By:________________________ Name: Joseph J. Catapano By:________________________ Name: Joseph P. Catapano American Tower Corporation hereby acknowledges and consents to each individual listed above becoming a party as Stockholder to the Amended and Restated Registration Rights Agreement AMERICAN TOWER CORPORATION By:____________________________ Name: Justin D. Benincasa Title: Senior Vice President IN WITNESS WHEREOF, the undersigned hereby execute the Agreement, and hereby authorize this signature page to be attached to a counterpart of each Agreement executed by the other parties thereto. By: ------------------------------ Name: David Fields American Tower Corporation hereby acknowledges and consents to each individual listed above becoming a party as Stockholder to the Amended and Restated Registration Rights Agreement AMERICAN TOWER CORPORATION By: ------------------------------------ Name: Title:
Exhibit 10.8 SIXTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT THIS SIXTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT, dated as of the 26th day of October, 2001 (this "Amendment"), is made by and among AMERICAN --------- TOWER, L.P., a Delaware limited partnership, AMERICAN TOWERS, INC., a Delaware corporation, VERESTAR, INC. (f/k/a ATC TELEPORTS, INC.), a Delaware corporation, and TOWERSITES MONITORING, INC., a Delaware corporation, (collectively, the "Borrowers"), THE FINANCIAL INSTITUTIONS SIGNATORIES HERETO and TORONTO DOMINION --------- (TEXAS), INC., as administrative agent (in such capacity, the "Administrative -------------- Agent"). - ----- W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Borrowers, the Lenders (as defined therein), the Issuing Bank (as defined therein) and the Administrative Agent are all parties to that certain Amended and Restated Loan Agreement dated as of January 6, 2000 (as previously amended and as hereafter amended, modified, restated and supplemented from time to time, the "Loan Agreement"); and -------------- WHEREAS, the Borrowers have requested amendments to certain provisions of the Loan Agreement, and, subject to the terms and conditions set forth herein, the Lenders and the Administrative Agent are willing to amend certain provisions of the Loan Agreement as more specifically set forth herein; NOW, THEREFORE, in consideration of the premises set forth above, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree that all capitalized terms used and not defined herein shall have the meanings ascribed to such terms in the Loan Agreement, and further hereby agree as follows: 1. Amendments. The Loan Agreement is hereby amended as more ---------- fully set for the below: (a) Amendments to Article 1. ----------------------- (i) Section 1.1 of the Loan Agreement, Definitions, is hereby amended by deleting the definitions of ----------- "Annualized Operating Cash Flow", "ATC International" "Borrowers", ------------------------------ ----------------- --------- "Change of Control" "Pro Forma Debt Service" and "Restricted ----------------- ---------------------- ---------- Subsidiaries" in their entirety and by substituting the following ------------ definitions in lieu thereof: " 'Annualized Operating Cash Flow' shall mean, as of ------------------------------ any calculation date, in each case on a consolidated basis, (a) the sum of (i) the product of (A) Operating Cash Flow (Mature Towers) for the fiscal quarter-end being tested, or the most recently completed fiscal quarter immediately preceding such calculation date, as the case may be, times (B) ----- four (4); and (ii) the product of (A) Operating Cash Flow (Developing Towers) for the fiscal quarter-end being tested, or the most recently completed fiscal quarter immediately preceding such calculation date, as the case may be, times (B) ----- four (4); and (iii) Operating Cash Flow (Other Business) for the four fiscal quarter period end being tested or the most recently completed four (4) fiscal quarter period immediately preceding such calculation date, as the case may be; minus (b) ----- corporate overhead (exclusive of amortization and depreciation) of the Borrowers and the Restricted Subsidiaries for the four (4) fiscal quarter period then ended or, the most recently completed four (4) fiscal quarter period immediately preceding the calculation date, as the case may be; provided, -------- however, that for purposes of calculating the Leverage Ratio ------- only, (I) item (a) above shall not include the amount by which the product of (x) Operating Cash Flow (without deductions for corporate overhead) attributable to Restricted Subsidiaries located in or doing business in Brazil and Mexico (or such other countries as the Majority Lenders approve) times (y) four (4) exceeds ten percent (10%) of the total amount determined by clause (a) of this definition (before giving effect to the deduction set forth in clause (II) immediately following), and (II) item (a)(iii) above shall be reduced by twenty-five percent (25%)." " 'ATC International' shall mean American Tower ----------------- International, Inc., a Delaware corporation." "'Borrowers' shall mean, collectively, AT L.P., AT Inc., --------- Verestar, Inc. (f/k/a ATC Teleports), Towersites Monitoring, Inc., a Delaware corporation, and ATC International, and shall include such other Persons as may be approved by the Majority Lenders at such time as any such Person executes and delivers to the Administrative Agent an assignment and assumption agreement in form and substance satisfactory to the Administrative Agent and each other Loan Document as executed by the other Borrowers; and "Borrower" shall mean any one of -------- the foregoing." " 'Change of Control' shall mean (a) the failure of the ----------------- Parent to own, directly or indirectly, one hundred percent (100%) of the ownership interests of each of the Borrowers, except for Verestar, of which the Parent must own ninety percent (90%), provided that the remaining ten percent (10%) -------- of Verestar is held by other Persons in connection with an employee stock option plan, (b) the failure of AT Inc. to own, directly or indirectly, one hundred percent (100%) of the ownership interests of ATC Operating (unless ATC Operating is merged with or into AT Inc.), (c) the sale, lease, transfer, in one or a series of related transactions, of all or substantially all of any of the Borrower's assets to any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act) other than to the other Borrowers or any wholly-owned direct or indirect Restricted Subsidiary of AT Inc., (d) the adoption of a plan relating to the liquidation or dissolution of the -2- Parent, (e) the acquisition, directly or indirectly, by any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act) of forty percent (40%) or more of the voting power of the voting stock of the Parent by way of merger or consolidation or otherwise and such Persons own more voting power than the Principal Shareholders, or (f) the Continuing Directors cease for any reason to constitute a majority of the directors of the Parent then in office." " 'Pro Forma Debt Service' shall mean with respect to the ---------------------- twelve (12) calendar month period following the calculation date, and after giving effect to any Interest Hedge Agreements and LIBOR Advances, the sum of the amount of all of the following with respect to the Borrowers and the Restricted Subsidiaries, on a consolidated basis: (a) scheduled payments of principal on Indebtedness for Money Borrowed (determined, with respect to the Revolving Loans only, as the difference between the outstanding principal amount of the Revolving Loans and Letter of Credit Obligations on the calculation date and the amount the Revolving Loan Commitments will be on the last day of such period) for such period; (b) Interest Expense for such period; (c) fees payable under this Agreement for such period; (d) other payments payable by such Persons during such period in respect of Indebtedness for Money Borrowed (other than voluntary repayments); and (e) after the Interest Reserve, the 2001 Interest Reserve and/or the 2002 Interest Reserve, as applicable, has been applied in full pursuant to the terms hereof, all Restricted Payments to be made by the Borrowers to the Parent which will be necessary to make interest payments on the (i) Convertible Notes and/or (ii) Senior Notes due 2009 during such period. For purposes of this definition, where interest payments for the twelve (12) month period immediately succeeding the calculation date are not fixed by way of Interest Hedge Agreements, LIBOR Advances, or otherwise for the entire period, interest shall be calculated on such Indebtedness for Money Borrowed for periods for which interest payments are not so fixed at the lesser of (i) the LIBOR Basis (based on the then current adjustment under Section 2.3(f) hereof) for a LIBOR Advance having an Interest Period of six (6) months as determined on the date of calculation and (ii) the Base Rate Basis as in effect on the date of calculation; provided, however, that if such LIBOR -------- ------- Basis cannot be determined in the reasonable opinion of the Administrative Agent, such interest shall be calculated using the Base Rate Basis as then in effect." " 'Restricted Subsidiary' shall mean any Subsidiary of --------------------- any Borrower other than an Unrestricted Subsidiary which (a) is organized under the laws of, or owns, operates, constructs, or manages towers in the United States of America, Brazil or Mexico, provided that such Subsidiary (i) is permitted to pay -------- dividends, (ii) has no liens other than Permitted Liens and (iii) that such Subsidiary becoming a Restricted Subsidiary shall not cause a Default or Event of Default, or in such other jurisdictions as the Majority Lenders may from time to time approve by prior written consent; and (b) has complied with the requirements of Section 5.13 -3- hereof (or delivered comparable documents to effect the purpose of such Section 5.13). The Restricted Subsidiaries as of the Agreement Date are as set forth on Schedule 2 attached ---------- hereto. (ii) Section 1.1 of the Loan Agreement, Definitions, ----------- is hereby amended by inserting the new definitions of "2002 Interest ------------- Reserve" and "Term Loan C Loans" in the proper alphabetical order: ------- ----------------- " '2002 Interest Reserve' shall mean an escrow account --------------------- pledged to the Lenders as collateral which is (a) maintained by one of the Borrowers, (b) maintained with the Administrative Agent on terms and conditions satisfactory to the Administrative Agent, (c) established with cash proceeds in an amount equal to $46,875,000.00 and (d) so long as no Event of Default has occurred and is continuing, used to make interest payments due in August 2002 on the Senior Notes due 2009." " 'Term Loan C Loans' shall mean, collectively, the ----------------- amounts advanced in connection with the Notice of Incremental Facility Commitment for Term Loan C." (b) Amendments to Article 2. ----------------------- (i) Section 2.7(b)(v) of the Loan Agreement, Sale of Capital Stock and Debt Instruments, is hereby amended by deleting such section in its entirety and substituting in lieu thereof the following: "(v) Sale of Capital Stock and Debt ------------------------------ Instruments. ----------- (A) Capital Stock. At any time when there ------------- are Term Loan C Loans outstanding, on the Business Day following the date of receipt by the Parent, any Borrower or any Restricted Subsidiary of any net cash proceeds from the sale of any Capital Stock by any of the Parent, any Borrower, or any Restricted Subsidiary (other than (x) net proceeds in an amount not to exceed $2,000,000.00 in the aggregate after the Agreement Date from the sale or issuance of Capital Stock in connection with any employee stock option plan of such Person or (y) proceeds received from Capital Stock issued in connection with an Acquisition permitted hereunder), the Term Loan C Loans shall be repaid (or, if no Term Loan C Loans are outstanding, the Term Loan C Loan commitment shall be cancelled) by an amount equal to such net cash proceeds; provided, however, that if such net cash proceeds are received -------- ------- on or prior to April 30, 2002 and no Term Loan C Loans are then outstanding, the Term Loan C Loan commitment shall be cancelled by an amount equal to such net cash proceeds in excess of $200,000,000.00, as more fully set forth in the Notice of Incremental Facility Commitment dated as of October 26, 2001; -4- (B) Debt Instruments. On the Business Day ---------------- following the date of receipt by the Parent, any Borrower or any Restricted Subsidiary of (1) at any time when there are Term Loan C Loans and/or Term Loan C Loan commitments outstanding, any net cash proceeds from the issuance of any public or private debt by any of the Borrowers, any of the Restricted Subsidiaries or the Parent, the Term Loan C Loans shall be repaid in an amount equal to such net cash proceeds (or if no Term Loan C Loans are then outstanding, the Term Loan C Loan commitment shall be reduced, as more fully set forth in the Notice of Incremental Facility dated as of October 26, 2001), and (2) at any time when there are no Term Loan C Loans outstanding, any Capital Raise Proceeds, the Loans shall be repaid in an amount equal to, in the aggregate, the Capital Raise Proceeds (after deducting amounts applied to Term Loan C Loans). (C) Application of Proceeds. The amount of ----------------------- the Capital Raise Proceeds required to be repaid under Section 2.7(b)(v)(B)(2) shall be applied to the Loans then outstanding on a pro rata basis. Accrued interest on the principal amount of the Loans being prepaid pursuant to Section 2.7(b)(v) to the date of such prepayment will be paid by the Borrowers concurrently with such principal prepayment. All repayments under this Section 2.7(b)(v) of each of the Term Loan A Loans and the Term Loan B Loans shall be applied to the repayments for such Loans in Section 2.7(b)(i) hereof in inverse order of maturity. All repayments under this Section 2.7(b)(v) of the Term Loan C Loans shall be applied to the repayments for such Term Loan C Loans in inverse order of maturity. Notwithstanding anything to the contrary in this Agreement, to the extent that net cash proceeds from a sale of Capital Stock and an issuance of public or private debt are received on the same day, the net cash proceeds from the issuance of public or private debt shall be applied to the Term Loan C Loans first, up to 50% of the total amount of such issuance, including amounts applied to the Term Loan C Loans, shall be deemed Capital Raise Proceeds (unless specifically excluded in the definition thereof), and any remaining Capital Raise Proceeds shall then be used to repay the Loans (other than the Term Loan C Loans) in accordance with Section 2.7(b)(v)(B). Any amendments or waivers of this Section 2.7(b)(v) shall require the approval of at least 50.1% of lenders holding Term Loan C Loans and/or Term Loan C Loan commitments as well as the approval of the Majority Lenders." (ii) Section 2.15 of the Loan Agreement, Incremental Facility Advances, is hereby amended by adding new section 2.15(f) as set forth below: "(f) Notwithstanding anything to the contrary herein, (i) the Term Loan C Loans may be refinanced in whole or in part with other Incremental Facility Loans (each, a "Replacement Term Loan C Loan"), which Replacement Term Loan C ---------------------------- Loan shall not reduce the amount of the then available remaining -5- Incremental Facility Commitment, and (ii) to the extent the Term Loan C Loans are repaid (or the commitment for such Term Loan C Loans is cancelled in whole or in part) as a result of the receipt by the Borrowers, the Restricted Subsidiaries or the Parent of the net cash proceeds from (A) the sale of any Capital Stock or (B) the issuance of any non-pari passu public or private debt otherwise permitted under this Agreement, the then available Incremental Facility Commitment will be increased by an amount equal to such repayment (or commitment cancellation)." (b) Amendments to Article 7. ----------------------- (i) Section 7.6 of the Loan Agreement, Investments ----------- and Acquisitions, is hereby amended by deleting subsection (b) thereof ---------------- in its entirety and substituting in lieu thereof the following: "(b) so long as no Default then exists or would be caused thereby, establish Unrestricted Subsidiaries and make Investments in (i) such Unrestricted Subsidiaries (in addition to Investments permitted under Section 7.6(e), (f) and (g) hereof), (ii) [reserved] and (iii) Persons primarily engaged in domestic and foreign communications tower and tower related businesses in an aggregate amount, directly or indirectly, provided that, giving effect to such additional -------- Investment, the aggregate Net Investment Amount made pursuant to the provisions of this Section 7.6(b) shall not exceed, from and after the effective date of the Sixth Amendment to Amended and Restated Loan Agreement, $300,000,000.00 at any time; provided further that, in the case of Investments made -------- ------- pursuant to clause (iii) of this Section 7.6(b), the Parent, any Borrower or any of the Restricted Subsidiaries has executed a binding acquisition, merger, lease/sublease or management agreement with such Person;" (ii) Section 7.6 of the Loan Agreement, Investments ----------- and Acquisitions, is hereby amended by deleting subsection (f) thereof ---------------- in its entirety and substituting in lieu thereof the following: "(f) [RESERVED]" (iii) Section 7.7 of the Loan Agreement, Restricted ---------- Payments, is hereby amended by deleting such section in its entirety -------- and substituting in lieu thereof the following: "Section 7.7 Restricted Payments. The Borrowers shall ------------------- not, and shall not permit any of the Restricted Subsidiaries to, directly or indirectly declare or make any Restricted Payment; provided, however, that so long as no Default or -------- ------- Event of Default hereunder then exists or would be caused thereby, the Borrowers may make, (a) subject to Section 2.7(b)(iv) hereof, cash distributions in an -6- aggregate amount for all Borrowers not to exceed fifty percent (50%) of Excess Cash Flow for the immediately preceding calendar year, on or after April 15th of each calendar year commencing on April 15, 2004; and (b) distributions to the Parent to make scheduled principal and interest payments on the Convertible Notes and the Senior Notes due 2009; provided, -------- however, that (x) all funds in the Interest Reserve shall have ------- been used to make all interest payments on the Convertible Notes due on or prior to October 15, 2001, (y) all funds in the 2001 Interest Reserve shall have been used in full to make all interest payments on the Senior Notes due 2009 due on or prior to February 15, 2002 and (z) all funds in the 2002 Interest Reserve shall have been used to make all interest payments on the Senior Notes due 2009 due in August 2002; provided that any funds remaining in the 2001 Interest Reserve -------- shall be used in full for such payments prior to using funds in the 2002 Interest Reserve." (iv) Section 7.8 of the Loan Agreement, Leverage -------- Ratio, is hereby amended by deleting the table included in such ----- section in its entirety and substituting in lieu thereof the following new table: "Period Ratio ------ ----- Borrowing Base Termination Date through December 31, 2001 7.75 to 1.00 January 1, 2002 through March 31, 2002 7.50 to 1.00 April 1, 2002 through June 30, 2002 7.00 to 1.00 July 1, 2002 through September 30, 2002 6.75 to 1.00 October 1, 2002 through March 31, 2003 6.50 to 1.00 April 1, 2003 through September 30, 2003 6.00 to 1.00 October 1, 2003 through March 31, 2004 5.25 to 1.00 April 1, 2004 through September 30, 2004 4.75 to 1.00 -7- October 1, 2004 through March 31, 2005 4.25 to 1.00 April 1, 2005 and thereafter 4.00 to 1.00" 2. No Other Amendments. Except for the amendments set forth above, the ------------------- text of the Loan Agreement and all other Loan Documents shall remain unchanged and in full force and effect. No amendment, waiver or consent by the Administrative Agent, the Issuing Bank or the Lenders under the Loan Agreement or any other Loan Document is granted or intended except as expressly set forth herein, and the Administrative Agent, the Issuing Bank and the Lenders expressly reserve the right to require strict compliance in all other respects (whether or not in connection with any Requests for Advance). Except as set forth herein, the amendments agreed to herein shall not constitute a modification of the Loan Agreement or any of the other Loan Documents, or a course of dealing with the Administrative Agent, the Issuing Bank and the Lenders at variance with the Loan Agreement or any of the other Loan Documents, such as to require further notice by the Administrative Agent, the Issuing Bank, the Lenders or the Majority Lenders to require strict compliance with the terms of the Loan Agreement and the other Loan Documents in the future. 3. Conditions Precedent. The effectiveness of this Amendment is -------------------- subject to: (a) receipt by the Administrative Agent of the following: (i) duly executed signature pages to this Amendment from the Majority Lenders; (ii) a duly executed Security Agreement from American Tower International, Inc.; (iii) a duly executed Pledge Agreement from American Tower International, Inc., pledging its interests in ATC Mexico Holding Corp., a Delaware corporation, and ATC South America Holding Corp., a Delaware corporation; (iv) a duly executed Assumption Agreement, in form and substance acceptable to the Administrative Agent, from American Tower International, Inc.; (v) a loan certificate of American Tower International, Inc., in substantially in the form of Exhibit V attached to the Loan Agreement, with all exhibits thereto; (vi) UCC-1 financing statements signed by American Tower International, Inc. to be filed in the office of the Secretary of State of the State of Delaware; and (vii) evidence that the 2002 Interest Reserve has been established; -8- (b) payment from funds received from the Borrowers by the Administrative Agent to each Lender approving this Amendment of an amendment fee equal to three-sixteenths (3/16) of one percent of the amount of Term Loan A Loans, Term Loan B Loans and Revolving Loan Commitments held by such Lender; and (c) the representations and warranties contained in Article 4 of the Loan Agreement and contained in the other Loan Documents remaining true and correct as of the date hereof, both before and after giving effect to this Agreement, except to the extent previously fulfilled in accordance with the terms of the Loan Agreement or such other Loan Document, as applicable, or to the extent relating specifically to the earlier date. No Default or Event of Default now exists or will be caused hereby. 4. Counterparts. This Amendment may be executed in any number of ------------ counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument. 5. Governing Law. This Amendment shall be construed in accordance ------------- with and governed by the laws of the State of New York. 6. Severability. Any provision of this Amendment which is ------------ prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof in that jurisdiction or affecting the validity or enforceability of such provision in any other jurisdiction. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] -9- IN WITNESS WHEREOF, the parties hereto have executed this Amendment or caused it to be executed by their duly authorized officers, all as of the day and year first above written. BORROWERS: AMERICAN TOWER, L.P., a Delaware limited partnership By ATC GP INC., its General Partner By_____________________________________ Name: Joseph L. Winn Title: Chief Financial Officer AMERICAN TOWERS, INC., a Delaware corporation By:____________________________________ Name: Joseph L. Winn Title: Chief Financial Officer VERESTAR, INC., a Delaware corporation By_____________________________________ Name: Joseph L. Winn Title: Chief Financial Officer TOWERSITES MONITORING, INC., a Delaware corporation By_____________________________________ Name: Joseph L. Winn Title: Chief Financial Officer Agreed to and Accepted by: AMERICAN TOWER INTERNATIONAL, INC., a Delaware corporation, as a new borrower By_______________________________ Name: Joseph L. Winn Title: Chief Financial Officer
Exhibit 10.9 NOTICE OF INCREMENTAL FACILITY COMMITMENT AMERICAN TOWERS, INC., a Delaware corporation, AMERICAN TOWER, L.P., a Delaware limited partnership, VERESTAR, INC., a Delaware corporation, TOWERSITES MONITORING, INC., a Delaware corporation and AMERICAN TOWER INTERNATIONAL, INC., a Delaware corporation (collectively, the "Borrowers"), in connection with that --------- certain Amended and Restated Loan Agreement dated January 6, 2000 (as amended, modified, restated or supplemented from time to time, the "Loan Agreement") by -------------- and among the Borrowers, the Lenders signatory thereto (collectively, the "Lenders"), the Issuing Bank (as defined therein) and Toronto Dominion (Texas), ------- Inc., as administrative agent (the "Administrative Agent"), hereby certifies -------------------- that: 1. As of the date hereof, the Borrowers have obtained an agreement to provide an Incremental Facility Commitment in the aggregate amount of two hundred fifty million and no/100s dollars ($250,000,000.00) from the financial institutions set forth in Schedule 1 attached hereto in such amounts as set ---------- forth in Schedule 1 attached hereto (collectively, the "Term Loan C ---------- ----------- Commitments", and individually, a " Term Loan C Commitment"). Within thirty (30) - ----------- ---------------------- days from the date hereof, financial institutions may provide additional Term Loan C Commitments provided that, (a) the aggregate amount of all Term Loan C -------- Commitments will not exceed, in the aggregate, THREE HUNDRED MILLION AND NO/100s DOLLARS ($300,000,000.00), (b) such financial institutions execute a supplemental signature page to this notice, and (c) no financial institution's existing Term Loan C Commitment shall be increased or decreased without such financial institution's consent. At any time an additional Term Loan C Commitment is provided within the thirty-day period, Schedule 1 hereto will be modified accordingly and each financial institution's pro rata share of the Term Loan C Commitment shall be modified accordingly. The terms for repayment of the loans (the "Term Loan C Loans") made pursuant to the Term Loan C Commitment are ----------------- set forth on Schedule 2 attached hereto. ---------- 2. All of the representations and warranties of the Borrowers made under the Loan Agreement (including, without limitation, all representations and warranties with respect to the Restricted Subsidiaries) are on the date hereof, and will be as of the effective date of such Term Loan C Commitment, true and correct in all material respects after giving effect to any update to information provided to the Lenders in accordance with the Loan Agreement, except to the extent previously fulfilled, to the extent subsequently inapplicable or to the extent that such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct on such earlier date. 3. There does not exist, on this date, and there will not exist after giving effect to the Term Loan C Loans, any Default or Event of Default under the Loan Agreement. 4. Set forth on Schedule 3 attached hereto are revised projections ---------- which demonstrate the Borrowers' ability to timely repay the Loans, including the Term Loan C Loans, and to timely comply with the covenants contained in Sections 7.8, 7.9, 7.10 and 7.11 of the Loan Agreement. 5. The Lenders having Term Loan C Commitments (the "Term Loan C ----------- Lenders") signatory hereto agree that, upon signature hereof, in their capacity - ------- as Term Loan C Lenders, they are bound under the Loan Agreement, as modified by the terms hereof, as "Lenders" (as defined therein). ------- 6. This Notice of Incremental Facility Commitment constitutes a Loan Document. The Loan Agreement shall hereafter be deemed amended and modified as necessary to incorporate the terms and conditions applicable to the Term Loan C Commitment which is the subject of this Notice of Incremental Facility Commitment. The parties hereto agree that the Term Loan C Loans shall be an "Incremental Facility" as defined in the Loan Agreement. -------------------- Capitalized terms used in this Notice of Incremental Facility Commitment and not otherwise defined herein are used as defined in the Loan Agreement. [Remainder of Page Intentionally Left Blank] 2 IN WITNESS WHEREOF, the undersigned, acting through an Authorized Signatory, has signed this Notice of Incremental Facility Commitment on the 26th day of October, 2001. BORROWERS: AMERICAN TOWERS, INC., a Delaware corporation By:______________________________________________ Name: Joseph Winn Chief Financial Officer AMERICAN TOWER, L.P., a Delaware limited partnership By ATC GP Inc., its General Partner By:______________________________________________ Name: Joseph Winn Chief Financial Officer VERESTAR, INC., a Delaware corporation By:______________________________________________ Name: Joseph Winn Chief Financial Officer TOWERSITES MONITORING, INC., a Delaware corporation By:______________________________________________ Name: Joseph Winn Chief Financial Officer AMERICAN TOWER INTERNATIONAL, INC., a Delaware corporation By:______________________________________________ Name: Joseph Winn Chief Financial Officer Affirmation of Guarantors: Each of the Guarantors listed on Schedule 3 attached ---------- hereto, by affixing their signature hereto, affirm that the Term Loan C constitutes an Obligation under the Loan Agreement and the other Loan Documents, including the Guarantees and that all Collateral pledged by them continues to secure all of the Obligations (including the Term Loan C Loans) of the Borrowers, the Restricted Subsidiaries and any other Guarantors. For each of the Guarantors listed on Schedule 3 attached hereto: By:______________________________________________ Name: Joseph Winn Title: LENDERS: TORONTO DOMINION (TEXAS), INC., as Administrative Agent and as a Lender By: ____________________________________________ Name: ______________________________________ Title: _____________________________________ THE CHASE MANHATTAN BANK, as a Lender By: ____________________________________________ Name: ______________________________________ Title: _____________________________________ CREDIT SUISSE FIRST BOSTON, as Lender By: ____________________________________________ Name: ______________________________________ Title: _____________________________________ By: ____________________________________________ Name: ______________________________________ Title: _____________________________________ GENERAL ELECTRIC CAPITAL CORPORATION, as a Lender By:_____________________________________________ Name: _______________________________________ Title: ______________________________________ Schedule 1 ---------- List of Incremental Facility C Lenders -------------------------------------- Name: Commitment: - ---- ---------- Toronto Dominion (Texas), Inc. $75,000,000.00 Credit Suisse First Boston $75,000,000.00 General Electric Capital Corporation $50,000,000.00 The Chase Manhattan Bank $50,000,000.00 Schedule 2 ---------- Incremental Facility Amount: Up to $300,000,000 ("Term Loan C") ----------- Purpose: Proceeds may used (a) to fund capital expenditures as permitted in the Loan Agreement, (b) to finance acquisitions and investments as permitted in the Loan Agreement, (c) to finance operations of its Restricted Subsidiaries and (d) for general corporate purposes. Loans: The Incremental Facility Lenders having Term Loan C Commitments (the " Term Loan C Lenders") agree severally, and not jointly, upon the terms and subject to the conditions of this Notice and the Loan Agreement to lend to the Borrower, in up to three separate advances, each of which must be at least $100,000,000.00 or a multiple thereof, on or from time to time after the effective date of the Term Loan C Commitments, amounts which do not exceed, (i) in the aggregate at any one time outstanding, the Term Loan C Commitments and, (ii) individually, such Term Loan C Lender's Term Loan C Commitment, in each case, as in effect from time to time; provided, however that amounts repaid under the -------- ------- Term Loan C Commitments may not be reborrowed. Conditions Precedent: The obligation of the Term Loan C Lenders to undertake the Term Loan C Commitments, and the effectiveness of the Term Loan C Commitments are subject to the prior or contemporaneous fulfillment of each of the following conditions: (a) The Administrative Agent and the Term Loan C Lenders shall have received each of the following: (i) Notice of Incremental Facility Commitment, duly executed by the Borrowers, the Restricted Subsidiaries and the other Guarantors; (ii) duly executed Term Loan C Notes; (iii) all such other documents as either the Administrative Agent or any Term Loan C Lender may reasonably request, certified by an appropriate governmental official or an Authorized Signatory if so requested; and (iv) any and all fees which may be due upon closing. (b) The Administrative Agent and the Term Loan C Lenders shall have received evidence satisfactory to them that all Necessary Authorizations, including, without limitation, all necessary consents to the closing of this Term Loan C, have been obtained or made, are in full force and effect and are not subject to any pending or, to the knowledge of the Borrowers, threatened reversal or cancellation, and the Administrative Agent and the Term Loan C Lenders shall have received a certificate of an Authorized Signatory so stating. Availability: Term Loan C shall be available only after the Administrative Agent shall have received evidence that all amounts under the existing Term Loan A, Term Loan B and the Revolving Loan Commitment are fully drawn. Incremental Facility C Maturity Date: June 30, 2008 Repayment Term Loan C shall amortize in equal quarterly Schedule: installments of 50.0% commencing on March 31, 2008, with the balance due on the Maturity Date as shown above, based on a percentage of the principal balance outstanding under the Term Loan C on March 30, 2008. Such amounts shall be repaid on the last day of each calendar quarter. Interest Rate: For all purposes under the Loan Agreement, the Term Loan C shall accrue interest as set forth for the Loans under Section 2.3(f) of the Loan Agreement with the following Applicable Margins: Base Rate Advance LIBOR Advance Period Applicable Margin Applicable Margin ------ ----------------- ----------------- Closing Date through October 31, 2002 3.000% 4.000% November 1, 2002 through March 31, 2003 4.000% 5.000% Thereafter. the Applicable Margins shall increase by 0.25% per quarter until the Term Loan C Loans are paid in full. Facility Fees: Commencing on April 1, 2003 and on the first day of each calendar quarter thereafter, a facility fee shall be paid to the Term Loan C Lenders in an amount equal to 0.250% on the Term Loan C commitment. The Facility Fee will be fully earned when due and non-refundable when paid. Commitment Fee: A commitment fee shall be paid to the Administrative Agent for the account of each Term Loan C Lender in accordance with such Lender's applicable Commitment Ratio for the Term Loan C based on the average unused Term Loan C Commitment of such Lender for each day from the date hereof through and including the date on which the Term Loan C Commitment is cancelled in full at a rate of two percent (2.000%) per annum. Such commitment fee shall be computed on the basis of a year of 365/366 days for the actual number of days elapsed, shall be payable quarterly in arrears on the last Business Day of each calendar quarter, and shall be fully earned when due and non-refundable when paid. Payments: Payments of interest and principal shall, except to the extent set forth herein, be payable in the same manner as payments for interest and principal of the Term Loans under the Loan Agreement. Mandatory Reduction/ (A)Debt Proceeds - 100.0% of the net proceeds from the Repayment: ------------- sale of any public or private debt issuance shall be required to repay the Term Loan C and reduce the Term Loan C commitment (to the extent that there are no Term Loan C loans outstanding). (B)Equity Proceeds - 100% of the net proceeds (other --------------- than (x) net proceeds in an amount not to exceed $2,000,000.00 in the aggregate after the Agreement Date from the sale or issuance of Capital Stock in connection with any employee stock option plan of such Person or (y) proceeds received from Capital Stock issued in connection with an Acquisition permitted hereunder) of the sale of any capital stock shall be required to repay the Term Loan C and to reduce the Term Loan C commitment (to the extent that there are no Term Loan C loans outstanding); provided, however, that -------- ------- on or prior to April 30, 2002, if on the date of any sale of capital stock there are no loans outstanding under Term Loan C, the Term Loan C commitment shall not be reduced by up to $200,000,000 of the net proceeds received from such sale of capital stock. Schedule 3 ---------- Guarantors ---------- ATC Holding, Inc. American Tower Corporation ATC Operating, Inc. OmniAmerica Holdings Corporation CommSite International, Inc. TeleCom Towers L.L.C. ATC LP Inc. ATS/PCS, LLC OmniAmerica Towers, Inc. South Atlantic Tower Corporation OmniTower, Ltd. American Tower PA LLC( f.k.a American Tower Texas) (f.k.a. ATC Financing LLC) ATC Tower Services, Inc. (f.k.a. Specialty Constructors, Inc.) Commsite Towers, Inc. US Sitelease, Inc. Prime Telecom Communications Co. RFM Facilities Management LP American Tower Management, Inc. Maritime Telecommunications Network, Inc. American Tower Trust #1 American Tower Trust #2 Flash Technology Corporation of America Modern Technical Services, Inc. Flash Technology International, Inc. Kline Iron & Steel Company, Inc. ATC (TV), Inc. (f.k.a. Tower Ventures, Inc.) ATC (TV), LLC, (f.k.a Tower Ventures, LLC) ATC Midwest, LLC Verestar Networks, Inc., (f.k.a. InterPacket Networks, Inc.) Verestar AG, fka Verestar GmBH Interpacket Promoters India Limited (49%) Interpacket (Singapore) Pte Limited Interpacket Brazil Limitada Interpacket de Argentina S.A. (99%) Digital Seas International, Inc. General Telecom, Inc. Verestar International, Inc. Unisite, Inc. American Tower Delaware Corporation Unistar Technologies, Inc. Unisite Alpha, Inc. National Wireless Infrastructure LP Pisa Real Estate LLC ATC South LLC Digital Television Towers, Ltd. Carolina Towers, Inc. Site Advantage, Inc. MHB Tower Rentals of America, LLC, fka Communisite Tower Rentals of America, LLC ATC Mexico Holding Corp. ATC MexHold, Inc. ATC South America Holding Corp. MTS Wireless Components (S) PTE, Ltd., a Singapore company ATC International Holding Corp., (f.k.a American Tower International, Inc.) (f.k.a. ATC Broadcast GP, Inc.) American Tower do Brazil, Ltd.