EXHIBIT 10.30
ARS-ATS SEPARATION AGREEMENT
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Agreement dated as of June 4, 1998 by and among American Radio Systems
Corporation, a Delaware corporation ("American"), American Tower Systems
Corporation, a Delaware corporation ("American Tower") and CBS Corporation
(formerly Westinghouse Electric Corporation), a Pennsylvania corporation
("CBS").
W I T N E S S E T H:
WHEREAS, American, CBS and R Acquisition Corp., a Delaware corporation
("CBS Subsidiary"), are parties to an Amended and Restated Agreement and Plan of
Merger, dated as of December 18, 1997, as amended (the "Merger Agreement"),
pursuant to which CBS Subsidiary will merge (the "Merger") with and into
American and American shall be the surviving corporation; and
WHEREAS, (i) CBS was not willing to enter into the Merger Agreement without
assurances that the aggregate amount to be paid by CBS for the radio business of
American, including without limitation the Cash Consideration, the aggregate
principal amount of debt of American that would remain outstanding after giving
effect to the Tower Separation, the aggregate liquidation preference of all
preferred stock (other than the American Convertible Preferred Stock), and the
tax liability of American with respect to the Tower Separation, would not exceed
$2.6 billion; (ii) American would not have been willing to enter into a Merger
Agreement that would have provided for a direct adjustment in the Cash
Consideration or the escrow of a portion of the Cash Consideration in order to
satisfy that the purchase price to be paid by CBS, as aforesaid, would not
exceed $2.6 billion; and (iii) CBS and American agreed in the Merger Agreement
that American Tower would assume and pay the tax liability of American with
respect to the Tower Separation and pay certain purchase price adjustments in
respect of working capital and other items, and American Tower intended such
assumption and such payments to be on behalf of its stockholders who formerly
owned stock or options to acquire stock of American; and
WHEREAS, the Merger Agreement provides that, prior to the Closing, American
and American Tower shall enter into an agreement and other documentation
approved by CBS (which approval shall not be unreasonably withheld, delayed or
conditioned) to effect the delivery of the Tower Common Stock as part of the
Tower Merger Consideration or the Merger Consideration, as the case may be (the
"Tower Separation") and to implement American Tower's assumption of the tax
liability and other purchase price adjustments of American with respect to the
Tower Separation; and
WHEREAS, the Merger Agreement provides for the entry by CBS, American and
American Tower into an agreement on substantially the terms hereinafter set
forth providing for the Tower Separation; and
WHEREAS, the respective Boards of Directors of American and American Tower
have approved, and CBS has approved, this Agreement;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained and other valuable
consideration, the receipt and adequacy whereof are hereby acknowledged, the
parties hereto hereby, intending to be legally bound, represent, warrant,
covenant and agree as follows:
ARTICLE 1
DEFINED TERMS
As used herein, unless the context otherwise requires, the terms
defined in Appendix A to the Merger Agreement when used in this Agreement
without definition shall have the respective meanings set forth therein. Terms
defined in the singular shall have a comparable meaning when used in the plural,
and vice versa, and the reference to any gender shall be deemed to include all
genders. Unless otherwise defined or the context otherwise clearly requires,
terms for which meanings are provided in this Agreement or Appendix A to the
Merger Agreement shall have such meanings when used in each Collateral Document
executed or required to be executed pursuant hereto or thereto or otherwise
delivered, from time to time, pursuant hereto or thereto. References to
"hereof," "herein" or similar terms are intended to refer to the Agreement as a
whole and not a particular section, and references to "this Section" or "this
Article" are intended to refer to the entire section or article and not a
particular subsection thereof.
"American Indemnitees" shall mean American, each Affiliate of
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American, including any of its direct or indirect Subsidiaries, each of their
directors, officers or employees and each of the heirs, executors, successors
and assigns of any of the foregoing, other than the American Tower Indemnitees.
"American Tax Group"" shall mean American and those of its
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Subsidiaries as are included from time to time in the consolidated Federal
income tax returns of American.
"American Tower Indemnitees" shall mean the Tower Subsidiaries, each
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of their Affiliates, each of their directors, officers or employees and each of
the heirs, executors, successors and assigns of any of the foregoing, other than
the American Indemnitees.
"CBS Indemnitees" shall mean CBS, each Affiliate of CBS, including any
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of its direct or indirect Subsidiaries (including, after the Effective Time, the
American Indemnitees), each of their directors, officers or employees and each
of the heirs, executors, successors and assigns of any of the foregoing.
"Indemnifiable Losses" shall mean, subject to Section 3.4, all losses
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(including, without limitation, losses of benefits), liabilities, damages,
deficiencies, obligations, fines, expenses, claims, demands, actions, suits,
proceedings, judgments or settlements, whether or not resulting from Third Party
Claims (as defined in Section 3.3(a)), including interest and penalties
recovered by a third party with respect thereto and out-of-pocket expenses and
reasonable attorneys' and accountants' fees and expenses incurred in the
investigation or defense of any of the same or in asserting, preserving or
enforcing any of the Indemnitee's rights hereunder, suffered or incurred by an
Indemnitee.
"Indemnitee" shall mean any of the CBS Indemnitees, the American
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Indemnitees or the American Tower Indemnitees who or which may seek
indemnification under this Agreement.
ARTICLE 2
TOWER SEPARATION
Subject to the terms and conditions hereof, American, American Tower
and CBS shall cause the Tower Separation to be consummated at the earlier to
occur of the Tower Merger Effective Time and the Effective Time. The date on
which the Tower Separation is so consummated is herein referred to as the
"Separation Closing Date".
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ARTICLE 3
INDEMNIFICATION MATTERS
3.1 American Tower Indemnification. American Tower shall indemnify,
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defend and hold the CBS Indemnitees or the American Indemnitees harmless from
and against any Indemnifiable Loss to which the CBS Indemnitees and the American
Indemnitees may be or become subject that relate to or arise from:
(a) the assets, business, operations, debts or liabilities of
American Tower Mergercorp or the Tower Subsidiaries (other than, in the
case of the Tower Subsidiaries, Tax liabilities governed by Article 4)
whether arising prior to, concurrent with or after the Merger, including,
without limitation, the assets (or debts or liabilities associated
therewith) to be transferred to American Tower pursuant to the provisions
of Article 11;
(b) liabilities (i) in connection with the distribution of the shares
of Tower Common Stock as part of the Tower Merger Consideration or the
Merger Consideration, as the case may be, (ii) relating to or arising from
any agreement, arrangement or understanding (other than the Merger
Agreement and the Collateral Documents, except as otherwise expressly set
forth therein) entered into by American, American Tower Mergercorp or any
of the Tower Subsidiaries (x) for the benefit of any of the Tower
Subsidiaries, (y) in contemplation of the Tower Separation, or (z) with
respect to the sale, assignment, transfer or other disposition of shares of
Tower Common Stock, (iii) relating to or arising from any untrue statement
or alleged untrue statements of a material fact contained in the
Information Statement, any Registration Statement or in any document filed
or required to be filed, or any document delivered to any security holder
of American, in connection with the Merger or the Tower Separation (or in
any document containing information relating thereto), or in any document
filed or required to be filed by American, American Tower Mergercorp or any
of the Tower Subsidiaries in connection with the preceding clause (ii) (or
in any document containing information relating thereto), or, in any such
case, any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
except with respect to information provided by or relating solely to
American (excluding American Tower Mergercorp and the Tower Subsidiaries)
which is contained in or expressly consistent with (x) the Filed American
SEC Documents, (y) the American September 10-Q or (z) any information (not
relating to the Merger, the Tower Separation, the Tower Subsidiaries, the
preceding clause (ii), the Merger Agreement, the Collateral Documents or
the obligations thereunder) contained in (I) the Annual Report on Form 10-K
of American for the fiscal year ended December 31, 1997, (II) the
Convertible Registration Statement as of the Effective Time (including the
Prospectus to be filed pursuant to Rule 424 under the Securities Act
containing the Quarterly Report on Form 10-Q for the three months ended
March 31, 1998), and (III) any document furnished by American to American
Tower for inclusion in the Convertible Registration Statement following the
Effective Time (and American hereby agrees to furnish, upon request, to
American Tower any such information required by Applicable Law in
connection with maintaining the effectiveness of the Convertible
Registration Statement for so long as such effectiveness is required
pursuant to Article 5 hereof) (the documents referred to in clauses (x) and
(y) and this clause (z) being collectively referred to as the "American
Included SEC Information"), or (iv) in connection with any action or
omission of any Tower Employee listed on Schedule B hereto for the benefit
of, including without limitation in furtherance of the business of, any of
the Tower Subsidiaries or in connection with or incident to such employee's
duties and responsibilities as a Tower Employee;
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(c) any economic impact related to or arising from the failure to
obtain any Governmental Authorizations, Private Authorizations or other
third party consents, or to make any Governmental Filings, necessary to
consummate the Tower Separation;
(d) the rental and related expenses for the relevant portion of the
leased premises located at 000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
referred to in Section 6.3, in the event of the failure to obtain the
landlord's consent to the assignment of the obligations relating to, or
sublease of, such relevant portion of such premises; and
(e) any actual or alleged defect in title to any of the assets listed
in Section 6.17 of the American Disclosure Schedule that were owned in fee
by American (the "Tower Fee Sites") that are attributable to American as a
result of the conveyance of the Tower Fee Sites or the granting of special
warranty deeds by American to American Tower with respect to the Tower Fee
Sites. In addition to, and not in derogation of the foregoing, American
Tower shall be responsible to take all necessary actions (including without
limitation to commencing and/or defending legal actions) and bear all costs
and expenses necessary to clear any defect in title to any Tower Fee Site
for which American is responsible as the result of the conveyance of the
Tower Fee Sites and the granting of such special warranty deeds by American
to American Tower.
At the earlier to occur of the Tower Merger Effective Time and the Effective
Time, American Tower hereby agrees to assume all liabilities (the "Assumed
Liabilities") with respect to which American Tower has agreed to indemnify and
hold harmless American pursuant to the provisions of this Section 3.1, Article 4
and Section 9.1.
3.2 American Indemnification. Following the Effective Time, American
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shall indemnify, defend and hold the American Tower Indemnitees harmless from
and against any Indemnifiable Loss (other than, in the case of the Tower
Subsidiaries, the Assumed Liabilities) to which the American Tower Indemnitees
may be or become subject that (i) relate to or arise from the assets, business,
operations, debts or liabilities of American or its Subsidiaries (other than the
Tower Subsidiaries) whether arising prior to, concurrent with or after the
Merger, (ii) arise from any action taken by any Tower Employee in the ordinary
course of business during the period, if any, from the Tower Merger Effective
Time to the Effective Time for the purpose of providing management services to
American pursuant to Section 9.1, or (iii) relate to or arise from the American
Included SEC Documents.
3.3 Procedures Relating to Indemnification.
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(a) In order for an Indemnitee to be entitled to any indemnification
provided for under this Agreement in respect of, arising out of or involving a
claim made by any Person who is not an Indemnitee against such Indemnitee (a
"Third Party Claim"), such Indemnitee must notify the party who may become
obligated to provide indemnification hereunder (the "indemnifying party") in
writing, and in reasonable detail, of the Third Party Claim reasonably promptly,
and in any event within fifteen business days after receipt by such Indemnitee
of written notice of the Third Party Claim; provided, however, that failure to
give such notification shall not affect the indemnification provided hereunder
except to the extent the indemnifying party shall have been actually prejudiced
as a result of such failure; provided further, however, that with respect to any
matter for which American Tower is the indemnifying party, American Tower shall
be deemed to have received notice with respect to all matters by or against
American or any Subsidiary of American that arose prior to, or were otherwise
pending at, the earlier to occur of the Tower Merger Effective Time and the
Effective Time. After any required notification (if applicable), the Indemnitee
shall deliver to the indemnifying party, promptly after the Indemnitee's receipt
thereof, copies of all notices and documents (including court papers) received
by the Indemnitee relating to the Third Party Claim.
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(b) If a Third Party Claim is made against an Indemnitee, the indemnifying
party will be entitled to participate in the defense thereof and, if it so
chooses, to assume the defense thereof (at the expense of the indemnifying
party) with counsel selected by the indemnifying party and reasonably
satisfactory to the Indemnitee. Should the indemnifying party so elect to
assume the defense of a Third Party Claim, the indemnifying party will not be
liable to the Indemnitee for any legal fees or expenses subsequently incurred by
the Indemnitee in connection with the defense thereof. If the indemnifying
party assumes such defense, the Indemnitee shall have the right to participate
in the defense thereof and to employ counsel, at its own expense, separate from
the counsel employed by the indemnifying party, it being understood that the
indemnifying party shall control such defense; provided, however, that the
Indemnitee may employ separate counsel (the reasonable fees and expenses of
which shall be paid by the indemnifying party) if the named parties in any Third
Party Claim (including any impleaded parties) include both the Indemnitee and
the indemnifying party and the Indemnitee shall have been advised in writing by
its outside counsel that representation of both parties by the same counsel
would be inappropriate under applicable standards of professional conduct due to
differing interests between them. The indemnifying party shall be liable for
the reasonable fees and expenses of counsel employed by the Indemnitee for any
period during which the indemnifying party has not assumed the defense thereof.
Notwithstanding the foregoing, the indemnifying party shall not be entitled
to assume the defense of any Third Party Claim if the Third Party Claim seeks an
order, injunction or other equitable relief or relief for other than money
damages against the Indemnitee which the Indemnitee reasonably determines, after
conferring with its outside counsel, (i) cannot be separated from any related
claim for money damages, and (ii) is, in the reasonable business judgment of the
Indemnitee, material to such Third Party Claim or otherwise material to the
business of the Indemnitee; provided, however, that such right to assume the
defense of any Third Party Claim by the Indemnitee shall not extend to any
portion of the Third Party Claim that seeks an order, injunction or other
equitable relief or relief for other than money damages against the indemnifying
party which the indemnifying party reasonably determines, after conferring with
its outside counsel, is, in the reasonable business judgment of the indemnifying
party, material to such Third Party Claim or otherwise material to the business
of the indemnifying party. If such equitable relief or other relief portion of
the Third Party Claim can be so separated from that for money damages, the
indemnifying party shall be entitled to assume the defense of the portion
relating to money damages. To the extent the indemnifying party is not entitled
to assume the defense, in whole or in part, of any Third Party Claim, (i) the
Indemnitee shall conduct the defense thereof to the extent so entitled, with
counsel selected by the Indemnitee and reasonably satisfactory to the
indemnifying party (which shall be liable for the reasonable fees and expenses
of such counsel), and (ii) the indemnifying party will be entitled to
participate in the defense thereof. The indemnification required by Section 3.1
or 3.2, as the case may be, shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, within fifteen
business days of receipt by the indemnifying party of bills or actual notice
that such Indemnifiable Loss has occurred, as the case may be. If the
indemnifying party chooses to defend or prosecute a Third Party Claim, and to
the extent the indemnifying party is not entitled to assume the defense of a
Third Party Claim, all the parties hereto shall cooperate in the defense or
prosecution thereof, which cooperation shall include (upon the indemnifying
party's request) the provision to the indemnifying party of records and
information which are reasonably relevant to such Third Party Claim, and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. If the
indemnifying party chooses to defend or prosecute any Third Party Claim, the
Indemnitee will agree to any settlement, compromise or discharge of such Third
Party Claim which the indemnifying party may recommend and which by its terms
obligates the indemnifying party to pay the full amount of liability in
connection with such Third Party Claim; provided, however, that, without the
Indemnitee's consent, the indemnifying party shall not consent to entry of any
judgment or enter into any settlement (x) that provides for injunctive or other
nonmonetary relief affecting the Indemnitee or (y) that does not include as an
unconditional term thereof the giving by each claimant or plaintiff to such
Indemnitee of a release from all liability with respect to such claim. If the
indemnifying party shall have assumed the defense of a Third
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Party Claim, the Indemnitee shall not admit any liability with respect to, or
settle, compromise or discharge, such Third Party Claim without the indemnifying
party's prior written consent (which consent shall not be unreasonably
withheld). To the extent that the Indemnitee is entitled to and elects to defend
or prosecute any Third Party Claim, the Indemnitee shall not consent to entry of
any judgment or enter into any settlement (x) that provides for injunctive or
other nonmonetary relief affecting the indemnifying party or (y) that does not
include as an unconditional term thereof the giving by each claimant or
plaintiff to such indemnifying party of a release from all liability with
respect to such claim.
(c) In order for an Indemnitee to be entitled to any indemnification
provided for under this Agreement in respect of a claim that does not involve a
Third Party Claim, the Indemnitee shall deliver written notice of such claim
with specific reference to this Section 3.3 with reasonable promptness to the
indemnifying party. The failure by any Indemnitee so to notify the indemnifying
party shall not relieve the indemnifying party from any liability which it may
have to such Indemnitee under this Agreement, except to the extent that the
indemnifying party shall have been actually prejudiced by such failure. If the
indemnifying party does not notify the Indemnitee within fifteen business days
following its receipt of such notice that the indemnifying party disputes its
liability with respect to such claim under Section 3.1 or 3.2, as the case may
be, the claim shall be conclusively deemed a liability of the indemnifying party
under Section 3.1 or 3.2, as the case may be, and the indemnifying party shall
pay the amount of such liability to the Indemnitee on demand or, in the case of
any notice in which the amount of the claim (or any portion thereof) is
estimated, on such later date when the amount of such claim (or such portion
thereof) becomes finally determined. If the indemnifying party has timely
disputed its liability with respect to such claim, as provided above, the
indemnifying party and the Indemnitee shall proceed in good faith to negotiate a
resolution of such dispute and, if not resolved through negotiations, such
dispute shall be resolved by litigation in an appropriate court of competent
jurisdiction.
(d) The parties hereto agree that (i) notices and other communications
made or delivered to American Tower shall also be deemed to have been made or
delivered to all other American Tower Indemnitees, and all elections, selections
of counsel, choices, agreements and consents made or delivered by American Tower
shall be deemed to have also been made or delivered by the other applicable
American Tower Indemnitees, and shall be binding thereon and (ii) notices and
other communications made or delivered to CBS shall also be deemed to have been
made or delivered to all other CBS Indemnitees and American Indemnitees, and all
elections, selections of counsel, choices, agreements and consents made or
delivered by CBS shall be deemed to have also been made or delivered by the
other applicable CBS Indemnitees and American Indemnitees, and shall be binding
thereon.
3.4 Certain Limitations.
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(a) The amount of any Indemnifiable Losses shall be net of any amounts
actually recovered by the Indemnitee from third parties (including, without
limitation, amounts actually recovered under insurance policies) with respect to
such Indemnifiable Losses.
(b) All indemnification payments under this Agreement shall be determined
so as to keep the Indemnitee whole on an after-tax basis, i.e., taking into
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account the tax consequences to the Indemnitee of making a payment that is
indemnified by another party under this Agreement or of receiving a payment
under this Agreement as indemnification therefor. Any such tax consequences
shall be determined by comparing the actual tax liability of the Indemnitee for
any period taking into account any such payments to the amount that such tax
liability would have been if the Indemnitee had not made or received such
payments. Any payment made by American Tower with respect to indemnification
payments under this Agreement shall be made to CBS in satisfaction of American
Tower's assumption of American's tax liability and American Tower's agreement to
pay certain purchase price adjustment items and American Tower's intention that
such assumption and payment was on behalf of its stockholders who formerly were
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stockholders or optionees of American, and nothing in this Section 3.4(b) shall
impair, restrict or otherwise qualify or affect in any way the obligations of
the parties hereto set forth in Article 4 relating to the tax reporting for the
Tower Separation. Any disagreement as to the amount of the actual tax liability
of any Indemnitee shall be resolved in accordance with the arbitration procedure
described in Section 4.3(b).
3.5 Exclusivity Regarding Tax Matters. Notwithstanding anything in this
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Agreement to the contrary, Section 3.4(b), this Section 3.5, Article 4, Section
10.1(g), Article 12 and Section 16.3 shall be the exclusive agreement among the
parties with respect to the Tax matters dealt with therein, including
indemnification in respect of Tax matters.
ARTICLE 4
TAX MATTERS
4.1 Tax Sharing Agreement. The tax sharing agreement among the Tower
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Subsidiaries and American and American's other Subsidiaries shall be terminated
as of the earlier of (a) the effective date of the Merger, and (b) the date (the
"Tower Deconsolidation Date") that the Tower Subsidiaries are no longer eligible
to be included in the consolidated tax returns of American and its other
Subsidiaries under Sections 1501 to 1504 of the Code and will have no further
effect for any taxable year (whether the current year, a future year, or a past
year). Each of American and American Tower hereby acknowledge that the Tower
Deconsolidation Date occurred on January 22, 1998 and that the tax sharing
agreement was terminated on such date.
4.2 Allocation of Tax Liabilities; Deconsolidation
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(a) American shall include the income of the Tower Subsidiaries (including
any deferred income triggered into income by Reg. (S)1.1502-13 and Reg.
(S)1.1502-14 and any excess loss accounts taken into income under Reg.
(S)1.1502-19) on American's consolidated federal income Tax returns and
consolidated or combined state and local income Tax returns to the extent such
income is properly includible thereon for all periods through the Tower
Deconsolidation Date, and pay any income Taxes attributable to such income.
American Tower shall reimburse American for any such federal, state and local
income Taxes payable by the American Tax Group attributable to such income, as
determined on a separate company basis; provided, however, that American Tower
shall have no reimbursement obligation if American has no income Tax liability
on a consolidated basis as a result of a net operating loss or to the extent
that the income of the Tower Subsidiaries is offset by a net operating loss
under the principles of Section 4.2(d). The Tower Subsidiaries will furnish Tax
information to American for inclusion in American's federal consolidated income
Tax return for the period through the Tower Deconsolidation Date in accordance
with American Tower's past custom and practice. The income of the Tower
Subsidiaries will be apportioned to the period up to and including the Tower
Deconsolidation Date and the period after the Tower Deconsolidation Date by
closing the books of the Tower Subsidiaries as of the end of such date.
(b) American Tower shall indemnify the American Tax Group and CBS for all
Taxes imposed by any Taxing Authority on any member of the American Tax Group or
on CBS (or on any member of CBS's consolidated tax group) as a result of or in
connection with (i) the sale or transfer of assets to a Tower Subsidiary
pursuant to Section 11.2 (or between members of the American Tax Group prior to
the final transfer to a Tower Subsidiary or between Tower Subsidiaries), (ii)
the Merger, (iii) the Tower Merger, (iv) the Tower Separation, (v) any other
disposition or issuance of American's stock interest in American Tower or
issuance of stock in American Tower contemplated or permitted hereby or by the
Merger Agreement or by any Collateral Document, (vi) the merger of American
Tower with any other Person, (vii) the transactions occurring on or about
January 20-21, 1998, involving American Tower Systems, L.P. or interests
therein,
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as the case may be, or otherwise in connection with the Tower Deconsolidation or
related transactions, or (viii) the exercise (or cashout) of stock options by
employees of American Tax Group at any time on or prior to the Effective Time,
including without limitation any Taxes (1) on any gain to any member of the
American Tax Group arising under Section 311 of the Code, (2) on any deferred
gain to any member of the American Tax Group triggered as a result of or upon
any such event, (3) on any gain attributable to any excess loss account
triggered upon any such event, (4) arising as a result of the election or other
transactions contemplated by paragraph (j) of this Section 4.2, (5) on any
income or gain arising as a result of transactions described in Section 3.4(c)
or the second sentence of Section 6.8(a) of the Merger Agreement, (6) as a
result of the timing of the payment of Taxes (including, without limitation, any
estimated Taxes) hereunder, (7) on any gain on the conversion of American
Convertible Preferred Stock into Tower Common Stock, and (8) in the nature of
any transfer Taxes arising from any such event; provided, however, that such
indemnity shall only apply to the extent that the additional liability for such
Taxes payable by the American Tax Group as a consequence of such events (on a
"but for" basis), after giving effect to any net operating loss in accordance
with the principles of Section 4.2(d), exceeds $20,000,000. Any payment made by
American Tower with respect to such indemnification or pursuant to the
provisions of Section 4.2(c) shall be made to CBS in satisfaction of American
Tower's assumption of American's tax liability with respect to the Tower
Separation and American Tower's intention that such assumption was on behalf of
its stockholders who formerly were stockholders or optionees of American.
(c) If as a result of any payment by American Tower to any member of the
American Tax Group or to CBS pursuant to this Section 4.2 (including this
paragraph (c)), CBS (or any member of its consolidated group for Federal income
tax purposes) or any member of the American Tax Group becomes liable in any
taxable year to pay any Taxes in excess of the Taxes they would have owed in the
absence of any such payment by American Tower, American Tower will indemnify
such Person for such Tax liability and make such Person whole on an after-tax
basis for such Tax liability.
(d) For the purposes of Sections 4.2(a) and 4.2(b), net operating losses
of the American Tax Group shall be reduced and deemed absorbed in the following
order for each taxable year of the American Tax Group: first, by all income
unrelated to the transactions contemplated by this Agreement of members of the
American Tax Group other than the Tower Subsidiaries for the entire applicable
taxable year of the American Tax Group; second, by income of the Tower
Subsidiaries described in Section 4.2(a); and third, by income of the American
Tax Group described in Section 4.2(b). Neither the American Tax Group nor CBS
(or any member of CBS's consolidated tax group for Federal income tax purposes)
shall have any claim under either Section 4.2(a) or (b) for additional Tax
liability arising in subsequent taxable years solely as a result of the
absorption of net operating losses of the American Tax Group in this manner.
The parties agree that, anything in this Agreement, including without limitation
Section 10.1(b), to the contrary notwithstanding, for purposes of Sections
4.2(a), 4.2(b) and 4.2(f) and this Section 4.2(d), (i) net operating losses of
the American Tax Group shall include any current deductions and losses of the
American Tax Group included on the Pre-Closing Tax Returns of the American Tax
Group, but excepting the current deductions and losses of the Tower Subsidiaries
(which deductions and losses of the Tower Subsidiaries shall be first applied
against the income of the Tower Subsidiaries under Section 4.2(a)), and (ii) the
current deductions and losses of the American Tax Group included on the Pre-
Closing Tax Returns of the American Tax Group shall include without limitation
the deductions attributable to the exercise or cancellation of options from the
date of the Original Merger Agreement through the time of completion of the
transactions contemplated by the Merger Agreement (including those options
canceled pursuant to the provisions of Section 6.8(a) of the Merger Agreement
immediately prior to the Effective Time) and the deductions attributable to any
disqualifying disposition as a result of the Merger of stock received pursuant
to the exercise of incentive stock options from the date of the Original Merger
Agreement through the time of completion of the transactions contemplated by the
Merger Agreement except, however, that in either case such deductions shall not
include deductions with respect to options that have been exercised or canceled
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and the payment for which (including disqualifying dispositions) has been
deferred pursuant to Section 6.8(d) of the Merger Agreement or otherwise.
(e) American shall control any audit or contest relating to Taxes
attributable to the American Tax Group. To the extent such audit or contest
relates to Taxes that American Tower is obligated to reimburse or indemnify
American or CBS under this Agreement, American and CBS shall (x) regularly
consult with American Tower in connection with such audit or contest; (y)
provide American Tower with periodic reports on the status of such audit or
contest; and (z) not enter into a settlement agreement relating to such audit or
contest that materially prejudices American Tower without American Tower's prior
written consent. Notwithstanding the foregoing, American and CBS shall, if so
requested by American Tower, pursue in their own name, but for the benefit of
and at the cost and expense of American Tower, any refund claims specified by
American Tower with respect to (i) the issue of whether indemnity payments and
other purchase price adjustments made by American Tower under this Agreement
give rise to a downward adjustment to the tax basis of American's Tower Common
Stock or otherwise require a "gross up" under the principles of Sections 3.4(b),
4.2(c), or 4.2(f), or (ii) the issue of the value of American's Tower Common
Stock for purposes of computing the tax to American on the distribution of its
Tower Common Stock. Any refunds in connection with the foregoing, including
interest refunded thereon but net of any Taxes imposed on American or CBS on
such refunds or such refunded interest, shall belong to American Tower and shall
be promptly paid over to American Tower by American or CBS when received.
Anything to the contrary contained herein notwithstanding, American Tower shall
have the sole right to control any such refund claims through the date of the
final administrative or judicial determination of such claims. American and CBS
agree to provide all such cooperation to American Tower as it shall reasonably
request in pursuing such refunds, including the execution and delivery of such
claims, pleadings, powers of attorney, extensions and other documents as are
reasonable and customarily associated with refund claims. In the event that an
audit or contest shall involve the issue of the value of American Tower or the
value of American's interest in the Tower Common Stock owned by it for purposes
of computing the tax to American on the distribution of such Tower Common Stock,
American and CBS shall permit American Tower, at its own cost and expense, to
place before the Internal Revenue Service or other administrative or judicial
body its position on such issue, and shall permit American Tower to participate
in all discussions regarding such issue and to submit such protests, briefs and
arguments as American Tower shall deem necessary or appropriate in connection
therewith. Without limiting the generality of the foregoing, American Tower may
at its election pay such portion of any asserted deficiency as shall relate to
such valuation issue, and shall thereupon have the rights specified above with
regard to pursuing a refund in respect of the valuation issue.
(f) If pursuant to any Tax audit or contest there is an adjustment to any
Taxes that were paid or are or were reimbursable or indemnifiable by American
Tower to any member of the American Tax Group or CBS under this Agreement,
including Sections 4.2(a), 4.2(b), 4.2(c) and 4.2(k), then (i) any additional
Taxes imposed on the American Tax Group as a result of such adjustment shall be
indemnified by American Tower, except to the extent that the American Tax Group
or CBS (or any member of its consolidated group for Federal income tax purposes)
receives a tax benefit as a result of any adjustment relating to the matters
referred in clause (ii) of the last sentence of Section 4.2(d); and (ii) any
refund of Taxes paid to the American Tax Group or CBS as a result of such
adjustment of amounts previously indemnified by American Tower (not exceeding
amounts previously paid or reimbursed by American Tower with regard to such
Taxes), plus refunded interest thereon but net of any Taxes imposed on American
or CBS on such refunds or such refunded interest, shall be promptly paid over to
American Tower.
(g) American Tower shall not have the right to any refund, credit (or
other reduction) of Taxes realized by the American Tax Group resulting from a
carry back of a post-Tower Deconsolidation Date Tax attribute of any of the
Tower Subsidiaries into a Tax Return filed by the American Tax Group.
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(h) American shall not elect to retain any net operating loss carryovers
or capital loss carryovers of the Tower Subsidiaries.
(i) The indemnities and agreements of the Tower Subsidiaries and the
agreements of American described in this Section 4.2 shall apply to all
applicable Taxes whenever they shall arise.
(j) At the request of any Tower Subsidiary, American agrees that it shall,
and shall cause its Subsidiaries or other appropriate Affiliates to, make and/or
cooperate with the Tower Subsidiaries (x) in making an election under Section
336(e) of the Code with respect to the Tower Separation, or (y) in effecting
intercompany sales or exchanges of assets designed to achieve a comparable
effect whereby deferred intercompany gains are recognized immediately prior to
the Tower Deconsolidation.
(k) American, CBS and American Tower agree that the Pre-Closing Tax
Returns shall be prepared on the basis that, in connection with gain that is
recognized by American in connection with the distribution of its Tower Common
Stock or, if applicable, recognized or taken into account by American on the
Tower Deconsolidation Date:
(i) The amount realized in connection with the distribution of
Tower Common Stock pursuant to the Tower Separation shall be based on the
"fair market value" of such stock. If so requested by American Tower, the
fair market value of such Tower Common Stock shall be determined by an
appraisal prepared at American Tower's expense by the firm of Xxxxxxxx
Xxxxx, or by another firm selected by American Tower subject to the
approval of CBS which approval shall not be unreasonably withheld, delayed
or conditioned. If such an appraisal is completed and American Tower
elects, in its sole discretion, to use such appraisal for tax reporting
purposes, then, for purposes of the Pre-Closing Tax Returns, American Tower
may elect to use any fair market value of the Tower Common Stock equal to
or greater than such appraised fair market value; provided, however, that
(x) CBS may in its sole discretion refuse to permit the filing of Pre-
Closing Tax Returns that use any fair market value less than 80% of the
Market Value, and (y) if the fair market value used is less than 85% of the
Market Value, American Tower shall secure its indemnity obligations
hereunder, two business days prior to the date on which such Pre-Closing
Tax Returns are required to be filed, by letter or letters of credit
reasonably satisfactory to CBS or in some other manner satisfactory to CBS,
in its sole discretion, in an amount equal to the amount by which the
reported tax liability of the American Tax Group would been increased if
the reported value of the Tower Common Stock had been 85% of the Market
Value. Such security shall continue until the earlier of (x) the expiration
of the applicable statutes of limitation under Applicable Law, or (y) final
resolution of the valuation question (by agreement with the appropriate
Taxing Authority or judicial proceedings that have become final). If the
appraisal is not completed, or is not completed prior to the date on which
any Pre-Closing Tax Return (including any Pre-Closing Estimated Tax Return)
is required to be filed, or if the appraisal is completed but American
Tower, in its sole discretion, determines not to use it, the amount
realized shall be based on the "fair market value" of the Tower Common
Stock determined by the written agreement of CBS and American Tower. The
term "Market Value" means the "Market Price of American Common Stock"
reduced by $44.00. The term "Market Price of American Common Stock" means
the closing price per share of American Class A Common Stock for the day
preceding the date on which the Effective Time shall occur, as reported on
the NYSE Composite Transactions List (as reported by the Wall Street
Journal or, if not reported thereby, by another authoritative source
mutually selected by CBS and American Tower). Notwithstanding the
foregoing, the amount realized in connection with the transactions
occurring on or about January 20-21, 1998 involving American Tower Systems,
L.P. or interests therein, or otherwise in connection with the Tower
Deconsolidation or any related transactions, shall be based on the Market
Value (as defined above, except that (A) the
Market Value shall be determined on January 21, 1998 and (B) in determining
such amount there shall be substituted for $44.00 an
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amount equal to (I) $44.00 minus (II) an amount reasonably agreed to by CBS
and American Tower (not to exceed $1.50) representing the time value of
money and the factors relating to the consummation of the Merger for
purposes of all Pre-Closing Tax Returns.
(ii) The amount of any payments made by (A) American Tower to any CBS
Indemnitee pursuant to this Agreement, including, without limitation,
Article 3, Article 4 and Article 10, shall be reported for Tax purposes as
a nontaxable dividend reducing American's tax basis in the Tower Common
Stock prior to the date of the Tower Separation, and (B) the amount of any
payments made by any CBS Indemnitee to American Tower pursuant to this
Agreement shall be treated as a capital contribution increasing American's
tax basis in its Tower Common Stock prior to the date of the Tower
Separation.
(iii) For state tax reporting purposes, such gain shall be reported
in a manner which is generally consistent with the analysis previously
prepared by Deloitte & Touche and reviewed by CBS, subject to the
qualification that other positions may be taken in connection with such
state tax reporting that, in the reasonable judgment of CBS, meet at least
the "some realistic possibility of success if litigated" standard of
correctness, provided that the applicable returns contain disclosure that
CBS reasonably determines is sufficient to avoid risk of penalties.
Notwithstanding the foregoing, solely for purposes of computing the payment
to be made to CBS as prescribed in Section 4.4 and used to fund payments to
be actually made with the Pre-Closing Estimated Tax Returns, the gain
recognized on the Tower Deconsolidation Date shall be treated as subject to
tax at a blended state and federal tax rate of 36.99% and the gain
recognized by American in connection with the distribution of its Tower
Common Stock shall be treated as subject to tax at a blended state and
federal tax rate of 37.42% (which in each case is consistent with the
analysis referred to above).
(iv) Notwithstanding the matters as to which reporting positions are
prescribed by this Section 4.2(k), American Tower shall have the rights set
forth in Section 4.2(e) relating to the filing of one or more refund claims
with respect to such matters.
(l) American, CBS and American Tower agree that in computing the amount of
taxable gain to American that is recognized after the Merger by American in
connection with the distribution of Tower Common Stock to holders of American
Convertible Preferred Stock, the "fair market value" of the Tower Common Stock
shall be determined entirely on the basis of the public trading price of Tower
Class A Common Stock at the time of any such distribution.
4.3 Tax Returns.
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(a) CBS shall prepare (or cause to be prepared) and file (or cause to be
filed) all Tax Returns of the American Tax Group and members thereof for taxable
periods beginning before the Merger that are not yet due (taking into account
extensions) on the date of the Merger, including the separate or combined
returns that include only the Tower Subsidiaries for taxable periods ending on
or before the Deconsolidation Date that are not yet due (taking into account
extensions) on the date of the Merger (the "Pre-Closing Tax Returns"). In the
absence of a controlling change in law, and except as otherwise set forth in
this Agreement, each such Tax Return shall be prepared on a basis that is
consistent with the elections, accounting methods, conventions, practices and
principles of taxation used on the Tax Returns for the most recent applicable
taxable periods, and such Tax Returns shall be prepared consistent with Section
4.2(k). CBS and American Tower shall consult each other on an ongoing basis
during the preparation of all such Tax Returns concerning any positions to be
taken therein (except to the extent that such position or positions are
expressly agreed to herein). Notwithstanding the foregoing, and subject to
Section 4.2(k), CBS shall not be required to file any Pre-Closing Tax Return
that takes any position to the extent CBS determines, in good faith after
consultation with its tax accountants and attorneys, that there is not
"substantial authority" for such position,
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unless (i) CBS so determines that there is a "reasonable basis" for such
position, (ii) disclosure that CBS, in its reasonable judgment after
consultation with American Tower, determines meets the requirements of Section
6662 of the Code is made of such position on such return, and (iii) the amount
of Tax liability (determined at the time) at stake for any such position on all
such Tax Returns does not exceed $1.0 million and the aggregate Tax liability
(so determined) at stake for all such positions on all such returns does not
exceed $5.0 million, unless American Tower has secured its indemnity obligation
to CBS in excess of such amounts by letter or letters of credit reasonably
satisfactory to CBS or some other manner reasonably satisfactory to CBS, in its
sole discretion. Such security shall continue until the earlier of (x) the
expiration of the applicable statutes of limitation under the Applicable Law, or
(y) final resolution of the issue in question (by agreement with the appropriate
Taxing Authority or judicial proceedings that have become final).
(b) American Tower shall cooperate with CBS in connection with the
preparation of the Pre-Closing Tax Returns and shall be liable for any damages
actually incurred by CBS because of American Tower's failure to fully and
reasonably promptly comply (or to cause its tax and accounting personnel to
fully and reasonably promptly comply) with any reasonable request by CBS for
assistance in such preparation to the extent American Tower or such personnel
are in possession of or provided reasonable access to the requisite information.
At least 60 calendar days prior to the date on which any Pre-Closing Tax Return
is required to be filed (taking into account extensions), CBS shall deliver such
Tax Return (or cause such Tax Return to be delivered) to American Tower for its
review. Within 30 calendar days of receipt of such Tax Return by American Tower
for review, American Tower shall notify (in writing) CBS of any changes to such
Tax Return (including disclosures proposed to be included therein) based on a
determination by American Tower that there is a "reasonable basis" or
"substantial authority" for a position not taken in such Tax Return. If CBS
disputes any such changes, it must notify (in writing) American Tower of any
such disputed changes within five calendar days. American Tower shall have the
right to cause the reasonableness of the determination by CBS to be submitted,
within five calendar days of the receipt of such notification, for final
resolution to an arbitrator jointly selected by CBS and American Tower, which
arbitration shall be completed within 15 calendar days of submission. If CBS
and American Tower are unable to agree on an arbitrator within the aforesaid
five calendar day period, each party shall identify an arbitrator by the end of
such period, and the arbitrators so identified shall jointly select the ultimate
arbitrator. The arbitrator shall be a law or accounting firm nationally
recognized in tax matters, and the costs of the arbitration shall be shared
equally by the parties. If the Closing Date occurs on or between (i) the 1st
and 15th calendar day of any month, Pre-Closing Tax Returns for estimated Taxes
of the American Tax Group for the taxable periods ending on or before the
Closing Date ("Pre-Closing Estimated Tax Returns") shall be filed on the later
of (x) the 15th calendar day of such month (or, if such day is not a business
day, the next business day) and (y) ten business days immediately following the
Closing Date, and (ii) the 16th and final calendar day of any month, such Pre-
Closing Estimated Tax Returns shall be filed on the 10th business day
immediately following the Closing Date; provided, however, that notwithstanding
the foregoing, the parties agree that, in the sole discretion of American Tower,
by written notice provided by American Tower to CBS at least three business days
before the applicable date described above, the Pre-Closing Estimated Tax
Returns may be filed at a later time or times, but in no event subsequent to
June 30, 1998, in which event American Tower shall be responsible for all
interest and penalties payable as a consequence of such late filing. Any such
Pre-Closing Estimated Tax Return shall report (and include payment for) the
entire estimated tax liability of the American Tax Group for taxable years that
end on or before the Closing Date to the extent not paid with a prior estimated
Tax Return.
(c) American Tower shall also cooperate with CBS, to the extent reasonably
requested, in the preparation of Tax Returns of the American Tax Group and
members thereof for taxable periods beginning on or after the Merger and ending
on or before December 31, 1998.
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(d) American Tower shall cooperate with CBS in the conduct of any audit or
other proceeding relating to Taxes of the American Tax Group, including without
limitation (i) making the books and records of American Tower available at such
times and places as CBS may reasonably request, (ii) making employees available
on a mutually convenient basis to provide such assistance as might reasonably be
required, and (iii) providing such information then within its or any of its
Subsidiaries' possession as might reasonably be required in connection with the
preparation of the Pre-Closing Tax Returns and any such audit or proceeding,
including, without limitation, records, returns, schedules, documents, work
papers or other relevant materials.
(e) CBS and American shall cooperate with American Tower in the conduct of
any audit or other proceeding relating to Taxes of the American Tax Group,
including without limitation (i) making the books and records of American
available at such times and places as American Tower may reasonably request,
(ii) making employees of American and CBS available on a mutually convenient
basis to provide such assistance as might reasonably be required, and (iii)
providing such information then within its or any of its Subsidiaries'
possession as might reasonably be required in connection with the preparation of
the Pre-Closing Tax Returns and any such audit or proceeding, including, without
limitation, records, returns, schedules, documents, work papers or other
relevant materials.
(f) If American Tower so requests, American shall request an extension of
time to file any Tax Return with respect to which American Tower bears
responsibility for all or any portion of the Tax liability.
(g) For purposes of this Article 4, "Tax Returns" means all returns,
reports, declarations, information, estimates, schedules, filings or documents
(including any related or supporting information) filed or required by any
Taxing Authority to be filed with respect to Taxes, including, without
limitation, all information returns, claims for refund, amended returns,
declaration of estimated Taxes, and requests for extensions of time to file any
item described in this paragraph.
4.4 Payment.
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(a) Payment of indemnification for Taxes under this Article 4 shall be
made in immediately available funds as follows: (i) in the case of each Pre-
Closing Estimated Tax Return (x) at the Effective Time, American Tower shall pay
CBS an amount equal to the Taxes then estimated to be due on such Tax Return, on
the basis that the amount realized in connection with the distribution of Tower
Common Stock pursuant to the Tower Separation is not less than 85% of the Market
Value and (y) at least two business days prior to the filing of such Pre-Closing
Estimated Tax Return, CBS shall pay American Tower or American Tower shall pay
CBS the amount necessary to reflect the difference, if any, between the Taxes to
be shown as payable on such Pre-Closing Estimated Tax Return and the amount
actually paid pursuant to clause (x) hereof, (ii) in the case of each other Tax
Return other than Pre-Closing Estimated Tax Returns, at least two business days
prior to the filing of such Tax Return, American Tower shall pay CBS the amount
necessary to reflect the excess, if any, of the Taxes shown as payable on such
Tax Return over the Taxes shown as payable on the Pre-Closing Estimated Tax
Return(s) to which such Tax Return relates (or, if the Taxes shown as payable on
the Pre-Closing Estimated Tax Return(s) to which such Tax Return relates
exceeded the Taxes shown as payable on such Tax Return, the provisions of
Section 4.4(b) shall apply to such excess), and (iii) in the case of
indemnification for Taxes under Section 4.2(f), payments shall be made at least
two business days prior to the date the payment of such Taxes is due to be made
to the Taxing Authority pursuant to Applicable Law. In the event payment is made
by American Tower at or prior to the Effective Time, CBS shall be entitled to
use such funds prior to June 15, 1998 (or such later date not later than June
30, 1998 as American Tower has, in its sole discretion, directed that the Pre-
Closing Estimated Tax Returns be filed) and the amount owed with respect to the
Final Adjustment Amount (including interest thereon) shall be reduced by an
amount equal to (i) the amount of the payment from American Tower to CBS
pursuant to the provisions of clause (i)(x) of the first sentence of this
Section 4.4(a) multiplied by (ii) the interest rate paid by CBS on its senior
bank credit facility for the period from the day following the Effective Time to
the date which is two business days prior to the filing of the Pre-Closing
Estimated Tax Return.
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(b) If a final (as opposed to estimated) Tax return reports a tax
liability lower than the amounts paid with the related Pre-Closing Estimated Tax
Returns, CBS may elect to treat such excess as either a credit or a refund. If
CBS elects to treat such amount as a credit, it shall pay American Tower such
amount, in immediately available funds, on the date such final Tax return is
filed. If CBS elects to have such amount refunded, it shall pay American Tower
such amount, in immediately available funds, immediately upon receipt of such
refund.
ARTICLE 5
REGISTRATION AND OTHER GOVERNMENTAL MATTERS
5.1 Securities Laws Registration.
----------------------------
(a) American Tower shall, to the extent that it has not already done so,
prepare and file with the Commission as soon as is reasonably practicable after
the date hereof (i) a registration statement on Form S-4 (the "Merger
Registration Statement"), (ii) a registration statement on Form S-8 (the "Option
Registration Statement") and (iii) a registration statement on Form S-1 (or any
other applicable form) (the "Convertible Registration Statement, and
collectively with the Merger Registration Statement and the Option Registration
Statement, the "Registration Statements"), in each case complying with
applicable rules and regulations of the Commission. The Merger Registration
Statement shall cover the registration under the Securities Act of the shares of
Tower Common Stock to be delivered as part of the Tower Stock Consideration or
the Tower Merger Stock Consideration to the holders of American Common Stock at
the Effective Time or the Tower Merger Effective Time, as the case may be. The
Option Registration Statement shall cover the registration under the
Securities Act of the shares of Tower Common Stock, among others, which may be
issued upon the exercise of options to purchase Tower Common Stock issued upon
the exchange of American Options pursuant to the provisions of Section 6.8(b) of
the Merger Agreement. The Convertible Registration Statement shall cover the
registration under the Securities Act of shares of Tower Common Stock to be
delivered by American upon conversion of American Convertible Preferred Stock
following the earlier to occur of the Tower Merger Effective Time and the
Effective Time.
(b) American Tower shall promptly furnish to American and CBS all
information, and take such other actions, as may reasonably be requested by
American in connection with any action taken by American to comply with the
provisions of Section 6.6 of the Merger Agreement. American Tower shall correct
promptly any information provided by it to be used specifically in the
Information Statement or any Registration Statement that shall have become false
or misleading in any material respect and shall take all steps necessary to file
with the Commission and have cleared by the Commission any amendment or
supplement to any Registration Statements so as to correct such Information
Statement or such Registration Statement. Without limiting the generality of
the foregoing, American Tower shall notify CBS promptly of any stop order or
proceeding by the Commission seeking a stop order relating to any Registration
Statement, the receipt of the comments of the Commission and of any request by
the Commission for amendments or supplements to any Registration Statement, or
for additional information, and shall supply CBS with copies of all
correspondence between it or its representatives, on the one hand, and the
Commission or members of its staff, on the other hand, with respect to any
Registration Statement. Whenever any event occurs which should be described in
an amendment or a supplement to the Information Statement or any Registration
Statement, American Tower shall, upon learning of such event, promptly prepare,
file and clear with the Commission such amendment or supplement; provided,
however, that, prior to such mailing, (i) American Tower shall consult with CBS
with respect to such amendment or supplement, (ii) shall afford CBS reasonable
opportunity to comment thereon, and (iii) each such amendment or supplement
shall be reasonably satisfactory to CBS.
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(c) American Tower represents and warrants to American that each of the
Registration Statements or any other document filed by American Tower with the
Commission or any other Authority pursuant to the provisions of this Section 5.1
will not (except to the extent revised or superseded by amendments or
supplements contemplated hereby), at the time each such Registration Statement
is filed with the Commission, at the time such Registration Statement is amended
or supplemented or at the time each such Registration Statement becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to make any statement contained
herein or therein, in light of the circumstances under which they were made, not
misleading; provided, however, that no representation or warranty is made by
American Tower with respect to statements made or incorporated by reference
therein based on information (i) supplied by CBS for inclusion or incorporation
by reference in any Registration Statement or any such other document; or (ii)
relating solely to American (excluding American Tower Mergercorp and the Tower
Subsidiaries) which is contained in or expressly consistent with the American
Included SEC Information. American Tower further represents and warrants to
American that all information provided by or relating to American Tower (or any
of its Subsidiaries) set forth in the Information Statement will not (except to
the extent revised or superseded by amendments or supplements contemplated
hereby), at the time such Information Statement is first mailed to the holders
of American Common Stock, contain any untrue statement of a material fact or
omit to state any material fact required to make any statement contained herein
or therein, in light of the circumstances under which they were made, not
misleading.
(d) American represents and warrants to American Tower that all
information supplied by or relating to American (or any of its Subsidiaries
other than American Tower Mergercorp or the Tower Subsidiaries) which is
contained in or expressly consistent with the American Included SEC Information
and is set forth in the Information Statement, each Registration Statement or
any other document filed by American Tower or American with the Commission or
any other Authority pursuant to the provisions of this Section 5.1 will not
(except to the extent revised or superseded by amendments or supplements
contemplated by the preceding paragraph (c)), at the time such Information
Statement is first mailed to the holders of American Common Stock and at the
time each such Registration Statement is filed with the Commission, at the time
such Registration Statement is amended or supplemented or at the time each such
Registration Statement becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact required
to make any statement contained herein or therein, in light of the circumstances
under which they were made, not misleading.
(e) American Tower covenants and agrees to use its reasonable business
efforts (i) to cause the Option Registration Statement and the Convertible
Registration Statement each to be declared effective prior to the earlier to
occur of the Tower Merger Effective Time and the Effective Time under the
Securities Act by the Commission, and (ii) to maintain, on customary terms, the
Convertible Registration Statement continuously effective under the Securities
Act until the earlier to occur of (x) the delivery by American Tower to American
of an opinion of legal counsel reasonably satisfactory to American and CBS that
such Registration Statement is no longer required to permit delivery by American
of shares of Tower Common Stock upon conversion of the American Convertible
Preferred Stock in accordance with the Securities Act and (y) the delivery by
American to American Tower of written notification that all of the outstanding
shares of American Convertible Preferred Stock have been converted, and the
shares of Tower Common Stock relating to such conversion have been delivered to
the holders thereof, in accordance with the Certificate of Designation relating
to the American Cumulative Preferred Stock; it being expressly understood that
neither American, CBS nor any of their respective Subsidiaries shall be under
any obligation to notify American Tower of any conversion by any holder of any
shares of American Convertible Preferred Stock following the earlier to occur of
the Tower Merger Effective Time and the Effective Time until such time as all of
the outstanding shares of American Convertible Preferred Stock have been so
converted and delivered in
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accordance with such Certificate of Designation, unless American Tower has
specifically requested, from time to time, information with respect to the
status of such conversions.
5.2 Governmental and Private Authorizations; Consents. American shall
-------------------------------------------------
obtain all Governmental Authorizations, Private Authorizations or other third
party consents (other than the consent of the banks under its Credit Agreements,
dated as of January 24, 1997, with The Bank of New York, as Collateral Agent and
Administrative Agent, and the other agents named therein and lenders party
thereto to the effectuation of the Tower Separation pursuant to the Merger), and
make any necessary Governmental Filings, necessary to consummate the Tower
Separation, except where the failure to obtain such consents, in the aggregate,
would not (a) be reasonably likely to have any adverse effect on American, (b)
materially impair the ability of American to perform its obligations under this
Agreement or the Merger Agreement, or (c) materially delay or prevent the
consummation of the Merger. American shall effect the Tower Separation in
compliance with its Restated Certificate of Incorporation and by-laws and in
material compliance with all Applicable Laws.
ARTICLE 6
COVENANTS OF AMERICAN AND AMERICAN TOWER
6.1 Acquisitions, Mergers and Capital Contributions. At the request of
-----------------------------------------------
American Tower and subject to the requirements and restrictions imposed on
American by any of its financing documents (as from time to time amended), and
the terms of the Merger Agreement, American shall, from time to time after the
date hereof and prior to the earlier to occur of the Tower Merger Effective Time
and the Effective Time, permit American Tower to (a) acquire (whether by merger,
stock or asset acquisition or otherwise) additional businesses engaged in the
business in which American Tower is engaged, (b) construct additional
communication towers, or (c) make other capital improvements on assets owned or
leased by American Tower or its Subsidiaries, and in each such case make
additional capital contributions in American Tower, or make loans to American
Tower, of the funds.
6.2 Contribution and Issuance of Tower Capital Stock.
------------------------------------------------
(a) American will contribute (without the payment of any amount or the
issuance of any securities by American Tower) to the capital of American Tower
(i) immediately prior to the earlier to occur of the Tower Merger Effective Time
and the Effective Time, as the case may be, a number of shares of Tower Common
Stock equal to the excess, if any, of (A) the number of shares of Tower Common
Stock owned by American immediately prior to the earlier to occur of the Tower
Merger Effective Time and the Effective Time, as the case may be, over (B) the
number of shares of Tower Common Stock required to be delivered (x) to the
holders of shares of American Common Stock, (y) to holders of American Options
pursuant to the provisions of Section 6.8(a) of the Merger Agreement, after
giving effect to all elections evidenced by definitive agreements delivered to
American immediately prior to the earlier to occur of the Tower Merger Effective
Time and the Effective Time by Tower Employees to convert their American Options
into options to acquire Tower Common Stock pursuant to the provisions of Section
6.8(b) of the Merger Agreement, and (z) upon conversion of American Convertible
Preferred Stock, and (ii) from time to time after the Effective Time, such
shares of Tower Common Stock owned by American that the holders of the
Dissenting Shares would have been entitled to receive had they not exercised
their appraisal rights.
(b) If the Tower Employees set forth on Schedule 4.1(e) to the Merger
Agreement do not enter into definitive agreements prior to the earlier to occur
of the Tower Merger Effective Time and the Effective Time to convert the
American Options which are held by such Tower Employees and set forth on such
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Schedule into options to acquire Tower Common Stock in accordance with this
Section 6.2(b), American Tower shall, prior to the earlier to occur of the Tower
Merger Effective Time and the Effective Time, issue to American in exchange for
payment of the par value thereof a number of shares of Tower Common Stock equal
to the aggregate number of shares of American Common Stock subject to such
American Options set forth on such Schedule.
6.3 Executive Office Lease. At the earlier to occur of the Tower Merger
----------------------
Effective Time and the Effective Time, American Tower shall assume, to the
extent permitted by the landlord, the obligations under the lease of 000
Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, with respect to the relevant portion
of such leased premises designated in Schedule A attached hereto and made a part
hereof or, if such permission is not obtained, sublease such relevant portion,
at which time American Radio and its personnel shall vacate such relevant
portion, except as otherwise provided in any written agreement between American
and American Tower with respect to the temporary use of space at such relevant
portion.
ARTICLE 7
CERTAIN COVENANTS
7.1 American Tower Covenants.
------------------------
(a) Prior to the earlier to occur of the Tower Merger Effective Time and
the Effective Time, American shall, to the extent requested by CBS, cause the
Tower Subsidiaries to perform its obligations under the Tower Documentation. If
the Tower Merger shall be consummated, during the period from the Tower Merger
Effective Time to the Effective Time, American shall not, except as contemplated
by this Agreement or the Merger Agreement, enter into any agreement,
transaction, plan or arrangement with American Tower without the express written
consent of CBS.
(b) Following the earlier to occur of the Tower Merger Effective Time and
the Effective Time, except as otherwise provided in this Agreement, including
without limitation Articles 11 and 12, American Tower shall, to the extent
requested by American, take whatever measures as are reasonably necessary to
cause the conveyance or lease to American of any assets necessary for the
operation of the business of American and its Subsidiaries (excluding the Tower
Subsidiaries) as such was conducted prior to the Closing Date which assets were
not conveyed, leased or otherwise transferred to American prior to the earlier
to occur of the Tower Merger Effective Time and the Effective Time.
7.2 CBS Covenant. CBS agrees that it shall, at the written request of
------------
American in its sole and absolute discretion, immediately prior to the Merger,
and subject to the satisfaction of all of the conditions to the consummation of
the transactions contemplated by the Merger Agreement, purchase, at their then
fair market value, shares of a new class of American preferred stock that
constitutes "Equity Interests" (as defined in the indenture relating to
American's 9% Senior Subordinated Notes due 2006) in an amount (which shall not
in the aggregate exceed $200,000,000) necessary to enable (a) the Tower Stock
Consideration to be delivered to the holders of American Common Stock pursuant
to the Merger, (b) Tower Common Stock to be delivered to holders of American
Options pursuant to the Merger, and (c) Tower Common Stock to be delivered upon
conversion of the American Convertible Preferred Stock, without causing any
conflict with, or breach or violation of, or default under, or creating any
right to accelerate any obligation or liability in, or causing or creating any
of the foregoing after the giving of notice or passage of time or both with, of,
under or in any indebtedness of American or the American Cumulative Preferred
Stock; provided, however, that anything in this Section or elsewhere in this
Agreement or the Merger Agreement to the contrary notwithstanding, in such event
such preferred stock shall remain outstanding immediately following the
Effective Time.
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ARTICLE 8
MUTUAL RELEASES
8.1 Release of American Tower. American shall cause all of the Tower
-------------------------
Subsidiaries to be released from all liabilities of American and its
Subsidiaries (other than the Tower Subsidiaries) other than the Assumed
Liabilities; provided, however, that American Tower agrees to reimburse American
for any expenses incurred in obtaining such release. Effective immediately
prior to the earlier to occur of the Tower Merger Effective Time and the
Effective Time, American and its Subsidiaries (other than the Tower
Subsidiaries) hereby release the Tower Subsidiaries from all Claims by American
or its Subsidiaries (other than the Tower Subsidiaries), except for (a) the
Assumed Liabilities, (b) American Tower's obligations under this Agreement, any
Collateral Document or any other Tower Documentation, or (c) Claims arising from
or attributable to the transactions contemplated by this Agreement, the Merger
Agreement or any Collateral Document or otherwise asserted prior to the earlier
to occur of the Tower Merger Effective Time and the Effective Time.
8.2 Release of American. Effective immediately prior to the earlier to
-------------------
occur of the Tower Merger Effective Time and the Effective Time, American Tower,
on behalf of the Tower Subsidiaries, hereby releases American and its other
Subsidiaries from all Claims by the Tower Subsidiaries, except for (a)
American's obligations under this Agreement, any Collateral Document or any
other Tower Documentation, or (b) Claims arising from or attributable to the
transactions contemplated by this Agreement, the Merger Agreement or any
Collateral Document or otherwise asserted prior to the earlier to occur of the
Tower Merger Effective Time and the Effective Time.
ARTICLE 9
TOWER EMPLOYEES
9.1 Offers of Employment. On the Separation Closing Date, the employees
--------------------
of American listed in Schedule B attached hereto and made a part hereof (the
"Tower Employees") shall be offered full-time employment by American Tower or
one of its Subsidiaries. If the Tower Merger shall be consummated, during the
period from the Tower Merger Effective Time to the Effective Time, the Tower
Employees who accept American Tower's offer of full-time employment shall be
employed by American Tower and American Tower hereby covenants and agrees that
such Tower Employees shall be made available to provide American with such
management services as shall enable American to fulfill its obligations under
Section 6.10(i) of the Merger Agreement. In rendering such management services,
the Tower Employees shall act as leased employees who are not employees of
American. American Tower shall be solely responsible for all compensation and
employee benefits relating to such Tower Employees; provided, however, that from
time to time during the period from the Tower Merger Effective Time to the
Effective Time American shall reimburse to American Tower a pro rata portion of
each Tower Employee's base salary based upon actual time spent by such Tower
Employee providing American management services pursuant to this Section 9.1.
Effective immediately prior to the earlier to occur of the Tower Merger
Effective Time and the Effective Time, American Tower shall assume all
obligations of American (it being understood that American Tower shall have no
obligation to reimburse American for obligations that are funded at the
Effective Time, but only to the extent such obligations remain funded following
the Effective Time, provided that neither CBS nor American nor any of their
Subsidiaries shall take any action to impair such funding) arising under any
Plan or Benefit Arrangement with respect to the Tower Employees other than (a)
the rights, if any, of the Tower Employees with respect to the American Options
(which are being satisfied as provided in Section
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6.8 of the Merger Agreement), (b) all existing rights to indemnification, and
(c) all claims and rights under all medical, dental, health and other benefit
plans of American existing as of the Effective Time. American Tower shall
indemnify American and its Subsidiaries, effective as of the earlier to occur of
the Tower Merger Effective Time and the Effective Time, from all obligations
arising under such Plan or Benefit Arrangement (except as provided in clauses
(a), (b) and (c) of the preceding sentence). For a period of eighteen (18)
months following the consummation of the Merger, American Tower covenants and
agrees that no Tower Subsidiary shall actively solicit or seek to hire any
employees of American or its Subsidiaries not currently engaged in the Tower
Business, other than the Tower Employees, it being understood and agreed that
such agreement shall not be deemed to prevent the Tower Subsidiaries from
placing general advertisements in publications or on the Internet or soliciting
any such employee who (a) initiates employment discussions with any Tower
Subsidiary or (b) is not employed by American or CBS or any of their respective
Subsidiaries on the date such a member first solicits such employee.
9.2 Section 401(k) Plan Amendment. Prior to the earlier to occur of the
-----------------------------
Tower Merger Effective Time and the Effective Time, American shall, to the
extent required, amend (a) its Section 401(k) Plan to authorize a transfer of
the assets held thereunder for the benefit of the Tower Employees to a Section
401(k) Plan to be established by American Tower and such assets will be so
transferred (subject to any outstanding qualified domestic relations orders and
loans) and (b) any other Plan or Benefit Arrangements with respect to Tower
Employees to reflect the Tower Separation. The form of such amendments shall
be submitted to CBS for its approval, which approval shall not be unreasonably
withheld, delayed or conditioned.
ARTICLE 10
PURCHASE PRICE ADJUSTMENT
10.1 Purchase Price Adjustment.
-------------------------
(a) Within 90 days after the Closing Date, CBS shall prepare and deliver
to American Tower (i) a consolidated balance sheet (the "Closing Balance Sheet")
of American and its Subsidiaries (other than the Tower Subsidiaries) (the "Post-
Closing American Group"), prepared from the books and records of the Post-
Closing American Group in accordance with GAAP, and (ii) a statement (the
"Closing Statement") setting forth (A) Working Capital (as defined below) as of
the Effective Time ("Closing Working Capital") and (B) Net Debt (as defined
below) as of the Effective Time ("Closing Net Debt"), together with a
certificate of CBS's chief financial officer that the Closing Statement has been
prepared in accordance with this Section 10.1.
During the 45-day period following American Tower's receipt of the Closing
Statement, American Tower shall be permitted to review (and make copies of) the
working papers of CBS relating to the Closing Statement. The Closing Statement
shall become final and binding upon the parties on the forty-sixth day following
delivery thereof, unless American Tower gives written notice of its disagreement
with the Closing Statement ("Notice of Disagreement") to CBS prior to such date.
Any Notice of Disagreement shall (i) specify in reasonable detail the nature of
any disagreement so asserted, (ii) only include disagreements based on Closing
Working Capital or Closing Net Debt (or the components thereof) not being
calculated in accordance with this Section 10.1 and (iii) be accompanied by a
certificate of American Tower's chief financial officer that he or she concurs
with each of the positions taken by American Tower in the Notice of
Disagreement. If a Notice of Disagreement is received by CBS in a timely manner,
then the Closing Statement (as revised in accordance with clause (A) or (B)
immediately following) shall become final and binding on the earlier of (A) the
date CBS and American Tower resolve in writing any differences they have with
respect to the matters specified in the Notice of Disagreement or (B) the date
any disputed matters are finally resolved in writing by the Accounting Firm (as
defined below).
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During the 30-day period following delivery of a Notice of Disagreement,
CBS and American Tower shall seek in good faith to resolve in writing any
differences which they may have with respect to the matters specified in the
Notice of Disagreement. During such period CBS shall be permitted to review
(and make copies of) the working papers of American Tower prepared in connection
with the Notice of Disagreement. At the end of such 30-day period, CBS and
American Tower shall submit to an independent accounting firm (the "Accounting
Firm") for review and resolution any and all matters which remain in dispute and
which were properly included in the Notice of Disagreement and each of CBS and
American Tower shall submit a memorandum setting forth in reasonable detail the
basis for its positions. The Accounting Firm shall be a nationally recognized
independent public accounting firm agreed upon by CBS and American Tower in
writing. CBS and American Tower shall jointly use all reasonable efforts to
cause the Accounting Firm to render a decision within thirty (30) days following
submission or as promptly thereafter as is practicable. CBS and American Tower
agree that judgment may be entered upon the determination of the Accounting Firm
in any court having jurisdiction over the party against which such determination
is to be enforced. The cost of any dispute resolution (including the fees and
expenses of the Accounting Firm and reasonable attorney fees and expenses of the
parties) pursuant to this Section 10.1 shall be borne by CBS and American Tower
in inverse proportion as they may prevail on matters resolved by the Accounting
Firm, which proportionate allocations shall also be determined by the Accounting
Firm at the time the determination of the Accounting Firm is rendered on the
merits of the matters submitted.
(b) Subject to Section 10.1(d), if Closing Working Capital is less than
the sum of $70,000,000 plus $15,000,000, which the parties hereby agree is the
agreed upon value allocable to CBS of the tax benefit attributable to the
exercise of all options or the cancellation of options for value between the
date of the Original Merger and the Effective Time, including without limitation
those canceled pursuant to the provisions of Section 6.8(a) of the Merger
Agreement immediately prior to the Effective Time (the "WC Amount"), American
Tower shall, and if Closing Working Capital is greater than the WC Amount, CBS
shall, owe the other the amount of such difference. The term "Working Capital"
shall mean Current Assets minus Liabilities (in each case as defined below). The
terms "Current Assets" and "Liabilities" shall mean the current assets and
liabilities of the Post-Closing American Group calculated as provided in Section
10.1(a), except that (i) outstanding principal amount of indebtedness and
liquidation preference of preferred stock shall be excluded, (ii) cash and note
or other receivables from employees attributable to the exercise of stock
options shall be excluded, (iii) accruals for Taxes shall be included, except
that (A) there shall not be taken into account (I) Tax liabilities (x) for which
American Tower is obligated (or would, but for the provisions of Section 4.2(d)
(including, notwithstanding the provisions of clause (III) following, the
provisions of the last sentence of Section 4.2(d)), be obligated ) to indemnify
American and its Subsidiaries (other than the Tower Subsidiaries) pursuant to
the provisions of this Agreement and (y) of the American Tax Group's in the
amount of $20,000,000 referred to in Section 4.2(b), (II) deferred income Tax
assets and liabilities that exist or arise from differences in basis for Tax and
financial reporting purposes attributable to acquisitions, exchanges and
dispositions or attributable to depreciation and amortization, and (III) Tax
benefits arising from (x) net operating losses to the extent such losses have
reduced income of the American Tax Group described in Section 4.2(b), (y) the
exercise of options or the cancellation of options for value between the date of
the Original Merger Agreement and the Effective Time, including without
limitation those canceled for value pursuant to the provisions of Section 6.8(a)
of the Merger Agreement immediately prior to the Effective Time, or (z) a
disqualifying disposition as a result of the Merger of stock received pursuant
to the exercise of incentive stock options (it being understood that such Tax
benefits enter into the computation of Tax liabilities for which American Tower
is obligated to indemnify American and its Subsidiaries (other than the Tower
Subsidiaries) pursuant to the provisions of this Agreement), and (B) accruals
for Taxes relating to acquisitions, exchanges or dispositions shall be
determined in accordance with American's past accounting practices, (iv) Current
Assets shall be increased by an amount equal to the sum of (x) the amount
derived by multiplying the Cash Consideration by the number of shares of
American Common Stock held in its treasury as of the Effective Time and (y) the
aggregate amount of the spread of $44.00 over the exercise price of each
American Option outstanding on the close of business on September
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19, 1997 terminated or canceled not for value prior to the Effective Time or for
which the holder has elected to receive an option to acquire Tower Common Stock
in lieu thereof, less the Tax benefit that would have been received with respect
to the exercise of such options, (v) Current Assets shall be (A) increased (if
the number of shares of American Common Stock issued or issuable upon conversion
of the American Convertible Preferred Stock is fewer than 3,750,000 (or if the
Tower Merger Effective Time shall have occurred, 3,750,000 multiplied by the
American Conversion Fraction)) by an amount equal to the amount derived by
multiplying the Cash Consideration by the excess of (I) 3,750,000 (or if the
Tower Merger Effective Time shall have occurred, 3,750,000 multiplied by the
American Conversion Fraction) less (II) the number of shares of American Common
Stock issued or issuable upon conversion of the American Convertible Preferred
Stock or (B) decreased (if the number of shares of American Common Stock issued
or issuable upon conversion of the American Convertible Preferred Stock is
greater than 3,750,000 (or if the Tower Merger Effective Time shall have
occurred, 3,750,000 multiplied by the American Conversion Fraction) by an amount
equal to the amount derived by multiplying the Cash Consideration by the excess
of (I) the number of shares of American Common Stock issued or issuable upon
conversion of the American Convertible Preferred Stock less (II) 3,750,000 (or
if the Tower Merger Effective Time shall have occurred, 3,750,000 multiplied by
the American Conversion Fraction), (vi) liabilities from the radio broadcasting
rights contracts for St. Louis Rams games shall be limited to $3,300,000, (vii)
amounts owed by American Tower to American pursuant to Section 16.3(b) shall be
excluded from Current Assets, and liabilities of American, if any, with respect
to such amounts shall be excluded from Liabilities (it being understood that
neither American nor CBS shall be responsible for any such liabilities), and
(viii) there shall be excluded from Liabilities the liability, if any, of
American with respect to payments required to be made by American pursuant to
the provisions of Section 6.8(a) of the Merger Agreement.
(c) Subject to Section 10.1(d), if Closing Net Debt is greater than the
Debt Amount (as defined below) minus $50,419,000, minus cash received by the
Post-Closing American Group in respect of options exercised between September
19, 1997 and the Effective Time (the "CD Amount"), American Tower shall, and if
Closing Net Debt is less than the CD Amount, CBS shall, owe the other the amount
of such difference. "Debt Amount" shall mean $1,066,721,000, minus the
consideration that was expected to be paid (as set forth on Section 6.10(a) of
the American Disclosure Schedule) with respect to all acquisitions set forth in
Section 6.10(a) of the American Disclosure Schedule which were not consummated
prior to the Closing Date, plus the consideration that was expected to be
received (as set forth in Section 6.10(a) of the American Disclosure Schedule)
with respect to all dispositions set forth in Section 6.10(a) of the American
Disclosure Schedule which were not consummated prior to the Closing Date, plus
the consideration paid in connection with acquisitions consummated prior to the
Closing Date which were not listed in Section 6.10(a) of the American Disclosure
Schedule, minus the consideration received in connection with dispositions
consummated prior to the Closing Date which were not listed in Section 6.10(a)
of the American Disclosure Schedule. The term "Net Debt" shall mean outstanding
principal amount of indebtedness (including, without duplication, guarantees of
indebtedness) plus outstanding liquidation preference of all preferred stock
(other than the American Convertible Preferred Stock), including, without
limitation, the aggregate liquidation preference of any junior preferred
security issued by American to CBS, minus cash, including, without limitation,
the aggregate purchase price of any such junior preferred security issued by
American to CBS; provided, however, that notwithstanding the foregoing, Net Debt
shall not include any indebtedness incurred by American or any of its
Subsidiaries (other than the Tower Subsidiaries) to fund (i) payments, if any,
required to by made by American pursuant to the provisions of Section 6.8(a) of
the Merger Agreement, or (ii) any liability, including without limitation those
set forth in Section 16.3, for which American Tower has, prior to the
determination of the Final Adjustment Amount, in fact, reimbursed American.
(d) Amounts owed pursuant to the first sentence of Section 10.1(b) and the
first sentence of 10.1(c) shall be aggregated or netted, as appropriate (the
resulting amount, the "Adjustment Amount"). In the event that the Adjustment
Amount minus $10,000,000 is greater than $0 (the "Final Adjustment Amount"), the
party that owes the Final Adjustment Amount shall make payment by wire transfer
of
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immediately available funds of the Final Adjustment Amount. Notwithstanding
the foregoing, in the event that American Tower delivers a Notice of
Disagreement to CBS in accordance with this Section 10 and either CBS or
American Tower shall be required to make a payment to the other regardless of
the resolution of the items contained in the Notice of Disagreement, then CBS or
American Tower, as applicable, shall, within ten (10) business days of the
receipt of the Notice of Disagreement, make payment to the other by wire
transfer in immediately available funds of the lesser of the two amounts (the
"Undisputed Portion") that may be owed by CBS or American Tower, as applicable,
pending resolution of the items contained in the Notice of Disagreement.
Interest on any amount payable hereunder shall accrue at a rate of interest
equal to the lesser of (i) 10% per annum and (ii) if American Tower is being
charged a rate of interest by a financial institution, such rate, but in not
event lower than the prime rate as reported in the Wall Street Journal on the
-------------------
date the Closing Statement becomes final and binding on the parties, in the case
of the Final Adjustment Amount, or, on the date of the Notice of Disagreement,
in the case of any Undisputed Portion, calculated on the basis of the actual
number of days elapsed divided by 365, from the date of the Effective Time to
the date of actual payment. For Tax purposes, any such interest shall be
treated as an item of income or expense and shall not be treated as having the
effect provided for in Section 4.2(k)(ii). The amount of any payment of an
Undisputed Portion (excluding interest) shall be credited against the Final
Adjustment Amount. Any payment made by American Tower with respect to the Final
Adjustment Amount shall be made to CBS in connection with American Tower's
assumption of American's tax liability and American Tower's agreement to pay
certain purchase price adjustment items, and American Tower's intention that
such assumption and payment was on behalf of its stockholders who formerly were
stockholders or optionees of American.
(e) The scope of the disputes to be resolved by the Accounting Firm is
limited to whether the Closing Statement was prepared in compliance with the
requirements of this Section 10.1 and the allocation of the costs of dispute
resolution, and the Accounting Firm is not to make any other determination.
(f) During the period of time from and after the delivery of the Closing
Statement to American Tower through the date the Closing Statement becomes final
and binding on CBS, American and American Tower, CBS shall cause the Post-
Closing American Group to afford to American Tower and any accountants, counsel
or financial advisors retained by American Tower in connection with the
adjustment contemplated by this Section 10.1 reasonable access (with the right
to make copies) during normal business hours to the books and records of the
Post-Closing American Group to the extent relevant to the adjustment
contemplated by this Section 10.1.
(g) Any adjustment pursuant to this Section 10.1 shall be taken into
account in the calculation of Tax liability pursuant to Section 4.2(b), and any
increase or decrease in the amount of Taxes that are reimbursable or
indemnifiable by the Tower Subsidiaries as a result of any such adjustment shall
be treated as an adjustment to Taxes for purposes of Section 4.2(f). Nothing in
this Section 10.1(g) shall impair, restrict or otherwise qualify or affect in
any way the obligations of the parties hereto set forth in Article 4 relating to
the tax reporting for the Tower Separation.
ARTICLE 11
TOWER LEASES
11.1 Tower Leases. Prior to the earlier to occur of the Tower Merger
------------
Effective Time and the Effective Time, CBS and American shall agree on the
definitive documentation ("Tower Leases") to be executed by American and
American Tower with respect to certain broadcasting towers set forth in Schedule
C attached hereto and made a part hereof ("Towers"). The markets in which such
Towers are located and the annual "market price" for each antenna are set forth
in Schedule C. Except as set forth in Schedule C, such Towers are now owned or
leased by American and shall become the property of American Tower, as
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set forth in Section 11.2. Each of the Tower Leases shall contain standard and
customary terms and conditions and CBS and American specifically agree to the
inclusion of the following in each of the Tower Leases:
(a) except as provided in clause (b) below with respect to those
Tower Leases set forth in Section 6.19 of the American Disclosure Schedule,
each Tower Lease shall be for a term of twenty (20) years with four (4)
renewal periods of five (5) years each, each such renewal to be upon the
same terms and conditions as the original Tower Lease;
(b) prior to the earlier to occur of the Tower Merger Effective Time
and the Effective Time, American shall use its best efforts to extend the
term of each lease set forth in Section 6.19 of the American Disclosure
Schedule ("Land Leases") to a minimum duration of twenty (20) years,
inclusive of renewal periods, if any, and provide CBS with respect to the
Towers subject to the extended Land Leases, tower leases with the
equivalent benefits set forth in clauses (c), (d) and (e) and for a minimum
duration of twenty (20) years ("Extended Tower Leases"). With respect to
any such Land Lease that is not, prior to ninety (90) days following the
Effective Time, so extended (except with respect to the Land Lease for
KUFX(FM), which present term of approximately eighteen (18) remaining years
shall be deemed to satisfy the foregoing requirement of a minimum duration
of twenty (20) years), American, American Tower and CBS shall negotiate in
good faith to agree upon definitive documentation to provide CBS, prior to
the determination of the Final Adjustment Amount, with respect to the
Towers subject to such Land Leases, upon the failure to agree American
Tower shall provide American and CBS with tower leases with the benefits
equivalent of such Extended Tower Leases or mutually agreed to alternative
arrangements providing equivalent value to CBS;
(c) each Tower Lease shall provide that no payments shall be payable
by CBS for a period of three (3) years from the Effective Time; for the
next three (3) years the payments shall be as follows: one-third (1/3) of
the market price as set forth in Schedule C corresponding to each FM
antenna (or AM/FM antenna) for year four (4); two-thirds (2/3) for year
five (5) and full market price for year six (6); thereafter, for the
balance of the term and any renewals thereof, the payments shall be the
market price, together with an annual increase every year, beginning for
year seven (7), of the lesser of five percent (5%) or the Consumer Price
Index for all Urban Consumers over the previous year's payments (except
with respect to San Xxxx (KUFX) and Boston (WNFT) which such payments shall
begin at the Effective Time, with respect to CBS, and will begin on January
1, 1998 as between American and American Tower). Notwithstanding the
foregoing, CBS acknowledges that Tower Lease payments at the full "market
price" indicated in Schedule C by American to American tower may commence
upon such leases becoming the property of American Tower and shall continue
until the Effective Time;
(d) all expenses for taxes, insurance, maintenance and utilities in
respect of each Tower shall be paid by American Tower; and
(e) American Tower will assume the obligation and responsibility for
complying with all Applicable Law with respect to the Towers.
11.2 Conveyance of Towers. Except as otherwise provided by Section 11.1,
--------------------
at the earlier to occur of the Tower Merger Effective Time and the Effective
Time, American shall, or shall cause its Subsidiaries to, as applicable,
contribute, transfer or convey to American Tower (by, as appropriate, deed
warrantying only against transferor's acts or assignment of lease) the assets
described in Section 6.17 of the American Disclosure Schedule, and American
Tower shall assume all of American's and such Subsidiaries' obligations with
respect to such assets. In the event American (or one of its Subsidiaries) does
not, at the Effective
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Time, own any such assets, it shall, or shall cause its Subsidiaries to, so
convey such assets to American Tower promptly after the acquisition thereof by
American or any such Subsidiary.
11.3 Change of Name; Trademark Matters. Within ten (10) days after the
----------------------------------
Effective Time, CBS and its Subsidiaries shall file, if necessary, certificates
of amendment with the appropriate Secretary of State to amend its Organic
Documents so that no subsidiary of CBS shall have a name which includes the
words "American Radio". Immediately prior to the Effective Time, American will
assign to American Tower or its designee all right, title and interest,
including all the goodwill related thereto, in and for past infringements of the
name "American Radio" and related trademarks, service marks, logos and the like,
subject to the rights of American under this Section 11.3. As soon as
commercially practicable, but in no event later than six (6) months from the
Effective Time, CBS and its Subsidiaries shall cease all use of the name
"American Radio" in all modes.
ARTICLE 12
TRANSITIONAL SERVICES
12.1 Reasonable Best Efforts. From and after the Effective Time, and upon
------------------------
the terms and subject to the conditions set forth in this Agreement, each of
CBS, American and American Tower shall use its reasonable best efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other in doing, all things necessary, proper or advisable
to provide, in the most expeditious manner practicable, the goods and/or
services described in this Article 12.
12.2 Assistance with Reporting.
-------------------------
(a) During the period between the earlier to occur of the Tower Merger
Effective Time and the Effective Time and 180 days after the Effective Time,
American Tower agrees to make available its employees having the appropriate
experience and expertise, in Boston and on a mutually convenient and timely
basis, to American or any Subsidiary of American (other than Tower Subsidiaries)
to provide reasonable assistance in the preparation and finalization of all
information required by American or any Subsidiary of American (other than Tower
Subsidiaries) to (i) be filed with any Authority or (ii) be provided to security
holders pursuant to any Contract, including, but not limited to, filings with
the SEC, filings with state regulatory Authorities, and filings with other
Authorities where financial statements or financial information are required to
be filed. During the period between the earlier to occur of the Tower Merger
Effective Time and the Effective Time and 180 days after the Effective Time,
American Tower agrees to use its reasonable business efforts to cause such
employees to provide such reasonable assistance, in Boston and on a mutually
convenient and timely basis, with any other filings with any Authorities that
must be completed for any entity owned or previously held by American, including
but not limited to Forms 10-Q, 10-K and 11-K under the Exchange Act and Forms
5500 under ERISA.
(b) If the Effective Time occurs subsequent to June 30, 1998 and prior to
August 14, 1998, American Tower shall use its reasonable best efforts, including
without limitation the making available of American Tower employees having the
appropriate experience and expertise, in Boston and on a mutually convenient and
timely basis, to assist CBS in the timely preparation of American's 1998 second
quarter financial statements or financial information, including without
limitation a "Management's Discussion and Analysis of Financial Condition and
Results of Operations" section meeting the requirements specified in Item 303 of
Regulation S-K under the Securities Act, that is required to be provided to
security holders under any Contract relating to American's debt securities and
preferred stock.
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(c) From and after the earlier to occur of the Tower Merger Effective Time
and the Effective Time, American Tower shall provide, on a timely basis,
financial statements or financial information relating to periods ending on or
before the earlier to occur of the Tower Merger Effective Time or the Effective
Time with respect to American Tower that American, any Subsidiary of American
(other than the Tower Subsidiaries) or CBS may require in connection with the
preparation, audit and filing of information required to (i) be filed with any
Authority or (ii) required to be provided to security holders pursuant to any
Contract, including, but not limited to, filings with the SEC, filings with
state regulatory Authorities, and filings with other Authorities where financial
statements or financial information are required to be filed. American Tower
shall cause such employees to provide such American Tower financial statements
or financial information in connection with any filing with any Authority that
must be completed for any entity owned or previously held by American.
12.3 Assistance with Financial Software Systems. During the period between
------------------------------------------
the earlier to occur of the Tower Merger Effective Time and the Effective Time
and 90 days after the Effective Time, American Tower shall provide reasonable
assistance with and use its reasonable business efforts to make available
employees of American Tower having the appropriate experience and expertise, in
Boston and on a mutually convenient and timely basis, to consult with CBS and
American regarding the financial software systems currently used by American
(including, without limitation, such systems being known as the Accpac System).
12.4 Assistance with Resolution of Prior Transactions.
------------------------------------------------
(a) From and after the earlier to occur of the Tower Merger Effective Time
and the Effective Time, American Tower shall make available senior management
employees (both operations personnel and management personnel), as well as any
of their subordinates necessary to render the assistance described in this
Section 12.4, in Boston and on a mutually convenient and timely basis, to
consult with and to assist CBS and American in the resolution of all
transactions entered into by American prior to the earlier to occur of the Tower
Merger Effective Time and the Effective Time (each, a "Prior Transaction").
Such consultation and assistance shall include, but not be limited to, the
provision of any information relating to the Prior Transactions, the calculation
of any post-closing adjustments necessary in connection with any Prior
Transaction, the resolution of lawsuits in connection with any Prior Transaction
and the compliance with any agreements entered into with the FCC in connection
with any Prior Transaction.
(b) American Tower shall make available employees of American Tower having
the appropriate experience and expertise, in Boston and on a mutually convenient
and timely basis, to consult with CBS in identifying and resolving any
contingent liabilities of American arising prior to the Effective Time.
(c) From and after the earlier to occur of the Tower Merger Effective Time
and the Effective Time, American Tower shall cooperate with, and provide
assistance to, CBS and American in consummating the transfer by American of the
assets to American Tower pursuant to this Agreement.
12.5 Certain Assets. Promptly after the Closing, American Tower shall
--------------
deliver to a location designated by CBS (i) all books and records of American
and each of its Subsidiaries (other than the Tower Subsidiaries), including, but
not limited to, minute books, stock transfer ledgers, tax records, and all
financial records of American, whether in electronic or physical form, including
an inventory specifically identifying, in reasonable detail, the contents of
such records; (ii) all software and hardware of American and each of its
Subsidiaries (other than the Tower Subsidiaries) wherever located, including
without limitation those located at 000 Xxxxxxxxxx Xxxxxx, Xxxxxx, XX, 00000;
provided, however, that, notwithstanding the foregoing, American shall use its
reasonable best efforts to permit American Tower to retain such software and
hardware for a reasonable period after the Closing, not to exceed 90 days, in
order to replace it with comparable software and hardware and to fulfill its
obligations under this Agreement; and (iii) all other
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assets of American, wherever located, other than any such assets listed on
Schedule D attached hereto and made a part hereof or transferred by American to
American Tower pursuant to the transactions contemplated by this Agreement;
provided, however, that notwithstanding the foregoing, American Tower need not
deliver any document or other information as to which American Tower has been
advised by its counsel is protected by the attorney-client privilege between
American Tower and such counsel. American Tower shall be entitled, at its
expense, to make copies of all such books and record, software (to the extent
permitted by applicable licensing agreements) and financial records and, to the
extent that it elects not to so make copies, CBS will make all such books and
records, software and financial records available to American Tower and its
advisers, from time to time, with the right (subject, in the case of software,
to applicable licensing agreements) to make copies thereof.
12.6 Access to Third Party Work Products. American Tower shall cooperate
-----------------------------------
with CBS in obtaining access to American's independent auditors' working papers
prepared for periods prior to the Effective Time and to all other documents, to
the extent such documents are not available to be delivered by American Tower to
CBS promptly after the Effective Time pursuant to Section 12.5, prepared by
accountants, lawyers, tax advisors and other third parties retained by American
prior to the Effective Time, including, but not limited to, management letters
and representation letters, it being understood that to the extent such
documents relate primarily to any Tower Subsidiary they shall be retained by
American Tower's accountants, lawyers, tax advisors and other third parties
retained by it and not delivered to CBS; provided, however, that notwithstanding
the foregoing, American Tower need not provide access to any document or other
information that it has been advised by its counsel is protected by the
attorney-client privilege between American Tower and such counsel. CBS and
American Tower will make all such documents available to the other and its
advisers, from time to time, with the right to make copies thereof and shall
cooperate with each other in obtaining access to American's and American Tower's
independent auditors' working papers prepared for periods prior to the Effective
Time.
12.7 Confidentiality. In accordance with their respective rights under
----------------
this Agreement, each of CBS, American and American Tower may learn confidential
information about each other. Each of CBS, American and American Tower shall
hold, and shall cause its controlled Affiliates, consultants and advisors to
hold, any such information which it so learns in confidence.
ARTICLE 13
REPRESENTATIONS AND WARRANTIES OF AMERICAN
American hereby represents and warrants to American Tower and CBS as
follows:
13.1 Organization and Business; Power and Authority; Effect of Transaction.
---------------------------------------------------------------------
(a) American is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware.
(b) American has all requisite power and authority (corporate and other)
to execute, deliver and perform its obligations under this Agreement and each
Collateral Document executed or required to be executed by such party pursuant
hereto or thereto and to consummate the transactions contemplated hereby and
thereby, and the execution, delivery and performance of this Agreement and each
Collateral Document executed or required to be executed pursuant hereto or
thereto have been duly authorized by all requisite corporate or other action on
the part of American and its Subsidiaries, other than the Tower Subsidiaries,
and no other corporate proceedings on the part of American or any of such
Subsidiaries are necessary to authorize this Agreement or the transactions
contemplated hereby. This Agreement has been duly executed
-26-
and delivered by American and constitutes, and each Collateral Document executed
or required to be executed by American and its Subsidiaries (other than the
Tower Subsidiaries) pursuant hereto when executed and delivered by American and
such Subsidiaries, as applicable, will constitute, a valid and binding
obligation of American and such Subsidiaries, as applicable, enforceable in
accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, moratorium, insolvency and similar laws affecting the
rights and remedies of creditors and obligations of debtors generally and by
general principles of equity. American has heretofore received the requisite
consent of the holders of more than a majority of (i) the outstanding shares of
American Cumulative Preferred Stock to the Tower Separation in accordance with
the Certificate of Designation of the American Cumulative Preferred Stock, (ii)
the 9% Senior Subordinated Notes due 2006 to the Tower Separation pursuant to
the Merger in accordance with the indenture pursuant to which such notes are
outstanding, and (iii) the 9 3/4% Senior Subordinated Notes due 2005 to the
Tower Separation pursuant to the Merger in accordance with the indenture
pursuant to which such notes are outstanding.
(c) The execution, delivery and performance by American and its
Subsidiaries, as applicable, of this Agreement and any Collateral Document
executed or required to be executed by such parties pursuant hereto or thereto
do not, and the consummation by American of the transactions contemplated hereby
and thereby, and compliance with the terms, conditions and provisions hereof or
thereof by such parties will not:
(i) (A) Except (x) as set forth in Section 4.1(c) of the American
Disclosure Schedule, and (y) for the consent of the banks under its Credit
Agreements, dated as of January 24, 1997, with The Bank of New York, as
Collateral Agent and Administrative Agent, and the other agents named
therein and lenders party thereto to the effectuation of the Tower
Separation pursuant to the Tower Merger conflict with, or result in a
breach or violation of, or constitute a default under, any Organic Document
of American or its Subsidiaries, as applicable, or (B) conflict with, or
result in a breach or violation of, or constitute a default under, or
permit the termination, cancellation or acceleration of any obligation or
liability in, or but for any requirement of the giving of notice or passage
of time or both would constitute such a conflict with, breach or violation
of, or default under, or permit any such termination, cancellation or
acceleration of, any agreement, arrangement, contract, undertaking,
understanding, Applicable Law or other obligation or Private Authorization
of American or its Subsidiaries, as applicable, except, in the case of
clause (B), for such conflicts, breaches, violations, terminations,
cancellations, defaults or accelerations that would not, individually or in
the aggregate, be reasonably likely to have a Material Adverse Effect on
American; or
(ii) result in or permit the creation or imposition of any Lien upon
any property now owned or leased by American except for such Liens that
would not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect on American; or
(iii) require any Governmental Authorization or Governmental Filing
except for (A) the filing with the Commission of (I) the Information
Statement and the Registration Statements and (II) such reports under
Section 13(a) or 15(d) of the Exchange Act as may be required in connection
with this Agreement and the transactions contemplated by this Agreement,
and (B) such other Governmental Authorizations and Governmental Filings the
failure of which to be made or obtained would not be individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on American.
13.2 Shares of American Tower. The number of shares of American Tower that
-------------------------
are on the date hereof, and will at the Effective Time be, authorized and
outstanding and owned by American is and will be equal to the number of
authorized and outstanding shares of American Common Stock, the number of shares
of American Common Stock issuable upon the exercise of Option Securities, the
number of shares of American Common Stock issuable in respect of any employee
benefit plan of American, including without
-27-
limitation, any 401(k) or ESOP Plan, and upon the conversion of Convertible
Securities (except with respect to shares of American Common Stock subject to
American Options set forth on Schedule 4.1(e) to the Merger Agreement which are
held by Tower Employees who have stated that they will enter into definitive
agreements to have such American Options assumed by American Tower and converted
into options to acquire Tower Common Stock in accordance with Section 6.8(b) of
the Merger Agreement), and such shares of American Tower include a number
sufficient to enable American to satisfy its obligations with respect to the
delivery of shares of American Tower to security holders of American under the
Merger Agreement.
ARTICLE 14
REPRESENTATIONS AND WARRANTIES OF AMERICAN TOWER
American Tower hereby represents and warrants to American and CBS as
follows:
14.1 Organization and Business; Power and Authority; Effect of Transaction.
---------------------------------------------------------------------
(a) American Tower is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware.
(b) American Tower has all requisite power and authority (corporate and
other) to execute, deliver and perform its obligations under this Agreement and
each Collateral Document executed or required to be executed by such party
pursuant hereto or thereto and to consummate the transactions contemplated
hereby and thereby, and the execution, delivery and performance of this
Agreement and each Collateral Document executed or required to be executed
pursuant hereto or thereto have been duly authorized by all requisite corporate
or other action on the part of American Tower and its Subsidiaries, and no other
corporate proceedings on the part of American Tower or any of its Subsidiaries
are necessary to authorize this Agreement or the transactions contemplated
hereby. This Agreement has been duly executed and delivered by American Tower
and constitutes, and each Collateral Document executed or required to be
executed by American Tower and its Subsidiaries pursuant hereto when executed
and delivered by American Tower and its Subsidiaries, as applicable, will
constitute, a valid and binding obligation of American Tower and its
Subsidiaries, as applicable, enforceable in accordance with their respective
terms, except as such enforceability may be limited by bankruptcy, moratorium,
insolvency and similar laws affecting the rights and remedies of creditors and
obligations of debtors generally and by general principles of equity.
(c) The execution, delivery and performance by American Tower and its
Subsidiaries, as applicable, of this Agreement and any Collateral Document
executed or required to be executed by such parties pursuant hereto or thereto
do not, and the consummation by American Tower of the transactions contemplated
hereby and thereby, and compliance with the terms, conditions and provisions
hereof or thereof by such parties will not:
(i) (A) conflict with, or result in a breach or violation of, or
constitute a default under, any Organic Document of American Tower or its
Subsidiaries, as applicable, or (B) conflict with, or result in a breach or
violation of, or constitute a default under, or permit the termination,
cancellation or acceleration of any obligation or liability in, or but for
any requirement of the giving of notice or passage of time or both would
constitute such a conflict with, breach or violation of, or default under,
or permit any such termination, cancellation or acceleration of, any
agreement, arrangement, contract, undertaking, understanding, Applicable
Law or other obligation or Private Authorization of American Tower or its
Subsidiaries, as applicable, except, in the case of clause (B), for such
conflicts, breaches, violations, terminations, cancellations, defaults or
accelerations that
-28-
would not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect on American Tower; or
(ii) result in or permit the creation or imposition of any Lien upon
any property now owned or leased by American Tower except for such Liens
that would not, individually or in the aggregate, be reasonably likely to
have a Material Adverse Effect on American Tower; or
(iii) require any Governmental Authorization or Governmental Filing
except for (A) the filing with the Commission of (I) the Information
Statement and the Registration Statement and (II) such reports under
Section 13(a) or 15(d) of the Exchange Act as may be required in connection
with this Agreement and the transactions contemplated by this Agreement,
and (B) such other Governmental Authorizations and Governmental Filings the
failure of which to be made or obtained would not be individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on American
Tower.
14.2 Shares of American Tower. The number of shares of American Tower that
------------------------
have been issued by American Tower to American is equal to the number of
authorized and outstanding shares of American Common Stock, the number of shares
of American Common Stock issuable upon the exercise of Option Securities, the
number of shares of American Common Stock issuable in respect of any employee
benefit plan of American, including without limitation, any 401(k) or ESOP Plan,
and upon the conversion of Convertible Securities (except with respect to shares
of American Common Stock subject to American Options set forth on Schedule
4.1(e) to the Merger Agreement which are held by Tower Employees who have stated
that they will enter into definitive agreement to have such American Options
assumed by American Tower and converted into options to acquire Tower Common
Stock in accordance with Section 6.8(b) of the Merger Agreement), and such
shares of American Tower include a number sufficient to enable American to
satisfy its obligations with respect to the delivery of shares of American Tower
to security holders of American under the Merger Agreement.
ARTICLE 15
CONDITIONS
15.1 Conditions to Obligations of Each Party to Effect the Tower
-----------------------------------------------------------
Separation. The respective obligations of each party to effect the Tower
Separation shall be subject to the satisfaction on the Separation Closing Date
of the following conditions, any or all of which may be waived, in whole or in
part, to the extent permitted by Applicable Law; provided, however, that
American may not waive any such condition, in whole or in part, without the
express written consent of CBS (which consent shall not be unreasonably
withheld, delayed or conditioned):
(a) the parties shall have received written approval of CBS
approving all of the Tower Documentation (other than this Agreement
including Appendix A), including without limitation any
and all ancillary documentation and any documentation relating to the
mechanics of effecting the Tower Separation (it being understood that this
Agreement constitutes only part of the Tower Documentation), which consent
shall not be unreasonably withheld, delayed or conditioned;
(b) if the Tower Separation shall occur pursuant to the Tower
Merger, each condition to the closing of the Tower Merger set forth in
Article 6 of the Tower Merger Agreement shall have been satisfied or
waived;
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(c) if the Tower Separation shall occur pursuant to the Merger, each
condition to the closing of the Merger set forth in Article 7 of the Merger
Agreement shall have been satisfied or waived;
(d) each of the Merger Registration Statement, the Option
Registration Statement and the Convertible Registration Statement shall
have been declared effective by the Commission under the Securities Act and
shall not be the subject of any stop order or proceeding by the Commission
seeking a stop order; and
(e) no Authority of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any Law (whether temporary,
preliminary or permanent) that remains in effect and restrains, enjoins or
otherwise prohibits consummation of the Tower Separation.
15.2 Conditions to Obligations of American Tower. The obligation of
-------------------------------------------
American Tower to effect the Tower Separation shall be subject to the
satisfaction of the following conditions, any or all of which may be waived, in
whole or in part, to the extent permitted by Applicable Law:
(a) the representations and warranties of American set forth in this
Agreement shall be true and correct as of the date of this Agreement and as
of the Separation Closing Date as though made on and as of the Separation
Closing Date except (x) to the extent such representations and warranties
expressly speak as of an earlier date (in which case such representations
and warranties shall be true and correct as of such earlier date) and (y)
to the extent that the failure of such representations and warranties to be
true and correct, individually or in the aggregate, would not have a
Material Adverse Effect on American; provided, however, that for the
purpose of this clause (y), representations and warranties that are
qualified as to materiality (including by reference to "Material Adverse
Effect") shall not be deemed to be so qualified; and
(b) American shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior
to the Separation Closing Date.
15.3 Conditions to Obligations of American. The obligation of American to
-------------------------------------
effect the Tower Separation shall be subject to the satisfaction of the
following conditions, any or all of which may be waived, in whole or in part, to
the extent permitted by Applicable Law; provided, however, that American may not
waive any such condition, in whole or in part, without the express written
consent of CBS (which consent shall not be unreasonably withheld, delayed or
conditioned):
(a) the representations and warranties of American Tower set forth in
this Agreement shall be true and correct as of the date of this Agreement
and as of the Separation Closing Date as though made on and as of the
Separation Closing Date except (x) to the extent such representations and
warranties expressly speak as of an earlier date (in which case such
representations and warranties shall be true and correct as of such earlier
date) and (y) to the extent that the failure of such representations and
warranties to be true and correct, individually or in the aggregate, would
not have a Material Adverse Effect on American Tower; provided, however,
that for the purpose of this clause (y), representations and warranties
that are qualified as to materiality (including by reference to "Material
Adverse Effect") shall not be deemed to be so qualified; and
(b) American Tower shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior
to the Separation Closing Date.
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ARTICLE 16
GENERAL PROVISIONS
16.1 Amendment. This Agreement may be amended from time to time by the
---------
parties hereto at any time prior to the Separation Closing Date but only by an
instrument in writing signed by the parties hereto.
16.2 Waiver. At any time prior to the Separation Closing Date, except to
------
the extent not permitted by Applicable Law, any party may, either generally or
in a particular instance and either retroactively or prospectively, extend the
time for the performance of any of the obligations or other acts of the other,
waive any inaccuracies in the representations and warranties of the other
contained herein or in any document delivered pursuant hereto, and waive
compliance by the other with any of the agreements, covenants, conditions or
other provision contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party or parties to
be bound thereby.
16.3 Fees, Expenses and Other Payments. Promptly following the Effective
---------------------------------
Time, American Tower shall pay to American in immediately available funds (and
make American whole on an after-tax basis under the principles set forth in
Sections 3.4(b) and 3.5) an amount equal to the aggregate costs and expenses
incurred by American in connection with any agreement, arrangement or
understanding (other than this Agreement) entered into by American, American
Tower Mergercorp or any Tower Subsidiary following the date of the Original
Merger Agreement (i) for the benefit of any Tower Subsidiary, (ii) in
contemplation of the Tower Separation or (iii) in connection with the sale,
assignment, transfer or other disposition of shares of American Tower Common
Stock, including without limitation such costs and expenses incurred by American
to Xxxxxxx Xxxxx Xxxxxx Xxxxxx & Xxxxx Incorporated and any such costs and
expenses incurred by American to CSFB in excess of those set forth in the
engagement letter between American and CSFB provided by American to Mergeparty
in accordance with Section 4.14 of the Original Merger Agreement.
16.4 Notices. All notices and other communications which by any provision
-------
of this Agreement are required or permitted to be given shall be given in
writing and shall be (a) mailed by first-class or express mail, postage prepaid,
or by recognized courier service, (b) sent by telecopy or other form of rapid
transmission, confirmed by mailing (by first class or express mail, postage
prepaid, or by recognized courier service) written confirmation at substantially
the same time as such rapid transmission, or (c) personally delivered to the
receiving party (which if, other than an individual, shall be an officer or
other responsible party of the receiving party). All such notices and
communications shall be mailed, sent or delivered as follows:
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(a) If to American:
American Radio Systems Corporation
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx Mettlor
Telecopier No.: (000) 000-0000
with a copy to:
CBS Corporation
00 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Telecopier No.: (000) 000-0000
and
Cravath, Swaine & Xxxxx
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxx, Esq.
Telecopier No.: (000) 000-0000
(b) If to American Tower:
American Tower Systems Corporation
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, President and Chief Executive
Officer
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopier No.: (000) 000-0000
(c) If to CBS:
CBS Corporation
00 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Telecopier No.: (000) 000-0000
with a copy to:
-00-
Xxxxxxx, Xxxxxx & Xxxxx
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxx, Esq.
Telecopier No.: (000) 000-0000
or to such other person(s), telex or facsimile number(s) or address(es) as the
party to receive any such communication or notice may have designated by written
notice to the other party.
16.5 Specific Performance; Other Rights and Remedies. Each party
-----------------------------------------------
recognizes and agrees that in the event any other party should refuse to perform
any of its obligations under this Agreement or any Collateral Document, the
remedy at law would be inadequate and agrees that for breach of such provisions,
each party shall, in addition to such other remedies as may be available to it
at law or in equity, be entitled to injunctive relief and to enforce its rights
by an action for specific performance to the extent permitted by Applicable Law.
Each party hereby waives any requirement for security or the posting of any bond
or other surety in connection with any temporary or permanent award of
injunctive, mandatory or other equitable relief. Nothing herein contained shall
be construed as prohibiting each party from pursuing any other remedies
available to it under Applicable Law or pursuant to the provisions of this
Agreement for such breach or threatened breach, including without limitation the
recovery of damages, including, to the extent awarded in any Legal Action,
punitive, incidental and consequential damages (including without limitation
damages for diminution in value and loss of anticipated profits) or any other
measure of damages permitted by Applicable Law.
16.6 Survival of Representations, Warranties, Covenants and Agreements. The
-----------------------------------------------------------------
representations, warranties, covenants and agreements in this Agreement shall
survive the Tower Separation.
16.7 Severability. If any term or provision of this Agreement shall be
------------
held or deemed to be, or shall in fact be, invalid, inoperative, illegal or
unenforceable as applied to any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions or in all cases, because of the
conflicting of any provision with any constitution or statute or rule of public
policy or for any other reason, such circumstance shall not have the effect of
rendering the provision or provisions in question invalid, inoperative, illegal
or unenforceable in any other jurisdiction or in any other case or circumstance
or of rendering any other provision or provisions herein contained invalid,
inoperative, illegal or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution, statute or rule
of public policy, but this Agreement shall be reformed and construed in any such
jurisdiction or case as if such invalid, inoperative, illegal or unenforceable
provision had never been contained herein and such provision reformed so that it
would be valid, operative and enforceable to the maximum extent permitted in
such jurisdiction or in such case. Notwithstanding the foregoing, in the event
of any such determination, the parties shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by Applicable Law in an acceptable
manner to the end that the Tower Separation is fulfilled and consummated to the
maximum extent possible.
16.8 Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument, binding upon all of the parties. In
pleading or proving any provision of this Agreement, it shall not be necessary
to produce more than one of each such counterparts.
16.9 Section Headings. The headings contained in this Agreement are for
----------------
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
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16.10 Governing Law. The validity, interpretation, construction and
-------------
performance of this Agreement shall be governed by, and construed in accordance
with, the Applicable Laws of the United States of America and the laws of the
State of New York applicable to contracts made and performed in such State and,
in any event, without giving effect to any choice or conflict of laws provision
or rule that would cause the application of domestic substantive laws of any
other jurisdiction, except to the extent the corporate laws of the State of
Delaware are applicable. Anything in this Agreement to the contrary
notwithstanding, in the event of any dispute between the parties which results
in a Legal Action, the prevailing party shall be entitled to receive from the
non-prevailing party reimbursement for reasonable legal fees and expenses
incurred by such prevailing party in such Legal Action.
16.11 Further Acts. Each party agrees that at any time, and from time to
------------
time, before and after the consummation of the transactions contemplated by this
Agreement, it will do all such things and execute and deliver all such
Collateral Documents and other assurances, as the other party or its counsel
reasonably deems necessary or desirable in order to carry out the terms and
conditions of this Agreement and the transactions contemplated hereby or to
facilitate the enjoyment of any of the rights created hereby or to be created
hereunder.
16.12 Entire Agreement; No Other Representations or Agreements. This
--------------------------------------------------------
Agreement (together with the Appendices, the Merger Agreement and the other
Collateral Documents delivered or to be delivered in connection herewith)
constitutes the entire agreement of the parties with respect to the subject
matter hereof and supersedes all prior agreements, arrangements, covenants,
promises, conditions, undertakings, inducements, representations, warranties and
negotiations, expressed or implied, oral or written, between the parties, with
respect to the subject matter hereof. If there is any conflict between the
terms of this Agreement and the Merger Agreement, the terms of this Agreement
shall control. Each of the parties is a sophisticated legal entity that was
advised by experienced counsel and, to the extent it deemed necessary, other
advisors in connection with this Agreement. Each of the parties hereby
acknowledges that (a) such party has not relied or will not rely in respect of
this Agreement or the transactions contemplated hereby upon any document or
written or oral information previously furnished to or discovered by it or its
representatives, other than this Agreement (including the Appendices, the Merger
Agreement and the other Collateral Documents) or such of the foregoing as are
delivered at the Closing, (b) there are no covenants or agreements by or on
behalf of either party hereto or any of its respective Affiliates or
representatives other than those expressly set forth in this Agreement, the
Merger Agreement and the other Collateral Documents, and (c) the parties'
respective rights and obligations with respect to this Agreement and the events
giving rise thereto will be solely as set forth in this Agreement, the Merger
Agreement and the other Collateral Documents. WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, EACH PARTY HERETO AGREES THAT, EXCEPT FOR THE REPRESENTATIONS
AND WARRANTIES CONTAINED IN THIS AGREEMENT, THE MERGER AGREEMENT AND ANY
COLLATERAL DOCUMENT, NEITHER AMERICAN NOR AMERICAN TOWER MAKES ANY OTHER
REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY OTHER
REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER REPRESENTATIVES, WITH
RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER OR
THE OTHER'S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION WITH
RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
16.13 Assignment. Neither this Agreement nor any of the rights, interests
----------
or obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties. Any assignment in violation of the preceding
sentence
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shall be void. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
16.14 Parties in Interest. This Agreement shall be binding upon and inure
-------------------
solely to the benefit of each party and their permitted successors and assigns,
and nothing in this Agreement, express or implied, is intended to or shall
confer upon any Person any right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement, except as otherwise provided in Section
16.13.
16.15 Mutual Drafting. This Agreement is the result of the joint efforts
---------------
of CBS, American and American Tower, and each provision hereof has been subject
to the mutual consultation, negotiation and agreement of the parties and there
shall be no construction against either party based on any presumption of that
party's involvement in the drafting thereof.
16.16 Obligations of American, American Tower and CBS. Whenever this
-----------------------------------------------
Agreement requires a Subsidiary of American, American Tower or CBS to take any
action, such requirement shall be deemed to include an undertaking on the part
of American and CBS, and following the earlier to occur of the Tower Merger
Effective Time and the Effective Time, American Tower, to cause such Subsidiary
to take such action.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, American, American Tower and CBS have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
American Radio Systems Corporation
By:_________________________________
Name: Xxxxxx X. Xxxx
Title: Chief Financial Officer and
Treasurer
American Tower Systems Corporation
By:_________________________________
Name: Xxxxxx X. Xxxx
Title: Chief Financial Officer and
Treasurer
CBS Corporation
By:_________________________________
Name:
Title:
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