**UNITED STATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

**FORM 10-K/A**

**AMENDMENT NO. 1**
| **x**                                                                                                                                                                                                                                                             | **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF  THE SECURITIES EXCHANGE ACT OF 1934**     |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------|
| **For the  fiscal year ended December 31, 2006**                                                                                                                                                                                                                  |
| ** **                                                                                                                                                                                                                                                        |
| **OR**                                                                                                                                                                                                                                                            |
| ** **                                                                                                                                                                                                                                                        |
| **o**                                                                                                                                                                                                                                                             | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
| ** **                                                                                                                                                                                                                                                        |
| **For the  transition period from                   to                     ** |
|                                                                                                                                                                                                                                                                   |                                                                                               |  |

 

**Commission File Number 000-21091**

**FIBERTOWER CORPORATION**

(Exactname of registrant as specified in its charter)

| **Delaware**                             |   | **52-1869023**          |
|------------------------------------------|--------|-------------------------|
| (State or other  jurisdiction of         |   | (I.R.S. Employer        |
| incorporation or  organization)          |   | Identification  Number) |
|                                     |   |                    |
|                                     |   |                    |
| **185 Berry Street, Suite 4800**         |   |                    |
| **San Francisco, CA**                    |   | **94107**               |
| (Address of principal executive offices) |   | (Zip Code)              |

Registrant’s telephonenumber, including area code: **(415) 659-3500**

Securities registeredpursuant to Section 12(b) of the Act:  

 
| ** ** | Title of Each Class | ** ** | ** ** | ** ** | **Name of Each Exchange On Which Registered** | ** ** |
|------------|---------------------|------------|------------|------------|-----------------------------------------------|------------|
|       | Common Stock        |       |       |       | NASDAQ Global  Market                         |       |

Securities registered pursuant to Section 12(g) of the Act:  **None**

Indicate by check markwhether the registrant is a well-known seasoned issuer (as defined in Rule 405of the Securities Act). 
|  | Yes o | No x |
|--|-------|------|

 

Indicate by check mark if theregistrant is not required to file reports pursuant to Section 13 or Section15(d) of the Act. 
|  | Yes o | No x |
|--|-------|------|

 

Indicate by check markwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days. Yes x No o

Indicate by check mark ifdisclosure of delinquent filers pursuant to Item 405 of Regulation S-K is notcontained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated byreference in Part III of this Form 10-K or any amendment to this Form10-K.  o

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer. See definition of “accelerated filer and largeaccelerated filer” in Rule 12b-2 of the Exchange Act. (Check One):
|  | Large accelerated filer o |   | Accelerated  filer x |   | Non-accelerated filer o |
|--|---------------------------|--------|----------------------|--------|-------------------------|

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theAct). Yes £ No x

The aggregate market value ofthe voting and non-voting common equity held by non-affiliates of theregistrant as of June 30, 2006based on the closing sales price as reported on the Nasdaq Global Market onsuch date was approximately $235 million.

Number of shares of commonstock outstanding as of April 16, 2007 : 145,668,647 shares.

**DOCUMENTS INCORPORATED BY REFERENCE**

**None**

 

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**TABLE OFCONTENTS**
|                   | ** **                                                                                       | **Page**   |
|-------------------|--------------------------------------------------------------------------------------------------|------------|
| **PART III**      | ** **                                                                                       | ** ** |
| ITEM 10.          | DIRECTORS,  EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE                                          |       |   |
| ITEM 11.          | EXECUTIVE  COMPENSATION                                                                          |       |   |
| ITEM 12.          | SECURITY  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER  MATTERS |       |   |
| ITEM 13.          | CERTAIN  RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDENPENDENCE                       |       |   |
| ITEM 14.          | PRINCIPAL  ACCOUNTANT FEES AND SERVICES                                                          |       |   |
| **PART IV**       | ** **                                                                                       | ** ** |
| ITEM 15.          | EXHIBITS AND  FINANCIAL STATEMENT SCHEDULES                                                      |       |   |
| SIGNATURES        |                                                                                             |       |
| INDEX TO EXHIBITS |                                                                                             |       |

 

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**EXPLANATORYNOTE**

ThisAmendment No. 1 on Form 10-K/A amends the Registrant’s Annual Report on Form10-K, as filed by the Registrant with the Securities and Exchange Commission onMarch 30, 2007, and is being filed solely to amend Part III, Item 10through Item 14.  The reference on thecover of the Annual Report on Form 10-K to the incorporation by reference ofRegistrant’s Definitive Proxy Statement into Part III of the Annual Report ishereby amended to delete that reference.

**PART III**

**Item10.  Directors, Executive Officers andCorporate Governance.**

**Board of Directors**

Our board of directors currentlyconsists of nine persons, three Class I directors with terms expiring atthe 2007 annual meeting of stockholders, three Class II directors withterms expiring at the 2008 annual meeting of stockholders, and threeClass III directors with terms expiring at the 2009 annual meeting ofstockholders. There is no family relationship between any director and anyother director or executive officer.

***Audit Committee***

In 2006, prior to our merger (which we refer to as themerger) with FiberTower Networks Services Corp., formerly FiberTowerCorporation (which we refer to as Old FiberTower), the Audit Committee of ourboard of directors consisted of Matthew Teplitz, Richard Shorten and NeilSubin.  Upon completion of the merger,Messrs. Teplitz and Shorten resigned from the board and Randall Hack, DarrylSchall and Steven Scheiwe were appointed by the board of directors to serve onthe Audit Committee, with Mr. Schall appointed as Chairman of theCommittee.  The board of directors hasdetermined that Mr. Schall is an “audit committee financial expert” under therules and regulations of the SEC and has accounting or related financialmanagement expertise as those terms are defined in the rules of the NasdaqStock Market.  The board has alsodetermined that each of Messrs. Hack, Schall and Scheiwe is financiallyliterate and sophisticated as those terms are defined in the rules of the NasdaqStock Market.

***Members of theBoard of Directors***

Class I Directors:

*John D. Beletic, age 55*

Mr. Beletic has been a member of our board ofdirectors since the merger and was a director of Old FiberTower from January2004 through the date of the merger. Since July 2002, Mr. Beletic has served asa venture partner with Oak Investment Partners, a venture capital firm. Inaddition, Mr. Beletic serves on the board of directors of iPass, Inc., TesscoTechnologies, as well as three privately-held companies. From July 2002 toSeptember 2004, Mr. Beletic also served as Executive Chairman of OculanCorporation, a network monitoring and intrusion detection company. From August1994 until December 2001, Mr. Beletic served as Chairman and Chief ExecutiveOfficer of PageMart and WebLink Wireless, Inc. Prior to 1994, he was a VenturePartner at Morgan Stanley Venture Capital Partners, following a five-year termas President and Chief Executive Officer of Tigon, which was acquired byAmeritech. Mr. Beletic received a B.S.B.A. degree in Finance from XavierUniversity and a M.B.A. degree from the Harvard Business School.

*Michael K. Gallagher, age 47*

Mr. Gallagher has served as our President andChief Executive Officer and as a member of our board of directors sinceSeptember 2005. From March 2001 to September 2005, Mr. Gallagher served asPresident of Flarion Technologies Inc., a maker of mobile communicationsnetwork devices. From January 1999 to January 

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2001, he served as Senior Vice President forWorldwide Sales and Operations for Nortel Networks’ IP Services business unit(formerly Shasta Networks, which was acquired by Nortel in April 1999). Priorto joining Shasta Networks, Mr. Gallagher served as Senior Vice President,North American Sales for Bay Networks, a computer networking company, from 1990to 1999. Mr. Gallagher serves on the board of directors of Enterasys Networks,Inc., a comprehensive network solutions company.

*Neil Subin, age 42*

Mr. Subin has served as a member of our boardof directors since December 2001 and is a member of our Compensation Committee.Since its formation in 1991, Mr. Subin has served as managing director andpresident of Trendex Capital Management. Trendex is a private investment fundfocusing primarily on financially distressed companies.

Class II Directors:

*Bandel Carano, age 45*

Mr. Carano has served as a member of ourboard of directors and member of our Nominating and Corporate GovernanceCommittee since the merger and was a director of Old FiberTower from February2004 through the date of the merger. Since 1985, Mr. Carano has served asManaging Partner at Oak Investment Partners. Prior to joining Oak InvestmentPartners, he worked in Morgan Stanley’s Venture Capital Group.  Mr. Carano has invested intelecommunications, software, semiconductors and design automation companies.Mr. Carano currently serves as a director of publicly-held companies WirelessFacilities, Inc. and Tele Atlas. Mr. Carano received B.S. and M.S. degrees inElectrical Engineering from Stanford University.

*John Muleta, 42*

Mr. Muleta has served as a member of ourboard of directors since June 2005 and is a member of our Nominating andCorporate Governance Committee. In December 2005, Mr. Muleta founded M2ZNetworks, Inc. and currently serves as Chief Executive Officer and a directorof M2Z Networks, Inc. He was a partner and co-chair of the Communications Groupat Venable LLP from March 2005 through April 2006. Mr. Muleta served as thechief of the Federal Communications Commission’s Wireless TelecommunicationsBureau from February 2003 through March 2005. From August 2001 to February2003, Mr. Muleta was the president and Chief Executive Officer of Source 1Technologies LLC, a privately held systems integration firm. From January 2001to August 2001, he was a cofounder of OI Systems Inc., a Washington-basedmanagement consulting firm. From January 2000 to January 2001, Mr. Muletaworked for Navisite, Inc. as Executive Vice President for International andBusiness Development. From January 1998 to January 2000, Mr. Muleta concurrentlyserved as president of PSINet Ventures Inc., president of PSINet’s GlobalFacilities Division and president of PSINet’s India, Middle East and AfricaDivision.

*Darryl Schall, age 46*

Mr. Schall has served as a member of ourboard of directors and the Chairman of our Audit Committee since the merger andwas a director of Old FiberTower from 2005 through the date of the merger. Mr.Schall has served as an investment professional at Tudor InvestmentCorporation, an investment firm, since July 2002. Prior to joining Tudor, heworked at Trust Company of the West, most recently as a portfolio manager anddirector of research for high yield debt and special situation investments. Mr.Schall received a B.A. degree from the University of California, Los Angelesand a M.B.A. degree from the University of Chicago.

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Class III Directors:

*Randall Hack, age 60*

Mr. Hack has served as a member of our boardof directors, the Chairman of our Nominating and Corporate Governance Committeeand a member of our Audit Committee since the merger and was a director of OldFiberTower from May 2002 through the date of the merger. Since January 1995,Mr. Hack has served as a senior managing director of Nassan Capital L.L.C., aninvestment firm that he founded. From 1990 to January 1995, Mr. Hack served asPresident of the Princeton University Investment Company. From 1979 to 1988, heserved as President and CEO of Matrix Development Company, a commercial andindustrial real estate development firm that he founded.  Mr. Hack serves as a member of our board ofdirectors on behalf of Crown Castle International Corp., for which he hasserved as a director since 1997.  Mr.Hack also serves as President and Chief Executive Officers of Capstone CapitalL.L.C., an investment firm that he founded. He also serves as an Advisory Director for Berkshire Partners. Mr. Hackreceived an A.B. degree from Princeton University and a M.B.A. degree fromHarvard Business School.

*John P. Kelly, age 49*

Mr. Kelly has served as a member of our boardof directors and the Chairman of our Compensation Committee since the mergerand was a director of Old FiberTower from May 2002 through the date of themerger. Mr. Kelly was elected as a director of Crown Castle International Corp.(“CCIC”) in May 2000 and was appointed President and Chief Executive Officer ofCCIC in August 2001. Mr. Kelly joined CCIC in July 1998, and was namedPresident and Chief Operating Officers of Crown Communication, Inc. in Decemberof that year.  Prior to his appointmentas Chief Executive Officer, he served as President and Chief Operating Officerof CCIC. From January 1990 to July 1998, Mr. Kelly was the President and COO ofAtlantic Cellular Company L.P. From December 1995 to July 1998, he was alsoPresident and COO of Hawaiian Wireless, Inc., an affiliate of AtlanticCellular. He currently serves on the board of directors of on the PersonalCommunications Industry Association (PCIA), the wireless infrastructureassociation.

*Steven Scheiwe, age 46*

Mr. Scheiwe has served as a member of ourboard of directors and a member of our Audit Committee since the date of themerger.  Mr. Scheiwe has also served asthe President of Ontrac Advisors, Inc., which provides analysis and managementservices to private equity groups, privately and publicly held companies andfunds managing distressed corporate debt issues, since May 2001. Mr. Scheiwealso currently serves on the board of directors of General Chemical IndustrialProducts, Inc., a leading North American supplier of soda ash to a broad rangeof industrial and municipal customers, and Footstar, Inc., a licensed operatorof footwear departments in Kmart Corporation stores and in Rite Aid Corporationstores.  From April 1999 to May 2001, Mr.Scheiwe was the CEO and a member of the board of directors of Teletrac, Inc., awireless telecommunications service provider located in Vista, California. Mr.Scheiwe also served as General Counsel and Secretary of Teletrac from 1995 to1999.

***StockholderNominations for Director Nominees***

No material changes have been made to the proceduresby which our stockholders may recommend nominees to our board of directorssince we described the procedures in our definitive information statement onSchedule 14C filed on July 25, 2006.

**ExecutiveOfficers**

The following sets forth information with respect to our executive officers (exceptfor Messrs. Gallagher and Beletic, whose biographical information is set forthabove under “Board of Directors—Members of the Board of Directors”):

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*ThomasA. Scott, age 31*

Mr.Scott has served as our Chief Financial Officer, Treasurer and Secretary sinceMarch 2006.  Mr. Scott served as our VicePresident, Business Development and Finance from October 2005through March 2006. From November 2004 through October 2005, he served asActing President and Acting Chief Operating Officer of Teligent, Inc. FromJanuary 2002 until October 2005, Mr. Scott was the managing director of TASAdvisors, LLC, a communication consulting firm. From 1999 until January 2002,he served as Senior Director, Corporate Development for Winstar Communications,Inc.

*David Leeds**, age 37*

Mr.Leeds has served as our Vice President—Sales & Sales Operations since themerger and served in the same role for Old FiberTower from March 2004 throughthe date of the merger.  He is a co-founderof Old FiberTower and had been with Old FiberTower since 2000. From 1999 to2000, Mr. Leeds worked as Director of Product Planning with Dialpad, a VoIPcarrier. Prior to that, from 1992 to 1997, Mr. Leeds worked in business,product, and strategic planning manager roles in the United States andEurope with Lexmark International, a manufacturer of printers and printersupplies. Mr. Leeds has a B.S. degree from the University of Vermont where healso studied at the University of Copenhagen and a M.B.A. degree from StanfordUniversity’s Graduate School of Business.

*Ravi Potharlanka,**age 39*

Mr.Potharlanka has served as our Senior Vice President—Operations since the mergerand served as President of Market Operations with Old FiberTower from September2003 through the date of the merger. Prior to that, he served as Old FiberTower’sVP of Market Operations and VP of Strategic Partnerships between August 2001and August 2003.  From August 1997 toJuly 2001, Mr. Potharlanka served in various capacities at Teligent, a fixedwireless CLEC (or competitive local exchange carrier) company, most recently asVice President of International Market Development. Prior to that, from August1991 to December 1995, he served as Director of Product and Technology Development at NextelCorporation and as Manager of Technology Development at Airtouch. Mr.Potharlanka holds a B.E. degree in Electrical Engineering from RegionalEngineering College, Trichy (India), a M.S. degree in Electrical Engineeringfrom the University of California, Davis, and a M.B.A. degree from HarvardBusiness School.

*JosephM. Sandri**, Jr.,age 43*

Mr.Sandri has served as our Executive Vice President—Government and Regulatorysince the completion of the merger.  Mr.Sandri served as Senior Vice President, and President of First Avenue NetworksSolutions, Inc., a First Avenue subsidiary, from May 2005 through the date ofthe merger. From December 2004 to May 2005, he served as President for IDTSpectrum, Inc, a fixed wireless carriers’ carrier. He also served as SeniorVice President of Winstar Government Solutions, Inc., an IDT Corporationsubsidiary, from April 2004 to May 2005. From December 2001 to May 2005 he alsoserved as Senior Vice President & Regulatory Counsel of WinstarCommunication LLC, an IDT Corporation subsidiary. From January 1996 to December2001 he served as Senior Vice President and Regulatory Counsel of WinstarCommunications, Inc.

*MichaelFinlayson,**age 40*

Mr.Finlayson has served as our Senior Vice President—Technology since February2007.  Prior to that, he served as ourVice President of Technology.  Beforejoining us, Mr. Finlayson served as Senior Technical Consultant for FlarionTechnologies where he was responsible for technical consulting worldwide,including the deployment and testing of 3G/4G mobile broadband networks for major cellularoperators across the U.S., Europe and Asia. Prior to that, Finlayson heldtechnical management roles for Shasta Networks, culminating in his most recentrole there as Midwest Engineering Manager, where he managed the testing andimplementation of Shasta’s 

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broadband service platform for U.S. carriers. Priorto his tenure with Shasta Networks, Mr. Finlayson held engineering andmanagement positions with Wellfleet Communications (now Bay Networks). MichaelFinlayson began his career in networking at the University of Buffalo, where healso attended.

*Ferdi Schell,**age 53*

Mr.Schell currently serves as our Senior Vice President—Systems.  Mr. Schell served as VicePresident—National Operations and Chief Information Officer of Old FiberTower from June 2001through the date of the merger. Prior to joining Old FiberTower, from September1993 to December 2000, Mr. Schell worked with BC Tel Mobility, a cellulartelecommunications company, as Vice President of Engineering and Operations andTelus Communications, a telecommunications company, as Vice President ofPlanning and Engineering. Mr. Schell holds a B.S. degree in Engineering Physicsand a M.B.A. degree from University of British Columbia. Mr. Schell also holdsa Diploma of Technology in Telecommunications from the British ColumbiaInstitute of Technology.

**Section 16(a)Beneficial Ownership Reporting Compliance**

Each director, executive officer(and, for a specified period, certain former directors and executive officers)and each holder of more than ten percent of a class of our equity securities isrequired to report to the SEC his or her pertinent position or relationship, aswell as transactions in those securities, by specified dates. Based solely upona review of reports on Forms 3 and 4 (including any amendments) furnished to usduring our most recent fiscal year and reports on Form 5 (including anyamendments) furnished to us with respect to our most recent fiscal year, andwritten representations from officers and directors that no Form 5 wasrequired, we believe that all filings applicable to our officers, directors andbeneficial owners required by Section16(a) of the Exchange Act were filed on a timely basis during 2006, except thateach of Arthur Folker, EnterAspen Ltd., Michael Casey and Thomas Scott filedone late Form 3, each of Joseph Sandri, Louis Olsen, Matthew Teplitz, QuakerCapital Management and Ravi Potharlanka filed one late Form 4, and Dean Johnsonfiled three late Form 4s.  MichaelFinlayson filed one late Form 3 in 2007.

**Code ofEthics**

Our board of directors hasadopted a Corporate Code of Business Conduct and Ethics applicable to all ofour directors, officers and employees, including our principal executiveofficer and our principal financial and accounting officer.  A copy of the code is available on ourwebsite at *www.fibertower.com*.  Any waivers of the code for directors orexecutive officers must be approved by the board.

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**Item11.  Executive Compensation.**

**DirectorCompensation**

The followingtable sets forth the compensation awarded to, earned by, or paid to ournon-management directors for 2006.

**DirectorCompensation for Fiscal Year 2006**
| **Name (1)**  | ** ** | **Fees  Earned or  Paid in  Cash** | ** ** | **Stock  Awards (2)** | ** ** | **Option  Awards (3)** | ** ** | **All Other  Compensation** | ** ** | **Total** | ** ** |
|--------------------|------------|----------------------------------------------|------------|----------------------------|------------|-----------------------------|------------|----------------------------------|------------|-----------|------------|
| Bandel Carano  (4) |       | —                                       |       | —                     |       | —                      |       | —                           |       | —    |       |
| Randall A. Hack    |       | $                                            | 23,333     |                       | $          | 85,000                      |       | —                           |       | —    |       | $ | 108,333 |   |
| John P. Kelly  (4) |       | —                                       |       | —                     |       | —                      |       | —                           |       | —    |       |
| John Muleta        |       | $                                            | 11,167     |                       | $          | 85,000                      |       | —                           |       | —    |       | $ | 96,167 |   |
| Darryl Schall  (4) |       | —                                       |       | —                     |       | —                      |       | —                           |       | —    |       |
| Steven Scheiwe     |       | $                                            | 21,667     |                       | $          | 85,000                      |       | —                           |       | —    |       | $ | 106,667 |   |
| Neil Subin         |       | $                                            | 11,167     |                       | $          | 85,000                      |       | —                           |       | —    |       | $ | 96,167 |   |

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(1)          Compensation paid toMichael K. Gallagher and John D. Beletic for their services as executiveofficers are shown in the Summary Compensation Table; neither receives additionalcompensation for services as a director.

(2)          Represents the dollaramount recognized for restricted stock grants for financial reporting purposeswith respect to the fiscal year in accordance with Statement of FinancialAccounting Standards No. 123(R), “Share-Based Payment”, which is equal to thegrant date fair value of such grants. Because such restricted stock grants vested on the day following thedate of grant and are therefore no longer restricted, none of our non-employeedirectors held any shares of restricted stock on December 31, 2006.

(3)          As of December 31, 2006, Mr. Hack held112,985 stock options and Mr. Muleta held 60,000 stock options.

(4)          Messrs.Carano, Kelly and Schall have declined to receive compensation for boardservices.

Our director cash compensation policy for ournon-employee directors provides that each non-employee director receives anannual retainer of $20,000 per year (which is paid quarterly).  The chairperson of the Audit Committee receivesan additional $10,000 per year (which is paid quarterly) and the chairpersonsof the Compensation Committee and the Nominating and Corporate GovernanceCommittee each receive an additional $5,000 per year (which is paidquarterly).  Non-employee directors alsoreceive $1,500 for each board meeting and committee meeting attended.  In addition, all directors receivereimbursement of expenses incurred in attending meetings.

Our Stock Incentive Plan also provides for annualgrants of restricted stock to each non-employee director on the date of thefirst regularly scheduled meeting of the board of directors in each calendaryear.  Under the plan, each non-employeedirector receives a number of shares of restricted stock equal in value to$85,000 (measured by the fair market value on the date of grant).  Such restricted stock grants vest on the dayfollowing the date of grant.

**CompensationDiscussion and Analysis**

*The following discussion and analysis ofcompensation arrangements of the executive officers named in the SummaryCompensation Table for 2006, whom we refer to as our Named Executive Officersor NEO’s, should be read together with the compensation tables and relateddisclosures set forth below. This discussion contains forward lookingstatements that are based on our current plans, considerations, expectationsand determinations*

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*regarding future compensationprograms. Actual compensation programs that we adopt may differ materially fromcurrently planned programs as summarized in this discussion.*

***Introduction***

Our named executive officers, or NEOs, for 2006 areMichael K. Gallagher, our Chief Executive Officer and President; Thomas A.Scott, our Chief Financial Officer; John D. Beletic, our Executive Chairman;Michael Finlayson, our Senior Vice President—Technology; and Joseph M. Sandri,Jr., our Senior Vice President—Government & Regulatory.  In addition, although they are no longerexecutive officers, each of Sandra Thomas, our former Chief Financial Officerwho resigned effective March 31, 2006; Michael P. Casey, our Vice President—Sales;and Louis Olson, our Vice President—Technology, are included as NEOs for 2006under SEC rules.  Under SEC rules, we arerequired to report compensation earned for services to, or awarded or paid by,First Avenue Networks, Inc. before the merger and by the combined company afterthe merger.  As a result, in determiningwhich individuals were our NEOs for 2006, we did not take into account thecompensation earned for services to, or awarded or paid by, Old FiberTower.

The section below titled “—2007 CompensationFramework—Executive Compensation Policies for 2007” lists our current executiveofficers and their 2007 base salaries and target bonuses.

***CompensationDecision Making Process***

*Compensation Committee Authority*

The compensation of our executive officers isadministered by the Compensation Committee of our board of directors, which iscomposed of two members, John P. Kelly and Neil Subin.  Mr. Kelly became the Chairman of theCompensation Committee upon joining our board of directors in August 2006.Prior to the merger with Old FiberTower, the Compensation Committee wascomposed of Mr. Subin, Wharton B. Rivers, Jr., and R. Ted Weschler, with Mr.Subin serving as the Chairman.  The 2006post-merger compensation for our executive officers was discussed andnegotiated in connection with the merger negotiations, in consultation with thepersons who comprise our current Compensation Committee.

Our board of directors appoints the members of theCompensation Committee and delegates to the committee the direct responsibilityfor, among other matters, approving the compensation arrangements for ourexecutive officers, issuing the compensation committee report on executivecompensation for inclusion in our annual proxy statement, and otherwiseoverseeing and advising the board of directors on the adoption of policies thatgovern our compensation programs, including our stock and benefit plans.  The principal responsibilities and functionsof the committee are, among other matters, to:

·                  review the performance of the Chief Executive Officer, or CEO, andexecutive management;

·                  review and approve CEO goals and objectives, evaluate CEO performancein light of these corporate objectives, and set CEO compensation levelsconsistent with company philosophy;

·                  approve the salaries, bonus and other compensation for all executiveofficers, provided that as to the CEO the committee will recommend appropriatesalary, bonus and other compensation to the board of directors for approval;

·                  review and approve the awards made under any executive officer bonusplan, and provide an appropriate report to the board of directors; and

·                  review and make recommendations concerning long-term incentivecompensation plans, including making and authorizing grants, in accordance withthe terms of those plans.

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Our board of directors has determined that each memberof the Compensation Committee is independent under the listing standards of theNasdaq Stock Market, the Securities and Exchange Commission rules and therelevant securities laws, and that each member is an “outside director” asdefined in Section 162(m) of the Internal Revenue Code of 1986, as amended. Ourpre-merger Compensation Committee held two meetings during 2006 and acted threetimes by written consent. In addition, the individuals who comprise our currentCompensation Committee met a couple of times prior to the merger in 2006, andour current Compensation Committee has held two meetings so far during 2007.

*Role of Compensation Experts*

Pursuant to its charter, the Compensation Committee isauthorized to retain outside counsel or other experts or consultants as itdeems appropriate.  The committee did notretain the services of a compensation consultant to design, review or evaluateour executive compensation arrangements for 2006 or prior to that time. Instead,for 2006, the committee considered the following factors, among other matters,in determining compensation levels for our NEOs:

·                  the qualifications, skills and experience level of the respective NEO;

·                  the position, role and responsibility of the respective NEO in thecompany; and

·                  the general business and particular compensation experience andknowledge of the committee’s members gained through more than 50 years ofcombined experience working in and with public companies in similar industriesas our NEOs.

*Role of Our Executive Officers inthe Compensation Process*

Mr. Gallagher was actively involved in providingrecommendations to the committee in its evaluation and design of 2006compensation programs for our NEOs, including the recommendation of individualcompensation levels for NEOs other than himself. Mr. Gallagher relied on hispersonal experience serving in the capacity of executive officer and directorof other public companies as well as publicly available information forcomparable compensation guidance.  Mr.Gallagher did not provide this specific information to the committee, butrather used it as the basis for his own recommendations to the committee. However,Mr. Gallagher was not present during committee deliberations and votingpertaining to the determination of his own compensation.

In addition, John D. Beletic, our Executive Chairman,was also actively involved in providing recommendations to the combinedcompany’s board of directors regarding compensation matters in connection withthe merger.  Mr. Beletic relied on hispersonal experience serving in the capacity of executive officer, director andchairman of the compensation committee of other public companies.  He also spoke informally with representativesof compensation consultants and others, who were not formally retained orcompensated by the committee, regarding general information regardingcompensation practices.  Mr. Beletic usedthis information to form the basis for his recommendations to thecommittee.  Other than Messrs. Gallagherand Beletic, no other executive officer assumed an active role in theevaluation, design or administration of 2006 executive officer compensationprograms.

*Executive Officer CompensationStrategy and Philosophy*

Our executive officer compensation strategy has beendesigned to attract and retain highly qualified executive officers and to aligntheir interests with those of our investors by linking significant componentsof executive officer compensation with the achievement of specific business andstrategic objectives and our overall financial performance. We seek to employexecutive officers who are entrepreneurially driven, and accordingly, we offera compensation package that places a significant amount of their compensationat risk by providing a substantial part of compensation in the form of equityincentives. The conservation of cash resources for use in growing our businesshas been an objective in designing our compensation arrangements.

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We have designed our executive compensationarrangements to be competitive with comparable employers and to alignmanagement’s incentives with the long-term interests of our stockholders.  Our compensation decision making processconsists of establishing targeted overall compensation for each executiveofficer and then allocating that compensation among the following components:

·                  base salaries;

·                  annual cash incentive awards; and

·                  long-term equity incentive compensation.

We consider long-term equity incentive compensation tobe the most important element of our compensation program for executiveofficers.  We expect our executivemanagement team not only to significantly increase stockholder value of ourcompany but also to significantly expand our business within the next severalyears.  We believe that meaningful equityparticipation by each executive officer is the primary motivating factor thatwill result in significant increases in value and growth.

It has been our philosophy that optimal alignmentbetween stockholders and executive officers is best achieved by providing asignificant amount of total compensation in the form of equity comprised ofboth stock options and restricted stock. Accordingly, we have designed total compensationprograms for our NEOs to provide base compensation levels, annual cashincentive award opportunities and long-term incentive compensation awards thatare economically equivalent to typical programs available for comparableexecutive officers in similarly situated public companies.  Although we did not retain a compensationconsultant for 2006, we, based on the collective experience of our CompensationCommittee and others, believe that the cash components of our NEO compensationare comparable to the median compensation levels that may be offered by similarcompanies and that the long-term equity component of our NEO compensation isgreater than similar companies. The committee determined compensation levelsthat it concluded were appropriate based on the general business and particularcompensation experience and knowledge of its members gained from working withpublic companies.

Our 2006 incentive compensation program elements wereprimarily structured to reward our executive officers for achieving certainfinancial and business objectives.  Webelieve that the attainment of these specific financial objectives assist inthe fulfillment of our strategic objectives, including the following:

·                  to increase stockholder value;

·                  to grow our company in an efficient manner; and

·                  to conserve and optimally utilize cash resources for the future growthof our business.

***Elements of Compensation***

*Base Salaries*

The base salaries of our NEOs are reviewed on anannual basis as well as at the time of a promotion or other material change inresponsibilities.  The base salaries werealso reviewed by the members of our current Compensation Committee, inconsultation with the independent members of the board of directors, shortlyprior to the time of the merger. Adjustments in base salary are based on an evaluation of individualperformance, our company-wide performance and the individual executive’scontribution to our performance.  No NEOreceived an increase in his 2006 annual base salary in connection with themerger.  Please see “—2007 CompensationFramework—Executive Compensation Policies for 2007” below for informationregarding 2007 annual base salaries and target bonus amounts for our currentexecutive officers.

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*Annual Cash Incentive Awards*

Our NEOs participated in a cash bonus program in2006.  The Summary Compensation Tablebelow sets forth the amounts of the cash bonuses earned by each NEO in 2006 inthe column “Non-Equity Incentive Plan Compensation.”** The purpose of the cash bonuses is to createfinancial incentives that are aligned with the overriding objective ofincreasing stockholder value. The 2006 cash bonus awards were earned based onthe achievement of defined financial targets and specific non-financialobjectives established for each of our NEOs.

In January 2006, we established non-financialperformance objectives for each of our executive officers.  These performance objectives includeddeveloping network equipment alternatives, selling to new customers and preparingto launch operations across multiple markets. These objectives and the associated performance levels that wereestablished represented the factors that the board deemed most important andwhich, if achieved, would likely result in an increase in stockholder value.

In August 2006, in connection with the merger, thetargets for the second half of 2006 were revised to take into account thechanged circumstances for the combined company. The new targets, which were more reflective of an operating company,were new sales measurements, sites deployed, T-1s added to billing, capitalexpenditures per site, expenses and quality measurements.  The specific targeted performance levels,including the non-financial targets, were determined with reference to our 2006revised budget, which we used to manage our day-to-day business and weredetermined by our Compensation Committee and board of directors as representingan aggressive level of growth and financial performance for us in 2006.  Each officer had a target level of bonus.  In addition, a portion of each officer’sbonus was related to attainment of relevant departmental objectives.  In the case of our CEO, we used the averageof all departments for his departmental measurement.

See “Grants of Plan-Based Awards” below for the targetamounts that could have been received by each NEO under the cash bonus programfor 2006.  The 2006 cash bonus program didnot provide for any minimum or maximum amount of bonus for any of the NEOs.

*Long-Term Incentive Compensation*

*Overview. *We currently administer long-termincentive compensation awards through our Stock Incentive Plan, as amended inAugust 2006, which provides for the issuance of both stock options andrestricted stock.  The purpose of ourStock Incentive Plan is to promote the interests of the company and ourstockholders by encouraging our employees, directors and officers to acquire orincrease their equity interest in us, thereby encouraging them to work towardour continued growth and success. Pursuant to the terms of the merger agreementwith Old FiberTower, we also assumed Old FiberTower’s Stock Option Plan for thepurpose of administering Old FiberTower options that had been exchanged foroptions to purchase shares of our common stock pursuant to the merger agreement.  However, no additional grants have been madeunder Old FiberTower’s Stock Option Plan since the completion of the merger,and grants under that plan have been discontinued.

Historically, we have awarded stock options as theprimary form of equity compensation. We selected this form because of thefavorable accounting and tax treatment and the expectation by key employees inour industry that they would receive stock options.  In connection with the merger, our StockIncentive Plan was amended to allow grants of restricted stock.  We have determined a mix of stock options andrestricted stock is the best way to attract, retain and motivate our employeesand officers.  We believe long-termincentive packages for our executive officers should be composed of a greaterproportion of options to restricted stock than the packages of our employees onaverage because of the greater decision-making authority the executive officershold.  Stock option and restricted stockawards vest in accordance with vesting schedules determined by our CompensationCommittee.

Our equity compensation strategy is for the totalequity compensation of all directors, officers and employees that vests eachyear to total 1.3% to 1.9% of the fully diluted stock of the company.  New employee grants of stock optionstypically vest 25% on the anniversary of the hire date and 1/48th per monththereafter.  New employee restrictedstock grants typically vest over four years at a rate of 10%, 20%, 30% and 40%on the four

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anniversary dates of the grant.  For executive officers, who are potentiallysubject to Section 280G excise taxes on a change of control, restricted stockgrants typically vest at a rate of 25% per year.

Upon the completion of the merger, the combinedcompany’s board of directors reviewed the unvested equity of all employees andthe amount vesting by employee by year going forward.  Options held by employees of First Avenuefully vested upon the merger.  With themerger completed, the committee and the board established a philosophy ofgranting equity to all employees such that all employees held equity vesting inyears 2007 through 2010.  Consequently,employees who already held unvested equity vesting in 2007 and 2008 received anadditional grant vesting in 2009 and 2010. We believe the philosophy of granting equity to ensure a relativelyconsistent vesting level from year to year for each employee provides bothconsistency in equity earned for the employee and is the most efficient use ofequity as a form of compensation. Accordingly, in addition to any equity awards we may grant toindividuals from time to time, we plan to grant a new round of equity awards toemployees and officers at the first regularly scheduled board meeting in 2009for vesting in 2011.

As of December 31, 2006, the following table lists thenumber of stock options and restricted shares outstanding as of December 31,2006 that will vest each year from 2007 through 2010 and the percentage thisequity represents of the 160,474,718 fully diluted shares outstanding as ofDecember 31, 2006 (consisting of 144,940,908 shares issued and outstanding,9,612,855 shares subject to outstanding stock options, 3,041,400 shares ofrestricted stock and 2,879,555 shares subject to outstanding warrants, butexcluding shares issuable upon conversion of our convertible notes).
| ** **                         | ** ** | **Shares Subject to Options   or Restricted Stock as of 12/31/06** | ** ** | **Percentage of Fully   Diluted Shares as of 12/31/06** | ** ** |
|------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------|------------|
| Vested as of 12/31/06              |       | 5,114,186                                                                                                       |       | 3.19                                                                                       | %          |
| Vesting in 2007                    |       | 2,299,185                                                                                                       |       | 1.43                                                                                       | %          |
| Vesting in 2008                    |       | 1,952,714                                                                                                       |       | 1.22                                                                                       | %          |
| Vesting in 2009                    |       | 1,801,984                                                                                                       |       | 1.12                                                                                       | %          |
| Vesting in 2010                    |       | 1,486,186                                                                                                       |       | 0.93                                                                                       | %          |
| Total outstanding as of   12/31/06 |       | 12,654,255                                                                                                      |       | 7.89                                                                                       | %          |

 

*2006 Long-Term Equity Incentive Awards. *Immediately following the merger, the board ofdirectors of the combined company awarded Mr. Gallagher stock options toacquire 800,000 shares of our common stock and 600,000 shares of restrictedstock.  Such grants were awarded in considerationof his remaining with the company following the merger as the chief executiveofficer of the combined company.  The optionsvest 25% on the first anniversary of the date of grant and 1/48th each monththereafter and the restricted stock would vest as to 25% of the shares on eachAugust 29th, beginning with August 29, 2007. (Due to an administrative error, Mr. Gallagher’s employment agreement aspreviously disclosed stated that the restricted stock would vest 25% on eachNovember 15th, beginning on November 15, 2007, whereasthe board had determined that the restricted stock would vest as to 25% on eachAugust 29th, beginning on August 29, 2007.  The employment agreement has been amended tocorrect the error).  We believe thisvesting schedule is customary.  The boardalso awarded Mr. Beletic 300,000 shares of restricted stock associated with atwo-year assignment as Executive Chairman beginning upon completion of themerger.  These shares vest over thetwo-year period with 25% vesting on the six month anniversary of the completionof the merger and then 12.5% quarterly thereafter.

Also in August 2006, the combined company’s board ofdirectors awarded Mr. Scott stock options and restricted stock, and the FirstAvenue Compensation Committee awarded each of Messrs. Finlayson, Sandri, Caseyand Olsen, stock options and restricted stock. These equity grants are shown below in the table entitled “Grants ofPlan-Based Awards for Fiscal Year 2006.” The options vest 25% on the first anniversary of the date of grant and1/48th of the remaining shares each month thereafter.  The restricted stock granted to Messrs.Scott, 

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Finlayson and Casey will vest as to 25% of the shareson each August 29th, beginning with August 29, 2007, and that the restrictedstock granted to Messrs. Sandri and Olsen will vest as to 10% on August 29,2007, 20% on August 29, 2008, 30% on August 29, 2009 and 40% on August 29,2010.  The committee believes thesevesting schedules are customary.

*Plans for Future Awards.*  TheCompensation Committee expects to grant additional “refresh” equity awards inFebruary 2009 for vesting in 2011.  Priorto that time, the committee plans to retain compensation consultants either in2007 or 2008 to prepare a full study, complete with benchmark companies, on allour compensation strategies.

*Stock Option Practices.* We have awarded all stock options to purchase our common stock toexecutive officers at or above the fair market value of our common stock at thegrant date, based on the closing market price of our common stock on the dateof the grant (or, with respect to options granted by Old FiberTower prior tothe merger, based on the Old FiberTower board’s determination of the fairmarket value of the common stock of Old FiberTower on the date of grant).

*Perquisites and Other Benefits*

We annually review the perquisites and other personalbenefits that our executive officers receive. See the Summary Compensation Table below for the amounts attributable toeach of the NEOs for these benefits provided in 2006.  During 2006, the perquisites provided to ourNEOs (other than Mr. Gallagher who did not make 401(k) contributions in 2006)consisted of 401(k) plan matching contributions and a relocation payment to Mr.Olsen.

During 2006, we made 401(k) plan matchingcontributions of up to 25% of the first 6% of each employee-participant’ssalary.  On January 1, 2007 wediscontinued matching contributions to conform with the Old Fiber Tower 401(k)plan.  We also maintain an employeebenefit plan that provides our employees with the opportunity to enroll in ourhealth, dental and life insurance plans. Each of these benefit plans requiresthe employee to pay a portion of the premium, with the company paying theremainder. These benefits are offered on the same basis to all employees.

***CompensationChanges in connection with the Merger***

*2006 Amendments to StockIncentive Plan*

We continue to believe that stock based incentives arean important ingredient in the compensation packages for executives and otherpersonnel. In connection with the merger, we determined that a number ofamendments were necessary in order to provide greater flexibility with respectto future equity grants.  As a result,the following amendments were adopted effective as of August 29, 2006, and wereapproved by the written consent of stockholders holding a majority of theshares of common stock of First Avenue Networks, Inc. prior to the merger.

*Increase in Shares Authorized forIssuance. *Subject to the evergreen provisiondescribed below, our stock incentive plan was amended to increase the shares ofour common stock reserved for issuance under the plan from 7,600,000 shares to23,314,588 shares upon completion of the merger. As of June 15, 2006, thereremained only 2,996,028 shares available for future grant under the plan.  The number of shares was increased because webelieved that, without the ability to grant additional stock options andrestricted stock, we would not have the appropriate tools to compete with othertelecommunications companies for the talented technical, sales and management personnelwe need to succeed.

*Evergreen Provision. *Our stock incentive plan was also amended to includean “evergreen” provision that provides for annual increases in the number ofshares available for issuance under the plan on each anniversary of the completiondate of the merger, beginning on August 29, 2007, during the remaining term ofthe plan, which 

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ends on December 20, 2011. The annual increase in thenumber of shares will be equal to the lesser of (i) 1.5% of the number ofshares of our common stock outstanding at the time immediately prior to thedate of increase, and (ii) a lesser number of shares determined by our board ofdirectors. In addition, the number of shares for which incentive stock optionsmay be granted under the plan may not exceed in the aggregate 233,145,880shares of common stock (subject to adjustment as provided in the plan).

This amendment is consistent with our desire toprovide for a flexible evergreen provision to allow for potential annualincreases in shares reserved under the plan based on our outstanding capitalstock.  We believe that the amendment wasappropriate given our anticipated hiring of new employees, and to permit thegrant in future years of a sufficient number of stock options and restrictedstock to our employees as incentive and performance awards. The amendment willenable us to continue our policy of equity ownership by employees, directorsand consultants as an incentive to contribute to our success. As ofDecember 31, 2006, there were 22,866,551 shares available for futuregrants under our stock incentive plan.

*Issuance of Restricted Stock and Annual RestrictedStock Grants to Non-Employee Directors. *The plan was also amended to permit theissuance of restricted stock in addition to stock options.  The plan amendments also provided for aninitial grant at the time of the merger of a number of shares of restrictedstock equal in value to $85,000 (measured by the fair market value on the dateof grant) for our non-employee directors. Beginning on the first regularlyscheduled meeting of the board of directors in 2007, and on the first regularlyscheduled meeting of the board of directors in each calendar year thereafter,each continuing non-employee director will receive a number of shares ofrestricted stock equal in value to $85,000 (measured by the fair market valueon the date of grant). Such restricted stock grants vest on the day followingthe date of grant.

*Fair Market Value. *Inaddition to the foregoing amendments, the board of directors also approved anamendment to the plan that requires that all stock options, includingnon-qualified stock options, have exercise prices at or above the fair marketvalue of our common stock on the date of grant. This amendment was made tocomply with Section 409A of the Internal Revenue Code.

*New Employment Agreement with Mr.Gallagher*

Upon completion of the merger, we entered into a newemployment agreement with Mr. Gallagher. See “Employment Agreements—ChiefExecutive Officer” and “Potential Payments Upon Termination orChange-in-Control—Michael K. Gallagher” below for a more detailed descriptionof his employment agreement and the potential payments available under thatagreement in the event of a termination of his employment or a change incontrol of the company.  We believe thatwe should provide reasonable severance benefits to our Chief Executive Officer,reflecting the fact that it may be difficult for a CEO, if terminated, to findcomparable employment within a short period of time.  We also believe that providing change ofcontrol benefits helps to align the interests of our CEO more closely withthose of our stockholders in that such benefits should reduce the potentialreluctance, if any, of our CEO to pursue a change of control transaction thatmay be in the best interests of our stockholders.

*Vesting of Stock Options inconnection with the Merger*

In 2006, all outstanding unvested First Avenue stockoptions issued prior to the merger under the First Avenue Networks, Inc. StockOption Plan, including those held by our NEOs, vested upon the completion ofthe merger.  The following table setsforth the number and estimated dollar value of stock options held by each ofour NEOs (other than Sandra Thomas who resigned prior to the merger) that weresubject to accelerated vesting upon completion of the merger:

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| **Name and Position** | ** ** | **Shares Issuable Under Options  Subject to Accelerated  Vesting** | ** ** | **Expense  under FAS 123R for   Accelerated Vesting (1)** | ** ** |
|---------------------------------|------------|---------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------|------------|
| Michael K.  Gallagher           |       | 1,500,000                                                                                   |       | $                                                                                       | 5,104,920  |   |
| Thomas A. Scott                 |       | 150,000                                                                                     |       | 551,129                                                                                 |       |
| John D. Beletic                 |       | —                                                                                      |       | —                                                                                  |       |
| Michael  Finlayson.             |       | 175,000                                                                                     |       | 926,771                                                                                 |       |
| Joseph M.  Sandri, Jr.     |       | 40,000                                                                                      |       | 148,999                                                                                 |       |
| Michael P. Casey                |       | 175,000                                                                                     |       | 877,443                                                                                 |       |
| Louis R. Olsen                  |       | 80,000                                                                                      |       | 315,244                                                                                 |       |
|                                 |            |                                                                                             |            |                                                                                         |            |  |

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(1)  Represents the value of shares accelerated inconnection with the merger, calculated in accordance with FAS 123R.

***Stock Ownership Requirements***

We do not currently have any policy or guidelines thatrequire a specified ownership of our common stock by our directors or executiveofficers or stock retention guidelines applicable to equity-based awardsgranted to directors and executive officers. See “Outstanding Equity Awards at FiscalYear-End 2006” for informationregarding outstanding options and restricted stock awards held by our NEOs and “Item12.  Security Ownership of CertainBeneficial Owners and Management and Related Stockholder Matters—SecurityOwnership of Certain Beneficial Owners and Management” for informationregarding shares of our common stock beneficially owned by our NEOs.

***2007 Compensation Framework***

During 2006, as a result of the merger, wetransitioned from being First Avenue Networks, Inc. to being FiberTowerCorporation, a company with a larger and more diverse stockholder base.Accordingly, following completion of the merger, we began the process ofestablishing a more structured and measurable compensation framework forexecutive officers appropriate for a public company of our size.

In connection with themerger, we undertook the following actions:

·                  appointed John P. Kelly, formerly a director of Old FiberTower, as thenew chair of our Compensation Committee, to join Mr. Subin;

·                  revised and amended our Compensation Committee charter;

·                  amended our Stock Incentive Plan to provide for greater flexibilitywith respect to equity compensation arrangements;

·                  entered into a new employment agreement with Mr. Gallagher; and

·                  entered into a letter agreement with Mr. Beletic to serve two years asExecutive Chairman (please see “Executive Compensation—EmploymentAgreements—John D. Beletic” below for a description of this letter agreement).

Below we summarize the significant steps we have takento date with respect to establishing compensation elements for 2007 and beyond.

*Executive Compensation Policiesfor 2007*

At the beginning of 2007, the Compensation Committeebegan an evaluation of the objectives, design, elements and process forestablishing executive officer compensation with the intention of adoptingchanges for 

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2007 that would be appropriate for the combinedcompany.  The following are new ormodified policies that the committee has adopted or determined to adopt for2007:

·                  Subject to further review upon changed circumstances, we have established2007 base salaries and target bonus amounts for our executive officers, whichwe believe to be appropriate given the stage of the company, as set forth inthe table below: 

| Executive Officer | ** ** | **2007 Base Salary** | ** ** | **2007 Target Bonus** | ** ** |    |
|------------------------|------------|--------------------------------|------------|---------------------------------|------------|---------|
| Michael K.  Gallagher  |       | $                              | 350,000    |                            | $          | 175,000 |   |
| Thomas A. Scott        |       | $                              | 200,000    |                            | $          | 75,000  |   |
| John D. Beletic        |       | $                              | 150,000    |                            | —     |    |
| Michael  Finlayson     |       | $                              | 200,000    |                            | $          | 75,000  |   |
| David Leeds            |       | $                              | 200,000    |                            | $          | 220,000 |   |
| Ravi Potharlanka       |       | $                              | 200,000    |                            | $          | 75,000  |   |
| Joseph M.  Sandri, Jr. |       | $                              | 235,000    |                            | $          | 117,500 |   |
| Ferdi Schell           |       | $                              | 178,000    |                            | $          | 66,750  |   |
|                        |            |                                |            |                                 |            |         |  |  |  |  |

 

·                  We determined the next scheduled “refresh” equity grants to ourexecutive officers will be at the first regularly scheduled board meeting in2009, for vesting in 2011; and

·                  We determined that our equity compensation strategy is for the totalequity compensation of all directors, officers and employees that vests eachyear to total 1.3% to 1.9% of the fully diluted stock of the company.

***Tax Implications of ExecutiveCompensation***

Our aggregate deductions for each NEO’s compensationare potentially limited by Section 162(m) of the Internal Revenue Code to theextent the aggregate amount paid to an executive officer exceeds $1.0 million,unless it is paid under a predetermined objective performance plan meetingcertain requirements, or satisfies one of various other exceptions specified inthe Internal Revenue Code. At our 2006 NEO compensation levels, we did notbelieve that Section 162(m) of the Internal Revenue Code would be applicable,and accordingly, our Compensation Committee did not consider its impact indetermining compensation levels for our NEOs in 2006.

***Accounting Implications ofExecutive Compensation***

Effective January 1, 2006, we were required torecognize compensation expense of all stock-based awards pursuant to theprinciples set forth in Statement of Financial Accounting Standards No. 123(R),Share-Based Payment. Consequently, we began recording non-cash stockcompensation expense in our financial statements for stock options grantedduring fiscal 2006 and thereafter. In our financial statements, we utilized theprospective method under SFAS No. 123(R) to calculate non-cash compensationexpense. However, in the Summary Compensation Table below and the DirectorCompensation Table above, we used SFAS No. 123(R)’s modified prospective methodas required by the SEC’s regulations. The non-cash stock compensation expensefor stock options that we grant is generally recognized ratably over therequisite vesting period. We continue to believe that stock options andrestricted stock are essential components of our compensation strategy, and weintend to continue to offer these awards in the future.

**ExecutiveCompensation**

The followingtable sets forth the aggregate compensation awarded to, earned by, or paidduring 2006 to our NEOs.  Please see “CompensationDiscussion and Analysis” above for a narrative description of the elements ofcompensation shown below and material factors affecting compensation.

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**Summary Compensation Table**
| **Name and Principal Position**                     | ** ** | **Year**   | ** ** | **Salary** | ** ** | **Bonus**  | ** ** | **Stock  Awards(1)(2)** | ** ** | **Option  Awards(1)(3)** | ** ** | **Non-  Equity   Incentive   Plan   Compen-  sation (4)** | ** ** | **All Other   Compensation** | ** ** | **Total**  | ** ** |
|--------------------------------------------------------------------|------------|------------|------------|------------|------------|------------|------------|-------------------------|------------|--------------------------|------------|-------------------------------------------------------------------------------|------------|----------------------------------------|------------|------------|------------|
| ** **                                                         | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **              | ** ** | ** **               | ** ** | ** **                                                                    | ** ** | ** **                             | ** ** | ** ** | ** ** |
| Michael K.  Gallagher  President and Chief Executive Officer       |       | 2006       |       | $          | 350,000    |       | —     |                    | $          | 397,062                  |       | $                                                                             | 6,531,847  |                                   | $          | 139,409    |       | $ | — |   | $ | 7,418,318 |   |
| Thomas A. Scott  Senior Vice President and Chief Financial Officer |       | 2006       |       | $          | 185,000    |       | —     |                    | $          | 132,354                  |       | $                                                                             | 764,714    |                                   | $          | 81,180     |       | $ | 2,363 | (5) | $ | 1,165,611 |   |
| Sandra Thomas  Former Chief Financial Officer                      |       | 2006       |       | $          | 31,250     |       | —     |                    | —     |                     | $          | 135,302                                                                       | (6)        | $                                      | 12,500     | (7)        | $          | 160,781 | (8) | $ | 339,833 |   |
| John D. Beletic  Executive Chairman                                |       | 2006       |       | $          | 51,731     |       | —     |                    | $          | 876,071                  |       | $                                                                             | 137,423    |                                   | —     | (9)        | $          | 656 | (5) | $ | 1,065,881 |   |
| Michael Finlayson  Senior VP Technology                            |       | 2006       |       | $          | 170,512    |       | $          | 20,000                  | (10)       | $                        | 92,648     |                                                                          | $          | 1,154,215                              |       | $          | 68,906     |   | $  | 2,000 | (5) | $ | 1,508,281 |   |
| Joseph M. Sandri,  Jr.  Senior VP Government & Regulatory      |       | 2006       |       | $          | 235,000    |       | —     |                    | $          | 29,776                   |       | $                                                                             | 262,910    |                                   | $          | 104,281    |       | $ | 3,525 | (5) | $ | 635,492 |   |
| Michael P. Casey  (11)  VP Sales                                   |       | 2006       |       | $          | 183,333    |       | —     |                    | 132,354    |                     | $          | 1,125,881                                                                     |       | $                                      | 54,500     |       | $          | 2,250 | (5) | $ | 1,498,318 |   |
| Louis Olsen (11)  VP Technology                                    |       | 2006       |       | $          | 180,000    |       | —     |                    | $          | 29,776                   |       | $                                                                             | 430,578    |                                   | $          | 45,563     |       | $ | 66,350 | (12) | $ | 752,267 |   |
|                                                                    |            |            |            |            |            |            |            |                         |            |                          |            |                                                                               |            |                                        |            |            |            |  |  |  |  |  |  |  |

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(1)          Note that amounts reported with respect to stock awardsand option awards in the table above may differ from the amounts reported inour consolidated financial statements included in our Annual Report on Form10-K for the year ended December 31, 2006. Because the merger was accounted for as a “reverse acquisition,” allfinancial information and statements prior to the merger included in our 2006Form 10-K reflect only the financial results of Old FiberTower on a historicalbasis after applying the merger exchange ratio to historical share-relateddata.  As a result, the amounts reportedfor stock and option awards in the table above may not correspond to ourconsolidated financial statements included in our 2006 Form 10-K with respectto amounts expensed by First Avenue Networks, Inc. prior to the merger.  In addition, the calculation of the amounts of stock-based compensation related torestricted stock and option awards reported in the above table is differentthan the calculation applied under U.S. GAAP for financial statement reportingpurposes in that estimated forfeitures related to service-based vestingconditions considered under SFAS No. 123(R) (which would reduce thecompensation reported in the financial statements) is disregarded for purposesof this table.  If an NEO fails toperform the requisite service and forfeits an award, the associated amount ofcompensation cost disclosed in this table will be deducted (reported as anegative amount) in this table in the period in which the award is forfeited.

(2)          Represents the dollar amount recognized for stockawards for financial reporting purposes with respect to the fiscal year inaccordance with FAS 123R.  For purposesof this table, we have disregarded any estimates of forfeitures related toservice-based vesting conditions considered under FAS 123(R) for financialstatement reporting purposes and have assumed that none of these shares will beforfeited.

(3)          Represents the dollar amount recognizedfor option awards for financial reporting purposes with respect to the fiscalyear in accordance with FAS 123R.  Weestimate the fair value of the options granted using a Black-Scholes-Mertonoption pricing model and the following assumptions: (a) an expected life ofoptions of between 3.75 to 6.25 years based on the guidance in SEC StaffAccounting Bulletin No. 107; (b) expected market price volatility of 70% basedon the historical volatilities of similar public companies in thetelecommunications industry; (c) a risk-free interest rate of between 4.39% to5.03% based on the U.S. Treasury yield curve in effect at the time of thegrant; and (d) an expected dividend yield of 0.00% since we

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|      | have never paid any cash dividends on our common  stock and we do not anticipate paying any cash dividends in the foreseeable  future. For purposes of this table, we have disregarded any estimates of  forfeitures related to service-based vesting conditions considered under FAS  123(R) for financial statement reporting purposes and have assumed that none  of these options will be forfeited. See “Compensation Discussion and  Analysis—Compensation Changes in Connection with the Merger—Vesting of Stock  Options in Connection with the Merger” for a table showing amounts recognized  in connection with the acceleration of vesting of option awards held by NEOs  in connection with the merger in accordance with FAS 123R. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (4)  | Represents amounts paid under our cash bonus program.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (5)  | Represents 401(k) matching contributions. Effective  January 1, 2007, we ceased making matching contributions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (6)  | Sandra Thomas resigned effective March 15, 2006. In  connection with her resignation, options to purchase 40,000 shares of our  common stock then held by Ms. Thomas were cancelled.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (7)  | Ms. Thomas was paid a pro-rata portion of her 2006  performance bonus through the date of her resignation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (8)  | Represents the aggregate amount of post-termination  payments, including a $75,000 transition bonus and $9,116 vacation payout.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (9)  | Mr. Beletic was not eligible to participate in our  cash bonus program in 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (10) | Represents a signing bonus paid to Mr. Finlayson in  connection with his hiring on February 22, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (11) | Messrs. Casey and Olsen were not executive officers  as of fiscal-year-end.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| (12) | Represents a $65,000 relocation payment and $1,350 of  401(k) matching contributions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

 

***Employment Agreements***

*Michael K. Gallagher — Current Employment Agreement*

Effective upon the completion of the merger, weentered into a new employment agreement with Mr. Gallagher, or the NewGallagher Agreement.  The New GallagherAgreement provided that Mr. Gallagher’s term of employment as President andChief Executive Officer would expire on September 7, 2006, subject to anautomatic extension for additional one-year terms unless either party providesat least thirty (30) days prior notice of a non-extension or the New GallagherAgreement is otherwise terminated. The New Gallagher Agreement provides, amongother things, that we will pay him a base annual salary of $350,000 plus anannual bonus with a target of $175,000.

Pursuant to the New Gallagher Agreement, Mr. Gallagherwas also granted an option to purchase 800,000 shares of our common stock, 25%of which will vest on the first anniversary of the date of grant and 1/48th ofthe total grant which will vest monthly thereafter.  Additionally, Mr. Gallagher was granted600,000 shares of restricted stock. The restricted stock will vest as to 25% ofthe total shares on each August 29th, beginning with August 29, 2007. (Due toan administrative error, Mr. Gallagher’s employment agreement as previouslydisclosed stated that the restricted stock would vest 25% on each November 15th, beginning on November 15, 2007, whereas the boardhad determined that the restricted stock would vest as to 25% on each August 29th, beginning on August 29, 2007.  The employment agreement has been amended tocorrect the error).  Pursuant to the NewGallagher Agreement, upon his termination of employment other than for cause orhis resignation under certain circumstances (including his failure to continuein his position of Chief Executive Officer), Mr. Gallagher will be entitled toreceive payment of one year of his base salary plus his annual target bonus ineffect on the date of termination and acceleration of the number of sharessubject to his outstanding options and restricted stock which would have vestedduring the one year period following his termination had he continued in theemployment of the combined company. If Mr. Gallagher is terminated fordisability, he would be entitled to payment of one year of his base salary plushis annual target bonus. Moreover, Mr. Gallagher would be entitled to 100% vestingacceleration of his stock options and restricted stock upon the six-monthanniversary of a change of control, or, if his employment after such event isterminated without cause prior to such six-month anniversary. Additionally, theproposed agreement would require Mr. Gallagher to maintain the confidentialityof confidential information, to assign certain rights in our intellectualproperty to us, and to comply with certain non-compete and nonsolicitationrestrictions while employed by us and for a period of time thereafter.Severance payments would be conditioned on Mr. Gallagher executing a generalrelease of claims in favor of the combined company.

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*Michael K. Gallagher — Prior Employment Agreement.*

The following is a description of Mr. Gallagher’semployment agreement with First Avenue Networks, Inc. that was in effect beforethe closing of the merger, or the Old Employment Agreement.  The Old Employment Agreement provided forone-year terms, subject to automatic extension for additional one-year termsunless either party provided at least thirty (30) days prior notice ofnon-extension or the Old Employment Agreement was otherwise terminated. The OldEmployment Agreement Agreement provided, among other things, that we would payMr. Gallagher a base annual salary of $350,000 plus an annual bonus with atarget of $150,000.

Pursuant to the Old Employment Agreement, upontermination of Mr. Gallagher’s employment other than for cause or hisresignation under certain circumstances (including his failure to continue inhis position of Chief Executive Officer), Mr. Gallagher was entitled to receivepayment of one year of his base salary and acceleration of outstanding optionswhich would have vested during the one year period following his termination.  Upon his termination for disability, Mr.Gallagher would have been entitled to payment of one year of his base salary.In addition, Mr. Gallagher was entitled to 100% acceleration of his stockoptions upon the six-month anniversary of a “change of control” (as defined inthe Old Employment Agreement), or, in the event his employment was terminatedwithout cause prior to such six-month anniversary, upon such earliertermination.  Additionally, Mr. Gallagherhad agreed to maintain the confidentiality of “confidential information” (asdefined in the Old Employment Agreement Agreement), to assign certain rights inour intellectual property to us, and to comply with certain non-compete andnon-solicitation restrictions while employed by us and for a period of time thereafter.Severance payments were conditioned on Mr. Gallagher executing a generalrelease of claims in our favor.

*Sandra Thomas*

Effective March 15, 2006, Ms. Thomas resigned from herpositions with First Avenue. The following description of her employment agreementis included because information regarding her compensation is required to beincluded in the Summary Compensation Table included in this report.  Ms. Thomas’ resignation was deemed aresignation for “good reason” (as defined in her employment agreement) withinthe initial six-month term under the terms of her employment agreement.  Ms. Thomas’s employment agreement had aninitial term of six months and automatically renewed for additional six-monthterms unless either party provided at least thirty (30) days prior notice ofnon-extension or the agreement was otherwise terminated. The agreement providedthat we would pay Ms. Thomas an annual base salary of $150,000. Additionally,subject to Ms. Thomas meeting her obligations thereunder in all materialrespects, upon her termination without cause or her resignation for “goodreason,” Ms. Thomas was entitled to receive severance in the amount of $75,000,and a separation bonus equal to $60,000, pro-rated for a partial year based onthe last date of Ms. Thomas’s employment with us. Additionally, if Ms. Thomaswas terminated without cause or resigned for good reason during the initialsix-month term, she would receive an additional $75,000 bonus. In addition, ifMs. Thomas was terminated without cause or resigned for good reason, (i) heroutstanding stock options granted as of the date of the agreement would becomeimmediately vested and exercisable, and (ii) any subsequent stock optionsgranted to Ms. Thomas would become immediately vested and exercisable to theextent they would have vested according to their terms within the six-monthperiod following her last date of employment had she remained employed by us.Additionally, if Ms. Thomas’s employment was terminated as a result of adisability, those stock options granted to Ms. Thomas as of the date of theagreement that remained unvested at the time of her termination would becomeimmediately vested and exercisable. Further, if Ms. Thomas elected to continueher participation and that of her eligible dependents in our group health anddental plans, we would contribute the full premium cost of any such coveragefor up to six months. If terminated for cause or if Ms. Thomas resigned withoutgood reason, she would not receive any of the aforementioned benefits and wouldbe entitled only to base salary earned and unpaid through the last date of heremployment.

Pursuant to her employment agreement, Ms. Thomasagreed to (i) comply with our policies and procedures for protectingconfidential information, (ii) not compete with us during the term of theagreement and for a period of one year following her last date of employment(the “Non-Competition Period”), (iii) not solicit our employees or consultantsduring the Non-Competition Period, (iv) reasonably cooperate with us for up to45 days following her last date of employment with regards to the transition toa new management team, including a new 

19

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Chief Financial Officer, and (v) during theNon-Competition Period, not disparage us or our subsidiaries. The violation byMs. Thomas of any of the foregoing obligations would have released us from ourobligation to pay her severance and/or medical benefits.

In connection with Ms. Thomas’ resignation from FirstAvenue, and upon her execution of a general release of claims in our favor,pursuant to the above described terms of her employment agreement, we paid Ms.Thomas an aggregate of $160,781 in post-termination payments, consisting of a$75,000 transition bonus and $9,116 vacation payout.

*John D. Beletic*

We have entered into an employment agreement with JohnD. Beletic, our Executive Chairman that became effective upon the completion ofthe merger.  The employment agreementprovides that Mr. Beletic will be a one-third part-time employee and providesfor an annual base salary of $150,000 without a bonus and a restricted stockgrant of 300,000 shares of our common stock. Such shares of restricted stock vest 25% at the six-month anniversary ofthe consummation of the merger and then in six (6) equal quarterly installments,subject to Mr. Beletic’s continued service with us. In the event Mr. Beletic’sposition as Executive Chairman is terminated without cause prior to August 29,2008, or we undergo a change of control, then subject to the execution of arelease, Mr. Beletic’s unvested restricted stock would immediately vest and ourrepurchase option would immediately lapse.

*Joseph M. Sandri, Jr.*

On May 12, 2005, we entered into an employmentagreement with Mr. Sandri, which will expire on May 12, 2007.  Mr. Sandri’s employment agreement provides,among other things, that we will pay him a base annual salary of $235,000 plusan annual bonus with a target of $117,500 conditioned upon certain performanceobjectives being met.  Under the terms ofhis employment agreement, Mr. Sandri also received a signing bonus of $312,500in connection with his commencement of employment.  In the event Mr. Sandri’s employment isterminated without cause prior to expiration of its two-year term, Mr. Sandriis entitled to payment of the remainder of his base salary and annual bonus asif he had remained employed through such two year term.  Additionally, Mr. Sandri has agreed tomaintain the confidentiality of “confidential information”, to assign certainrights in our intellectual property to us, and to comply with certainnon-compete and non-solicitation restrictions while employed by us and for aone year period of time thereafter.

***Stock Incentive Plan***

Since its adoption in 2001, our stock incentive planhas been used for the grant of stock options for purposes of retaining orrecruiting employees, officers, directors and consultants, and rewarding andproviding incentives for individual performance. We believe that the adoptionin 2006 of amendments to the stock option plan, which are described in “CompensationDiscussion and Analysis—Compensation Changes in connection with the Merger—2006Amendments to Stock Incentive Plan,” will enhance long-term stockholder valueby offering opportunities to our officers, employees, directors and consultantsto acquire a proprietary interest in us, thereby more closely aligning theirinterests with those of our stockholders. Our stock incentive plan will terminate on December 20, 2011.

Our stock incentive plan provides for the grant ofawards to our or our subsidiaries’ employees, directors, officers andconsultants. Awards under the stock incentive plan may consist of restrictedstock or incentive or non-qualified stock options to acquire shares of our commonstock. Incentive stock options may be granted only to employees. By makinggrants of restricted stock and stock options under our stock incentive plan, weseek to attract, retain and motivate our employees and other persons to devotetheir best efforts to our business and financial success.

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23,314,588 shares of our common stock are authorizedfor issuance under our stock incentive plan. In addition, our stock incentive plan includes an “evergreen” provisionthat provides for annual increases in the number of shares available forissuance under the plan on each anniversary of the completion date of themerger (August 29, 2006) during the remaining term of the plan. The annualincrease in the number of shares will be equal to the lesser of (i) 1.5% of thenumber of shares of our common stock outstanding at the time immediately priorto the date of increase, and (ii) a lesser number of shares determined by ourboard of directors. In addition, the number of shares for which incentive stockoptions may be granted under our stock incentive plan may not exceed in theaggregate 233,145,880 shares of common stock (subject to adjustment as providedin the plan).

*Terms of Stock Options*

Stock options granted under the stock incentive planmay be either incentive stock options, as defined in the Code, or non-qualifiedstock options. Subject to a maximum stock option term of five years, theCompensation Committee will determine the terms of stock options. Stock optionsgranted under the plan may not be transferred except at death. Except in thecase of substitute stock options, the exercise price of each stock option willnot be less than 100% of the fair market value of the stock upon the date ofthe stock option grant.

In the event of (i) any offer to holders of our commonstock generally relating to the acquisition of all or substantially all oftheir shares, or (ii) any proposed transaction generally relating to theacquisition of substantially all of our assets or business, the board ofdirectors may cancel any outstanding stock options and pay or deliver to theholder thereof an amount in cash or securities having a value equal to theproduct of (x) the number of shares of common stock that, as of the date of theconsummation of such transaction, the holder of such stock option had becomeentitled to purchase (but had not purchased) multiplied by (y) the amount, ifany, by which the formula or fixed price per share paid to such holders ofshares of common stock pursuant to such transaction exceeds the stock option priceapplicable to such stock option shares.

Generally, if a stock option holder’s servicerelationship with us terminates other than by death or disability, any unvestedstock options granted under our stock incentive plan that are then held by theoption holder will expire and any vested portion will remain exercisable forone month. If a stock option holder’s service relationship with us terminatesdue to death or disability, any unvested stock options granted under our stockincentive plan that are then held by the stock option holder will expire andany vested portion will remain exercisable for an additional one year.

Certain provisions of the stock incentive plan applyonly to certain executive officers and are intended to comply with Section162(m) of the Code, including an annual limit of $1,000,000 on the number ofshares with respect to stock options that may be granted under the stockincentive plan in any calendar year.

*Terms of Restricted Stock*

The committee may grant shares of restricted stock toany employee, director or consultant. Restricted stock is stock which issubject to a substantial risk of forfeiture, which we refer to as “unvested”restricted stock, and non-transferable until the restrictions lapse. Thecommittee may determine what restrictions apply to the stock and when therestrictions of one award may differ from those of any other award. If for anyreason the restrictions imposed by the committee are not met at the end of therestricted period, the stock will be forfeited by the participant andreacquired by the company. Unless otherwise provided in the grant, holders ofrestricted stock will have the right to vote the shares, receive dividends andall other rights of our stockholders. Generally, the restricted stock will beheld in escrow by the company until the restrictions lapse.

 

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**Grants ofPlan-Based Awards for Fiscal Year 2006**

All stock awards andoption awards set forth below were issued under our stock incentive plan.  
|                       | ** ** | **Grant** | ** ** | **Estimated Future Payouts   Under   Non-Equity Incentive Plan Awards** | ** ** | **All Other Stock Awards:  Number of Shares of Stock or** | ** ** | **All Other Option  Awards:  Number of Securities  Underlying** | ** ** | **Exercise or Base Price of  Option Awards** | ** ** | **Grant Date Fair Value of  Stock and Option Awards** | ** ** |
|-----------------------|------------|-----------|------------|------------------------------------------------------------------------------|------------|-----------------------------------------------------------|------------|----------------------------------------------------------------------|------------|----------------------------------------------|------------|-------------------------------------------------------|------------|
| **Name**              | ** ** | **Date**  | ** ** | **Threshold**                                                                | ** ** | **Target**                                                | ** ** | **Max**                                                              | ** ** | **Units (#)**                                | ** ** | **Options (#)**                                       | ** ** | **($/share)** | ** ** | **($)(1)** | ** ** |
|                  |       |      |       |                                                                         |       |                                                      |       |                                                                 |       |                                         |       |                                                  |       |   |   |   |   |
| Michael K. Gallagher  |       |      |       | —                                                                       |       | $                                                         | 158,275    |                                                                 | —     |                                         |       |                                                  |       |   |   |   |   |   |
|                       |       | 8-29-06   |       |                                                                         |       |                                                      |       |                                                                 |       | 600,000                                      |       |                                                  |       |   |   | $ | 4,644,000 |   |
|                       |       | 8-29-06   |       |                                                                         |       |                                                      |       |                                                                 |       |                                         |       | 800,000                                               |       | $7.74 |   | $ | 3,384,000 |   |
|                  |       |      |       |                                                                         |       |                                                      |       |                                                                 |       |                                         |       |                                                  |       |   |   |   |   |
| Thomas A. Scott       |       |      |       | —                                                                       |       | $                                                         | 90,000     |                                                                 |       |                                         |       |                                                  |       |   |   |   |   |   |
|                       |       | 1-30-06   |       |                                                                         |       |                                                      |       |                                                                 |       |                                         |       | 50,000                                                |       | $7.93 |   | $ | 311,500 |   |
|                       |       | 8-29-06   |       |                                                                         |       |                                                      |       |                                                                 |       | 200,000                                      |       |                                                  |       |   |   | $ | 1,548,000 |   |
|                       |       | 8-29-06   |       |                                                                         |       |                                                      |       |                                                                 |       |                                         |       | 266,667                                               |       | $7.74 |   | $ | 1,128,000 |   |
|                  |       |      |       |                                                                         |       |                                                      |       |                                                                 |       |                                         |       |                                                  |       |   |   |   |   |
| Sandra Thomas         |       |      |       | —                                                                       |       | $                                                         | 60,000     |                                                                 |       |                                         |       |                                                  |       |   |   |   |   |   |
|                  |       |      |       |                                                                         |       |                                                      |       |                                                                 |       |                                         |       |                                                  |       |   |   |   |   |
| John D. Beletic       |       | 5-5-06    |       |                                                                         |       |                                                      |       |                                                                 |       |                                         |       | 52,175                                                |       | $4.68 |   | $ | 137,423 |   |
|                       |       | 5-12-06   |       |                                                                         |       |                                                      |       |                                                                 |       | 47,423                                       |       |                                                  |       |   |   | $ | 529,241 |   |
|                       |       | 8-29-06   |       |                                                                         |       |                                                      |       |                                                                 |       | 300,000                                      |       |                                                  |       |   |   | $ | 2,322,000 |   |
|                  |       |      |       |                                                                         |       |                                                      |       |                                                                 |       |                                         |       |                                                  |       |   |   |   |   |
| Michael Finlayson     |       |      |       | —                                                                       |       | $                                                         | 75,000     |                                                                 | —     |                                         |       |                                                  |       |   |   |   |   |   |
|                       |       | 2-22-06   |       |                                                                         |       |                                                      |       |                                                                 |       |                                         |       | 175,000                                               |       | $7.92 |   | $ | 1,085,000 |   |
|                       |       | 8-29-06   |       |                                                                         |       |                                                      |       |                                                                 |       | 140,000                                      |       |                                                  |       |   |   | $ | 1,083,600 |   |
|                       |       | 8-29-06   |       |                                                                         |       |                                                      |       |                                                                 |       |                                         |       | 186,667                                               |       | $7.74 |   | $ | 789,601 |   |
|                  |       |      |       |                                                                         |       |                                                      |       |                                                                 |       |                                         |       |                                                  |       |   |   |   |   |
| Joseph M. Sandri, Jr. |       |      |       | —                                                                       |       | $                                                         | 117,500    |                                                                 | —     |                                         |       |                                                  |       |   |   |   |   |   |
|                       |       | 1-16-06   |       |                                                                         |       |                                                      |       |                                                                 |       |                                         |       | 20,000                                                |       | $7.00 |   | $ | 86,400 |   |
|                       |       | 8-29-06   |       |                                                                         |       |                                                      |       |                                                                 |       | 45,000                                       |       |                                                  |       |   |   | $ | 348,300 |   |
|                       |       | 8-29-06   |       |                                                                         |       |                                                      |       |                                                                 |       |                                         |       | 60,000                                                |       | $7.74 |   | $ | 253,800 |   |
|                  |       |      |       |                                                                         |       |                                                      |       |                                                                 |       |                                         |       |                                                  |       |   |   |   |   |
| Michael P. Casey      |       |      |       | —                                                                       |       | $                                                         | 75,000     |                                                                 | —     |                                         |       |                                                  |       |   |   |   |   |   |
|                       |       | 2-6-06    |       |                                                                         |       |                                                      |       |                                                                 |       |                                         |       | 175,000                                               |       | $7.47 |   | $ | 1,027,250 |   |
|                       |       | 8-29-06   |       |                                                                         |       |                                                      |       |                                                                 |       | 200,000                                      |       |                                                  |       |   |   | $ | 1,548,000 |   |
|                       |       | 8-29-06   |       |                                                                         |       |                                                      |       |                                                                 |       |                                         |       | 266,667                                               |       | $7.74 |   | $ | 1,128,000 |   |
|                  |       |      |       |                                                                         |       |                                                      |       |                                                                 |       |                                         |       |                                                  |       |   |   |   |   |
| Louis Olsen           |       |      |       | —                                                                       |       | $                                                         | 54,000     |                                                                 | —     |                                         |       |                                                  |       |   |   |   |   |   |
|                       |       | 1-16-06   |       |                                                                         |       |                                                      |       |                                                                 |       |                                         |       | 60,000                                                |       | $7.00 |   | $ | 259,200 |   |
|                       |       | 8-29-06   |       |                                                                         |       |                                                      |       |                                                                 |       | 45,000                                       |       |                                                  |       |   |   | $ | 348,300 |   |
|                       |       | 8-29-06   |       |                                                                         |       |                                                      |       |                                                                 |       |                                         |       | 60,000                                                |       | $7.74 |   | $ | 253,800 |   |

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(1)          Notethat amounts reported with respect to stock awards and option awards in thetable above may differ from the amounts reported in our consolidated financialstatements included in our Annual Report on Form 10-K for the year endedDecember 31, 2006.  Because the mergerwas accounted for as a “reverse acquisition,” all financial information andstatements prior to the merger included in our 2006 Form 10-K reflect only thefinancial results of Old FiberTower on a historical basis after applying themerger exchange ratio to historical share-related data.  As a result, the amounts reported for stockand option awards in the table above may not correspond to our consolidatedfinancial statements included in our 2006 Form 10-K with respect to amounts 

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expensed by First AvenueNetworks, Inc. prior to the merger.  Inaddition, the calculation of the grant date fair value of stock and optionawards reported in the above table is different than the calculation appliedunder U.S. GAAP for financial statement reporting purposes in that estimatedforfeitures related to service-based vesting conditions considered under SFASNo. 123(R) (which would reduce the grant date fair value reported in thefinancial statements) is disregarded for purposes of this table.

**Outstanding Equity Awards at Fiscal Year-End 2006**

 
|                       | ** ** | **Option Awards**                                                                                                 | ** ** | **Stock Awards**                                                                                                    | ** ** |
|-----------------------|------------|------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------|------------|
| ** Name**        | ** ** | **Number of   Securities   Underlying   Unexercised   Options   (#)   Exercisable** | ** ** | **Number of   Securities   Underlying   Unexercised   Options   (#)   Unexercisable** | ** ** | **Option   Exercise   Price** | ** ** | **Option   Expiration   Date** | ** ** | **Number of   Shares or   Units of   Stock That   Have Not   Vested (#)** | ** ** | **Market Value of   Shares or   Units of   Stock That   Have Not   Vested (1)** | ** ** |
| Michael K. Gallagher  |       | 1,500,000                                                                                                              |       | 0                                                                                                                        |       | $ | 7.00 |   | 9-07-10 |   |   |   |   |   |
|                       |       | 0                                                                                                                      |       | 800,000                                                                                                                  | (2)        | $ | 7.74 |   | 8-29-11 |   |   |   |   |   |
|                       |       |                                                                                                                   |       |                                                                                                                     |       |   |   |   |   | 600,000 | (3) | $ | 3,528,000 |   |
|                  |       |                                                                                                                   |       |                                                                                                                     |       |   |   |   |   |   |   |   |   |
| Thomas A. Scott       |       | 100,000                                                                                                                |       | 0                                                                                                                        |       | $ | 7.00 |   | 12-12-10 |   |   |   |   |   |
|                       |       | 50,000                                                                                                                 |       | 0                                                                                                                        |       | $ | 7.93 |   | 1-30-11 |   |   |   |   |   |
|                       |       | 0                                                                                                                      |       | 266,667                                                                                                                  | (2)        | $ | 7.74 |   | 8-29-11 |   |   |   |   |   |
|                       |       |                                                                                                                   |       |                                                                                                                     |       |   |   |   |   | 200,000 | (3) | $ | 1,176,000 |   |
|                  |       |                                                                                                                   |       |                                                                                                                     |       |   |   |   |   |   |   |   |   |
| Sandra Thomas         |       | —                                                                                                                 |       | —                                                                                                                   |       |   | ** ** | **—** |   | — |   | — |   |
|                  |       |                                                                                                                   |       |                                                                                                                     |       |   |   |   |   |   |   |   |   |
| John D. Beletic       |       | 30,405                                                                                                                 |       | 0                                                                                                                        |       | $ | 0.86 |   | 1-20-14 |   |   |   |   |   |
|                       |       | 30,405                                                                                                                 |       | 0                                                                                                                        |       | $ | 0.86 |   | 1-24-15 |   |   |   |   |   |
|                       |       | 52,175                                                                                                                 |       | 0                                                                                                                        |       | $ | 4.68 |   | 5-05-16 |   |   |   |   |   |
|                       |       |                                                                                                                   |       |                                                                                                                     |       |   |   |   |   | 347,423 | (4) | $ | 2,042,847 |   |
|                  |       |                                                                                                                   |       |                                                                                                                     |       |   |   |   |   |   |   |   |   |
| Michael Finlayson     |       | 175,000                                                                                                                |       | 0                                                                                                                        |       | $ | 7.92 |   | 2-22-11 |   |   |   |   |   |
|                       |       | 0                                                                                                                      |       | 186,667                                                                                                                  | (2)        | $ | 7.74 |   | 8-29-11 |   |   |   |   |   |
|                       |       |                                                                                                                   |       |                                                                                                                     |       |   |   |   |   | 140,000 | (3) | $ | 823,200 |   |
|                  |       |                                                                                                                   |       |                                                                                                                     |       |   |   |   |   |   |   |   |   |
| Joseph M. Sandri, Jr. |       | 100,000                                                                                                                |       | 0                                                                                                                        |       | $ | 8.70 |   | 6-06-10 |   |   |   |   |   |
|                       |       | 20,000                                                                                                                 |       | 0                                                                                                                        |       | $ | 7.00 |   | 1-16-11 |   |   |   |   |   |
|                       |       | 0                                                                                                                      |       | 60,000                                                                                                                   | (2)        | $ | 7.74 |   | 8-29-11 |   |   |   |   |   |
|                       |       |                                                                                                                   |       |                                                                                                                     |       |   |   |   |   | 45,000 | (5) | $ | 264,600 |   |
|                  |       |                                                                                                                   |       |                                                                                                                     |       |   |   |   |   |   |   |   |   |
| Michael P. Casey      |       | 175,000                                                                                                                |       | 0                                                                                                                        |       | $ | 7.47 |   | 2-06-11 |   |   |   |   |   |
|                       |       | 0                                                                                                                      |       | 266,667                                                                                                                  | (2)        | $ | 7.74 |   | 8-29-11 |   |   |   |   |   |
|                       |       |                                                                                                                   |       |                                                                                                                     |       |   |   |   |   | 200,000 | (3) | $ | 1,176,000 |   |
|                  |       |                                                                                                                   |       |                                                                                                                     |       |   |   |   |   |   |   |   |   |
| Louis Olsen           |       | 60,000                                                                                                                 |       | 0                                                                                                                        |       | $ | 8.70 |   | 6-06-10 |   |   |   |   |   |
|                       |       | 60,000                                                                                                                 |       | 0                                                                                                                        |       | $ | 7.00 |   | 1-16-11 |   |   |   |   |   |
|                       |       | 0                                                                                                                      |       | 60,000                                                                                                                   | (2)        | $ | 7.74 |   | 8-29-11 |   |   |   |   |   |
|                       |       |                                                                                                                   |       |                                                                                                                     |       |   |   |   |   | 45,000 | (5) | $ | 264,600 |   |

 

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| (1)    | Determined by multiplying the $5.88 closing market  price of our common stock on December 29, 2006 by the number of shares in the  prior column.                                                                                                                                    |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                |
| (2)    | The options are scheduled to vest 25% on August 29,  2007 and the remainder to vest monthly over a period of 36 months in equal  monthly installments.                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                |
| (3)    | The shares of restricted stock are scheduled to vest  25% on August 29th of each year beginning with August 29, 2007.                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                |
| (4)    | Of the shares of restricted stock shown, 75,000  shares vested on March 1, 2007, 47,423 shares vested on April 2, 2007, and  37,500 shares are scheduled to vest on each of May 29, 2007, August 29, 2007,  November 29, 2007, February 29, 2008, May 29, 2008 and August 29, 2008. |
|   |                                                                                                                                                                                                                                                                                |
| (5)    | The shares of restricted stock are scheduled to vest  10% on the first anniversary of the date of grant, 20% on the second  anniversary, 30% on the third anniversary and 40% on the fourth anniversary.                                                                            |

 

**Option Exercises and Stock Vested for Fiscal Year2006**
|                   | ** ** | **Option Awards**                                                    | ** ** | **Stock Awards**                                    | ** ** |
|------------------------|------------|---------------------------------------------------------------------------|------------|----------------------------------------------------------|------------|
| **Name**               | ** ** | **Number of Shares   Acquired on Exercise  (#)** | ** ** | **Value Realized on   Exercise ($)** | ** ** | **Number of Shares   Acquired on Vesting   (#)** | ** ** | **Value Realized on   Vesting ($)** | ** ** |
| Michael K. Gallagher   |       | —                                                                    |       | —                                                   |       | — |   | — |   |
| Thomas A. Scott        |       | —                                                                    |       | —                                                   |       | — |   | — |   |
| Sandra Thomas          |       | 24,236                                                                    |       | $                                                        | 201,401    |   | — |   | — |   |
|                        |       | 74,591                                                                    |       | $                                                        | 591,507    |   | — |   | — |   |
|                        |       | 24,900                                                                    |       | $                                                        | 212,148    |   | — |   | — |   |
|                        |       | 20,000                                                                    |       | $                                                        | 19,200     |   | — |   | — |   |
| John D. Beletic        |       | —                                                                    |       | —                                                   |       | — |   | — |   |
| Michael Finlayson      |       | —                                                                    |       | —                                                   |       | — |   | — |   |
| Joseph M.  Sandri, Jr. |       | —                                                                    |       | —                                                   |       | — |   | — |   |
| Michael P. Casey       |       | —                                                                    |       | —                                                   |       | — |   | — |   |
| Louis Olsen            |       | —                                                                    |       | —                                                   |       | — |   | — |   |

 

**PotentialPayments Upon Termination or Change-in-Control**

*Michael K. Gallagher.* Under Mr. Gallagher’s employment agreement, if Mr. Gallagher’semployment is terminated by the company other than for cause or by Mr.Gallagher under certain circumstances (including his failure to continue in hisposition of Chief Executive Officer), Mr. Gallagher will be entitled to receivepayment of one year of his base salary plus his annual target bonus in effecton the date of termination and accelerated vesting of the number of sharessubject to his outstanding options which would have vested during the one yearperiod following his termination had he continued his employment with us.  If Mr. Gallagher is terminated due todisability, he would be entitled to payment of one year of his base salary plushis annual target bonus.  In the event ofa change of control of the company, Mr. Gallagher would be entitled to 100%vesting acceleration of his stock options and restricted stock upon thesix-month anniversary of the change of control or, if his employment after suchevent is terminated without cause prior to such six-month anniversary, upon histermination. Any severance payments would be conditioned on Mr. Gallagherexecuting a general release of claims in our favor.  If Mr. Gallagher’s employment had beenterminated without cause on December 29, 2006, the last business day of ourlast fiscal year, he would have been entitled to a cash payment of $508,500(the sum of the amount of his annual salary and target bonus then ineffect).  In addition, Mr. Gallagherwould have received accelerated vesting of his unvested stock options topurchase 800,000 shares of common stock and 600,000 shares of restrictedstock.  The market value of such sharesof restricted stock that would have been subject to accelerated vesting wouldhave been

24

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$3,528,000 (determined by multiplying the $5.88closing market price of our common stock on December 29, 2006 by 600,000 sharesof restricted stock).  The exercise priceof $7.74 of the stock options to purchase 800,000 shares of common stock wasgreater than the closing market price of our common stock on December 29, 2006.

*John D. Beletic.* Under our employment offer letter agreement with Mr. Beletic, if Mr.Beletic’s employment as Executive Chairman is terminated without cause prior toAugust 29, 2008, or we undergo a change of control, then subject to theexecution of a release, Mr. Beletic’s unvested restricted stock wouldimmediately vest and our repurchase option would immediately lapse.  As of December 29, 2006, Mr. Beletic held347,423 shares of restricted stock.  IfMr. Beletic had been terminated without cause on December 29, 2006, the marketvalue of such restricted stock that would have been subject to acceleratedvesting would have been approximately $2,042,847 (determined by multiplying the$5.88 closing market price of our common stock on December 29, 2006 by 347,423shares of restricted stock).

*Joseph M. Sandri, Jr.* Mr. Sandri’s employment agreement will expire on May 12, 2007.  Under his employment agreement, if Mr. Sandri’semployment is terminated without cause prior to that time, he is entitled topayment of his base salary and annual bonus as if he had remained employedthrough the remainder of the term of the employment agreement.

**ExecutiveCompensation Report of the Compensation Committee**

TheCompensation Committee of the board of directors has reviewed and discussed theCompensation Discussion and Analysis section of this annual report on Form10-K/A with management. Based on this review and discussion, the committeerecommended to the board that the Compensation Discussion and Analysis beincluded in this annual report on Form 10-K/A.

*Compensation Committee*

John P. Kelly, ChairNeil Subin

**CompensationCommittee Interlocks and Insider Participation**

In2006, prior to the merger, our Compensation Committee consisted of Neil Subin,Wharton B. Rivers, Jr. and Ted Weschler. Upon completion of the merger in August 2006, Messrs. Rivers andWeschler resigned from the board of directors and John P. Kelly and Neil Subinwere appointed by the board of directors to serve on the CompensationCommittee.  None of the directors whoserved on the Compensation Committee during 2006 is or has been in the past anofficer or employee of the company or any of its subsidiaries and none has anyinterlocking or other relationship with the company or its management requiringdisclosure.

**Item12.  Security Ownership of Certain Beneficial Owners and Management andRelated Stockholder Matters.**

**SecurityOwnership of Certain Beneficial Owners and Management**

Thefollowing table sets forth certain information with respect to the beneficialownership of shares of our common stock as of April 16, 2007 by (i) the NEOs listed in the summary compensation table includedin this report, (ii) each of our directors, (iii) all of ourexecutive officers and directors as a group and (iv) each person(including any “group” as that term is used in Section 13(d)(3) ofthe Exchange Act) known to us to be the beneficial owner of more than 5% of ouroutstanding common stock. As of April 16, 2007, there were 145,668,647 sharesof FiberTower common stock outstanding. Unless otherwise indicated, thebusiness address of each director and executive officer named below is c/oFiberTower Corporation, 185 Berry Street, Suite 4800, San Francisco, California94107. Except as noted below, each of the persons listed has sole investmentand voting power with respect to the shares indicated.

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Beneficialownership is determined by the rules of the Securities and ExchangeCommission and includes voting or investment power of the securities. Shares ofcommon stock subject to stock options or other rights to purchase which are nowexercisable or are exercisable within 60 days after April 16, 2007 are to beconsidered outstanding for purposes of computing the percentage ownership ofthe persons holding these stock options or other rights, but are not to beconsidered outstanding for the purpose of computing the percentage ownership ofany other person.
| ** **                                                                                                        | ** ** | **Beneficial  Ownership** | ** ** |
|-------------------------------------------------------------------------------------------------------------------|------------|---------------------------|------------|
| **Name**                                                                                                          | ** ** | **Number**                | ** ** | **Percent** | ** ** |
|                                                                                                              |       |                      |       |   |   |
| Crown Castle Investment Corp (1)  510 Bering Drive, Suite 600  Houston, TX 77057                                  |       | 26,352,956                |       | 18.1 | % |
|                                                                                                              |       |                      |       |   |   |
| Aspen Advisors LLC(2)  152 West 57th Street, 46th Floor  New York, New York 10019                                 |       | 22,369,359                |       | 15.4 | % |
|                                                                                                              |       |                      |       |   |   |
| Tudor Investment Corporation and affiliates (3)  1275 King Street  Greenwich, CT 06831                            |       | 14,240,398                |       | 9.8 | % |
|                                                                                                              |       |                      |       |   |   |
| Oak Investment Partners and affiliates (4)  c/o Oak Management Corporation  One Gorham Island  Westport, CT 06880 |       | 12,119,847                |       | 8.3 | % |
|                                                                                                              |       |                      |       |   |   |
| TCS Capital and affiliates(5)  888 Seventh Avenue, Suite 1504  New York, New York 10019                           |       | 11,783,025                |       | 8.1 | % |
|                                                                                                              |       |                      |       |   |   |
| OZ Management, L.L.C. and affiliates (6)  9 West 57th Street, 39th Floor  New York, NY 10019                      |       | 11,018,068                |       | 7.6 | % |
|                                                                                                              |       |                      |       |   |   |
| Michael K.  Gallagher (7)                                                                                         |       | 2,100,000                 |       | * |   |
| Thomas A. Scott(8)                                                                                                |       | 350,000                   |       | * |   |
| Sandra Thomas                                                                                                     |       | —                    |       | — |   |
| John D.  Beletic(9)                                                                                          |       | 412,608                   |       | * |   |
| Michael  Finlayson(10)                                                                                            |       | 315,012                   |       | * |   |
| Joseph M. Sandri(11)                                                                                              |       | 165,000                   |       | * |   |
| Michael Casey(12)                                                                                                 |       | 375,000                   |       | * |   |
| Louis Olsen(13)                                                                                                   |       | 165,000                   |       | * |   |
| Bandel Carano  (14)                                                                                               |       | 12,058,391                |       | 8.3 | % |
| Randall A. Hack(15)                                                                                               |       | 140,908                   |       | * |   |
| John P. Kelly  (16)                                                                                               |       | 26,352,956                |       | 18.1 | % |
| John B. Muleta(17)                                                                                                |       | 87,616                    |       | * |   |
| Darryl L. Schall                                                                                                  |       | —                    |       | — |   |
| Steven D.  Schiewe                                                                                                |       | 27,616                    |       | * |   |
| Neil Subin                                                                                                        |       | 27,616                    |       | * |   |
| All executive officers  and directors as a group (15 persons) (18)                                                |       | 43,643,922                |       | 29.4 | % |

----

*                    Lessthan 1.0%

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(1)             This information isbased on a Schedule 13D filed on September 8, 2006 by Crown CastleInternational Corp. (“Crown Castle”), and Crown Castle Investment Corp., awholly-owned subsidiary of Crown Castle (“Crown Castle Investment”).  Crown Castle Investment holds 26,352,956shares of our common stock. Crown Castle expressly disclaims beneficialownership of the shares held by Crown Castle Investment, except to the extentthat it has a pecuniary interest in Crown Castle Investment.  Crown Castle and Crown Castle Investment maybe deemed to have shared voting and dispositve power over such shares.  One of our directors, Randall Hack, is also adirector of Crown Castle.  The sharesowned by Mr. Hack are set forth opposite his name in this beneficial ownershiptable.  Crown Castle and Crown CastleInvestment expressly disclaim beneficial ownership of the shares beneficiallyowned by Mr. Hack.

(2)             This information isbased on a Schedule 13D (Amendment No. 9) filed on June 21, 2006by Aspen Partners Series A, a series of Aspen Capital Partners, LP (“AspenPartners”), Aspen Capital LLC (“Aspen Capital”), Aspen Advisors LLC (“AspenAdvisors”), EnterAspen Limited (“EnterAspen”), and Nikos Hecht.  Of the 22,396,359 shares beneficially ownedby Aspen Advisors, (i) 12,856,919 shares are held by Aspen Partners and (ii)9,539,440 shares are held by private client accounts of Aspen Advisors,including EnterAspen.  Aspen Advisors, asinvestment manager for Aspen Partners and its private clients, has (i) voting powerover the shares held by Aspen Partners and the private clients and (ii)dispositive power over (A) all shares held by Aspen Partners and the privateclients (excluding EnterAspen) and (B) 431,666 shares held by EnterAspen. Asthe general partner of Aspen Partners, Aspen Capital may be deemed to haveshared voting and dispositive power over the shares held by AspenPartners.  Each of Aspen Partners, AspenCapital, Aspen Advisors and Mr. Hecht have shared voting and dispositive powerover the 12,856,919 shares beneficially owned by Aspen Partners.  Aspen Partners and Aspen Capital disclaim anybeneficial interest in the shares owned by the accounts managed by AspenAdvisors.  Mr. Hecht, as themanaging member of, and the owner of a majority of the membership interest in,Aspen Advisors and Aspen Capital may be deemed to be the controlling person ofAspen Advisors and Aspen Capital and, through Aspen Capital, AspenPartners.  EnterAspen is the beneficialowner of 8,302,186 shares of common stock. EnterAspen has sole dispositivepower with respect to 7,870,520 shares of our common stock but otherwise sharesdispositive power with respect to the remaining 431,666 shares beneficiallyowned by it with Aspen Advisors, the investment manager for EnterAspen. EnterAspenshares voting authority with respect to the 8,302,186 shares beneficially ownedby it with Aspen Advisors.  Mr. Hecht, asthe managing member of Aspen Advisors and Aspen Capital, may be deemed to bethe beneficial owner of the shares of common stock held by EnterAspen.

(3)             This information isbased on a Schedule 13G filed on February 14, 2007 by Tudor InvestmentCorporation (“TIC”), Tudor Proprietary Trading, L.L.C. (“TPT”), The Tudor BVIGlobal Portfolio Ltd. (“BVI Portfolio”), The Raptor Global Portfolio Ltd. (“RaptorPortfolio”), The Altar Rock Fund L.P. (“Altar Rock”), Witches Rock PortfolioLtd. (“Witches Rock”), Paul Tudor Jones, II, and James J. Pallotta.  Of the 14,240,398 shares of common stockreported as beneficially owned are (i) 1,160,265 shares (including 304,221shares receivable upon conversion of convertible notes) owned directly by TPT,(ii) 2,165,985 shares (including 572,737 shares receivable upon conversion ofconvertible notes) owned by BVI Portfolio, (iii) 9,647,333 shares (including2,741,852 shares receivable upon conversion of convertible notes) owned byRaptor Portfolio, (iv) 1,201,286 shares owned by Witches Rock, and (v) 65,529shares owned by Altar Rock.  Because TICprovides investment advisory services to BVI Portfolio, Raptor Portfolio, andWitches Rock, and is the general partner of Altar Rock, TIC may be deemed tobeneficially own the shares of our common stock owned by each of such reportingpersons. TIC expressly disclaims such beneficial ownership. Because Mr. Jones isthe controlling shareholder of TIC and the indirect controlling equity holderof TPT, Mr. Jones may be deemed to beneficially own the shares of our commonstock deemed beneficially owned by TIC and TPT. Mr. Jones expressly disclaimssuch beneficial ownership. Because Mr. Pallotta is the portfolio manager of TICand TPT responsible for investment decisions, Mr. Pallotta may be deemed tobeneficially own the shares of our common stock deemed beneficially owned byTIC and TPT. Mr. Pallotta expressly disclaims such beneficial ownership.  Mr. Schall, one of our directors, is employedby TIC.

(4)             Thisinformation is based on a Schedule 13G filed on February 14, 2007 by OakInvestment Partners X, Limited Partnership (“Oak Investment Partners X”), OakAssociates X, LLC (“Oak Associates X”), Oak X Affiliates Fund, LimitedPartnership (“Oak X Affiliates Fund”), Oak X Affiliates, LLC (“Oak X Affiliates”),Oak 

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Management Corporation (“Oak Management”), Bandel L. Carano, Gerald R.Gallagher, Edward F. Glassmeyer, Fredric W. Harman, Ann H. Lamont and David B.Walrod.  Oak Investment Partners X ownsdirectly and has sole voting and dispositive power over 11,852,674 shares ofour common stock, and Oak Associates X, its general partner, has shared votingand dispositive power over such shares. Oak X Affiliates Fund directly owns and has sole voting and dispositivepower over 190,249 shares of our common stock, and Oak X Affiliates, itsgeneral partner, has shared voting and dispositive power over such shares.  Oak Management has shared voting power andshared dispositive power over all such 12,042,923 shares directly held by OakInvestment Partners X and Oak X Affiliates Fund.  Messrs. Carano, Gallagher, Glassmeyer, Harmanand Walrod and Ms. Lamont may be deemed to have shared voting and dispositivepower over such 12,042,923 shares of our common stock.  In addition, Mr. Carano individually owns13,547 shares and 1,921 shares are held in trust for the benefit of hischildren.  Mr. Carano disclaimsbeneficial ownership of the shares held in trust for his children.  Mr. Gallagher individually owns 5,981shares.  Mr. Glassmeyer individually owns12,372 shares and 21,549 shares are held by a trust of which members of Mr.Glassmeyer’s immediate family are the beneficiaries and the trustee.  6,603 shares are held by a trust of which Mr.Harman is a trustee and 1,785 shares are held in trust for the benefit of Mr.Harman’s minor children.  Mr. Harmandisclaims beneficial ownership of the shares held in trust for hischildren.  Ms. Lamont individually owns11,485 shares and 1,681 shares are held by The Lamont Children’s 1998 Trust forthe benefit of Ms. Lamont’s minor children.

(5)             This information isbased on a Schedule 13G filed on February 9, 2007 by TCS Capital GP, LLC (“TCSGP”) and Eric Semler.  TCS GP (as thegeneral partner of TCS Capital Investments, L.P., TCS Capital II, L.P. and TCSCapital L.P.) has sole voting and dispositive power over 11,613,025 shares ofour common stock.  TCS Select GP, LLC (“TCSSelect GP”), as the general partner of TCS Select, L.P., beneficially owns170,000 shares of our common stock.  Mr.Semler, as manager of TCS GP and TCS Select GP, has sole voting and dispositivepower over 11,783,025 shares.

(6)             This information isbased on a Schedule 13G filed on February 14, 2007 by OZ Management,L.L.C. (“OZ”), Daniel S. Och, and OZ Master Fund, Ltd. (“OZMD”).  OZMD has sole voting and dispositive powerover the 10,656,618 shares that it holds. OZ, as the principal investment manager to a number of investment fundsand discretionary accounts (including OZMD), has sole voting and dispositivepower over 11,018,068 shares of our common stock.  Mr. Och, as the Senior Managing Member of OZ,may be deemed to control such entity and therefore may be deemed to be thebeneficial owner of the shares beneficially owned by OZ.

(7)             Includes 1,500,000shares of common stock subject to options that are currently exercisable orwill be exercisable within 60 days.

(8)             Includes 150,000shares of common stock subject to options that are currently exercisable orwill be exercisable within 60 days.

(9)             Includes 112,985shares of common stock subject to options that are currently exercisable orwill be exercisable within 60 days.

(10)       Includes 175,000 shares ofcommon stock subject to options that are currently exercisable or will beexercisable within 60 days.

(11)       Includes 120,000 shares ofcommon stock subject to options that are currently exercisable or will beexercisable within 60 days.

(12)       Includes 175,000 shares ofcommon stock subject to options that are currently exercisable or will beexercisable within 60 days.

(13)       Includes120,000 shares of common stock subject to options that are currentlyexercisable or will be exercisable within 60 days.

28

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(14)       Includes 11,852,674 sharesdirectly owned by Oak Investment Partners X, Limited Partnership (“Oak X, L.P.”),190,249 shares directly owned by Oak X Affiliates Fund, Limited Partnership (“OakX Affiliates, L.P.”), 13,547 shares directly owned by Mr. Carano, and 1,921shares held in trust for the benefit of Mr. Carano’s children.  Mr. Carano is a managing member of OakAssociates X, L.L.C., the general partner of Oak X, L.P., and is a managingmember of Oak X Affiliates, L.L.C., the general partner of Oak X Affiliates,L.P.   Mr. Carano disclaims beneficialownership of any securities not directly owned by him except to the extent ofhis pecuniary interest in such securities.

(15)       Includes 112,985 sharessubject to options that are currently exercisable or will be exercisable within60 days.

(16)       Includes 26,352,956 sharesheld by Crown Castle Investment Corp. Mr. Kelly is President and Chief Executive Officer of Crown CastleInvestment Corp. and is a director and President and Chief Executive Officer ofCrown Castle International Corp. (“CCIC”), which is the sole stockholder ofCrown Castle Investment Corp., and, as such, may be deemed to be an indirectbeneficial owner of the reported securities. Except to the extent of any indirect pecuniary interest therein, Mr.Kelly and CCIC disclaim beneficial ownership of the securities beneficiallyowned by Crown Castle Investment Corp.

(17)       Includes 60,000 sharessubject to options that are currently exercisable or will be exercisable within60 days.

(18)       Includes(i) 26,352,956 shares of common stock owned by Crown Castle InvestmentCorp., of which Mr. Kelly is President and CEO; (ii) 12,042,923 shares ofcommon stock held by Oak Investment Partners, of which Mr. Carano is a managingmember; (iii) 675,319, 371,571 and 200,000 shares of common stockbeneficially owned by each of David Leeds, Ravi Potharlanka and Ferdi Schell,respectively, who are current executive officers but were not NEOs for 2006;and (iv) 19,807, 47,806 and 291,696 shares subject to options that arecurrently exercisable or will be exercisable within 60 days that arebeneficially owned by each of David Leeds, Ravi Potharlanka and Ferdi Schell,respectively.  This number excludesshares reported in the table for Sandra Thomas, Michael Casey and Louis Olsen,who were NEOs for 2006 but were not executive officers as of fiscal-year-end2006.

29

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***EquityCompensation Plan Information***

The following tablesummarizes our equity compensation under all of our equity compensation plansas of December 31, 2006:
| **Plan Category**                                  | ** ** | **(a)  Number of Shares to  be Issued Upon   Exercise of  Outstanding Options,  Warrants and Rights** | ** ** | **(b)  Weighted-Average  Exercise Price of  Outstanding Options,  Warrants and Rights** | ** ** | **(c)  Number of Securities  Remaining Available  for Future Issuance  Under Equity  Compensation Plans  (Excluding Securities  Reflected in Column  (a))** | ** ** |
|---------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| Equity compensation  plans approved by stockholders (1) |       | 4,249,336                                                                                                                                               |       | $7.03                                                                                                            |       | 22,866,551                                                                                                                                                                                                    | (2)        |
| Equity compensation  plans not approved by stockholders |       | —                                                                                                                                                  |       | —                                                                                                           |       | —                                                                                                                                                                                                        |       |
| Total                                                   |       | 4,249,336                                                                                                                                               |       | $7.03                                                                                                            |       | 22,866,551                                                                                                                                                                                                    | (2)        |

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(1)             Doesnot include 5,363,519 shares subject to stock options assumed in the merger,with a weighted average exercise price of $4.22.  As a result of the merger, we assumed alloutstanding options and restricted stock awards under Old FiberTower’s stockoption plan and new grants under that plan were discontinued.

(2)             Ourstock incentive plan includes an “evergreen” provision that provides for annualincreases in the number of shares available for issuance under the plan on eachAugust 29th, beginning on August 29, 2007, during the remaining term of theplan, which ends on December 20, 2011. The annual increase in the number ofshares will be equal to the lesser of (i) 1.5% of the number of shares of ourcommon stock outstanding at the time immediately prior to the date of increase,and (ii) a lesser number of shares determined by our board of directors.

**Item13.  Certain Relationships and Related Transactions, and DirectorIndependence.**

**CertainRelationships and Related Transactions**

The following information regarding certaintransactions with directors, officers and holders, either of record orbeneficially, of more than five percent of our common stock does not includeinformation for any period during which such person or entity, as the case maybe, was not an officer, director or five percent holder.  As provided in the Audit Committee’s writtencharter, it is our policy that the Audit Committee review all transactionsbetween the company and any related parties or affiliates.

A company controlled by Mr. Subin, who is currentlya member of our board of directors, periodically serves as a consultant toAspen Advisors LLC regarding its investments, including its holdings inFiberTower.  Aspen Advisors beneficiallyholds 15.4% of our common stock.

Mr. Muleta, who is currently a member of ourboard of directors, was affiliated with****a consultingcompany which provided business development services to us. Under the terms ofa consulting agreement with the consulting firm dated April 2005, we paidthe consulting firm (i) $5,000 plus expenses per month and (ii) 5% ofthe monthly recurring net revenue received under each customer agreemententered into as a direct result of services provided by the consultingagreement. This agreement expired on April 30, 2006. During the year endedDecember 31, 2006, we paid $20,000 to the consulting firm under thisagreement.

30

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Crown Castle Investment Corp., which ownsapproximately 18.1% of our outstanding stock, leases its communicationsfacilities to FiberTower.  During theyear ended December 31, 2006, we paid Crown Castle approximately $1.7 millionunder these leases.  Crown Castle alsoentered into an exclusivity agreement under which Crown Castle agreed not tocompete directly with us as a provider of backhaul services and not to investin other entities in 20 designated markets. Crown Castle’s President and ChiefExecutive Officer, John P. Kelly, and board member, Randall A. Hack, serve onour board of directors.

**DirectorIndependence**

The board of directors has determined that each ofMessrs. Carano, Hack, Kelly, Muleta, Schall, Scheiwe and Subin is deemed to bean independent director as that term is defined in under the rules of TheNasdaq Stock Market.  In addition, theboard of directors has determined that each member of the compensation,nominating and corporate governance and audit committees is independent undersuch standards.  The board of directorsconsidered the relationships set forth above in determining the independence ofsuch directors.

**Item14.  Principal Accountant Fees and Services.**

Following the merger, Ernst & Young LLP wasappointed as our independent audit firm. Prior to the merger, First Avenue Networks, Inc.’s financial statementswere audited by KBA Group LLP and Old FiberTower’s financial statements wereaudited by Ernst & Young LLP. Because Old FiberTower was treated as the acquirer for accountingpurposes and Ernst & Young LLP continued to audit our financial statementsfollowing the merger, Ernst & Young LLP has audited our consolidatedfinancial statements for all periods included in our most recent annual reporton Form 10-K.

The following table shows the fees for professionalservices rendered by Ernst & Young LLP for the years ended December 31,2005 and 2006.

| Type of Fees | ** ** | **2005 Fees** | ** ** | **2006 Fees** | ** ** |
|------------------------|------------|--------------------|------------|--------------------|------------|
| Audit Fees             |       | $                  | 391,000    |               | $          | 3,627,000 |   |
| Audit-Related  Fees    |       | —             |       | 71,000             |       |
| Tax Fees               |       | 21,000             |       | 64,000             |       |
| All Other Fees         |       | —             |       | —             |       |
|                   |       | $                  | 412,000    |               | $          | 3,762,000 |   |

* *

*Audit Fees.*  This category includes fees related to theannual audit of our financial statements for 2006, the audit of management’sassessment of our internal control over financial reporting and Ernst &Young’s own audit of our internal control over financial reporting, review offinancial statements included in our Form 10-Q quarterly reports and servicesthat are normally provided by the independent registered public accounting firmin connection with regulatory filings, including filings related to our mergerwith First Avenue, for those fiscal years. This category also includes advice on accounting matters that aroseduring, or as a result of, the audit or the review of interim financialstatements, and the preparation of an annual “management letter” on internalcontrol matters.  During fiscal 2006,these fees also included services associated with the issuance of ourconvertible senior secured notes and related transactions.

*Audit-Related Fees.*  This category consists of assurance andrelated services provided by Ernst & Young that are reasonably related tothe performance of the audit or review of our financial statements and are notreported above under audit fees.  Theservices for the fees disclosed under this category include due diligence inconnection with our merger with First Avenue.

*Tax Fees.*  This category consists of tax servicesgenerally for tax compliance and tax preparation.

During 2005 and up to the date of the merger with FiberTower in August2006, KBA Group LLP was First Avenue’s independent audit firm.  The following table shows the fees forprofessional services rendered by KBA Group LLP for the years ended December31, 2005 and 2006.
| **Type of Fees** | ** ** | **2005 Fees** | ** ** | **2006 Fees** | ** ** | ** ** |
|----------------------------|------------|---------------|------------|---------------|------------|------------|
| Audit Fees                 |       | $             | 100,807    |          | $          | 103,666    |   |   |
| Audit-Related  Fees        |       | $             | 45,043     | (1)           | $     | 83,190     | (3) |   |
| Tax Fees                   |       | $             | 6,600      | (2)           | $     | 18,500     | (4) |   |
| All Other Fees             |       | —        |       | —        |       |       |

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(1)             Services consistedprincipally of reviewing filings with the SEC for registration of our commonstock, reviewing a private placement memorandum and issuance of a comfortletter in connection with an equity offering.

(2)             Principally relatedto federal and state income tax consultation rendered to us and our affiliatesand for the completion of our federal and state income tax returns.

(3)             Services consisted ofinternal control over financial reporting (SOX) audit, consultation regardingamortization of FCC licenses, review of merger information statement andconsent for Form S-8 filing.

(4)             Servicesconsisted of preparation of 2004 income tax returns and preparation and reviewof 2005 tax accrual.

The Audit Committee is required by its charter toapprove all services to be provided to the company by the independent auditors.This includes the pre-approval of all audit services and all permittednon-audit services. All of the fees shown above were pre-approved pursuant tothese procedures, with the exception of fees billed for Old FiberTower for 2005when it was a private company and not subject to SEC pre-approval requirements.

**PART IV**

**Item15.  Exhibits and Financial StatementSchedules.**

(b) Exhibits.

The exhibits filed as a part of this report arelisted below and this list is intended to comprise the exhibit index.
| Exhibit No. | ** ** | **Description**                                                          |
|------------------|------------|--------------------------------------------------------------------------|
| 31.1*            |       | Rule 13a-14(a)/15d-14(a) Certification of Chief  Executive Officer.      |
|             |       |                                                                     |
| 31.2*            |       | Rule 13a-14(a)/15d-14(a) Certification of Chief  Financial Officer. |

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*                    Filedherewith.

31

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**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) ofthe Securities Exchange Act of 1934, the registrant has duly caused this reportto be signed on its behalf by the undersigned, thereunto duly authorized.
|          |           |   | FIBERTOWER  CORPORATION    |
|----------|----------------|--------|----------------------------|
|     |           |   |
|     |           | By:    | /s/ Thomas A. Scott        |
|     |           |   | Thomas A. Scott            |
| * * |           |   | *Chief  Financial Officer* |
| Date:    | April 23, 2007 |   |                       |
|          |                |        |                            |  |

 

32

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**EXHIBIT INDEX**
| Exhibit No. | ** ** | **Description**                                                          |
|------------------|------------|--------------------------------------------------------------------------|
| 31.1*            |       | Rule 13a-14(a)/15d-14(a) Certification of Chief  Executive Officer.      |
|             |       |                                                                     |
| 31.2*            |       | Rule 13a-14(a)/15d-14(a) Certification of Chief  Financial Officer. |

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*                    Filedherewith.

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