<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 7, 1998
REGISTRATION NO. 333-50219
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
SBA COMMUNICATIONS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 6749 65-0716501
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
---------------
ONE TOWN CENTER ROAD
THIRD FLOOR
BOCA RATON, FLORIDA 33486
(561) 995-7670
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
STEVEN E. BERNSTEIN
CHAIRMAN OF THE BOARD OF DIRECTORS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
SBA COMMUNICATIONS CORPORATION
ONE TOWN CENTER ROAD
THIRD FLOOR
BOCA RATON, FLORIDA 33486
(561) 995-7670
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
KIRK A. DAVENPORT, ESQ. JEFFREY A. STOOPS, ESQ.
LATHAM & WATKINS SENIOR VICE PRESIDENT--CORPORATE
885 THIRD AVENUE DEVELOPMENT AND GENERAL COUNSEL
NEW YORK, NEW YORK 10022 SBA COMMUNICATIONS CORPORATION
(212) 906-1200 ONE TOWN CENTER ROAD
THIRD FLOOR
BOCA RATON, FLORIDA 33486
(561) 995-7670
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC. As soon as
practicable after this Registration Statement becomes effective.
IF THE SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED IN
CONNECTION WITH THE FORMATION OF A HOLDING COMPANY AND THERE IS COMPLIANCE
WITH GENERAL INSTRUCTION G, CHECK THE FOLLOWING BOX. [_]
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING
PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND
LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE
REGISTRATION STATEMENT FOR THE SAME OFFERING. [_]
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(D)
UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================
TITLE OF EACH AMOUNT OF
CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER NOTES(2) OFFERING PRICE(2) FEE(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12% Senior Discount
Notes due 2008(1).. $269,000,000 56.641% $152,362,948 $44,947.07
================================================================================
</TABLE>
(1) The "Amount to be Registered" with respect to the 12% Senior Discount
Notes due 2008 represents the aggregate principal amount at maturity of
such notes. The 12% Senior Discount Notes due 2008 were sold at a
substantial discount from their principal amount at maturity. The
registration fee with respect to the 12% Senior Discount Notes due 2008
was calculated based on the approximate accreted value thereof as of April
15, 1998 determined pursuant to the provisions of the indenture governing
such notes.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE>
SBA COMMUNICATIONS CORPORATION
CROSS REFERENCE SHEET
PURSUANT TO RULE 404(A) AND ITEM 501(B) OF REGULATION S-K
SHOWING LOCATION IN PROSPECTUS OF THE INFORMATION
REQUIRED BY PART I OF FORM S-4
<TABLE>
<C> <S> <C>
1. Forepart of Registration
Statement and Outside Front
Cover Page of Prospectus........ Outside Front Cover Page; Cross
Reference Sheet; Inside Front Cover
Page
2. Inside Front and Outside Back
Cover Pages of
Prospectus...................... Inside Front Cover Page; Outside Back
Cover Page
3. Risk Factors, Ratio of Earnings
to Fixed Charges and Other
Information..................... Prospectus Summary; Risk Factors;
Selected Historical Financial Data
4. Terms of the Transaction......... The Exchange Offer; Certain United
States Federal Income Tax
Considerations; Description of
Exchange Notes
5. Pro Forma Financial Information.. Prospectus Summary; Unaudited Pro Forma
Condensed Consolidated Financial
Statements
6. Material Contacts with the
Company Being
Acquired........................ Not Applicable
7. Additional Information Required
for Reoffering by
Persons and Parties Deemed to be
Underwriters.................... Not Applicable
8. Interests of Named Experts and
Counsel......................... Not Applicable
9. Disclosure of Commission Position
on
Indemnification for Securities
Act Liabilities................. Not Applicable
10. Information with Respect to S-3
Registrants..................... Not Applicable
11. Incorporation of Certain
Information by Reference........ Not Applicable
12. Information with Respect to S-2
or S-3 Registrants.............. Not Applicable
13. Incorporation of Certain
Information by Reference........ Not Applicable
14. Information with Respect to
Registrants Other Than S-3 or S-
2 Registrants................... Prospectus Summary; Capitalization;
Selected Historical Financial Data;
Unaudited Pro Forma Condensed
Consolidated Financial Statements;
Selected Historical Financial Data; of
Management's Discussion and Analysis
Financial Condition and Results of
Operations; Industry Overview;
Business; Management; Ownership of
Capital Stock; Certain Transactions;
Description of Credit Facility;
Description of Exchange Notes;
Financial Statements
15. Information with Respect to S-3
Companies....................... Not Applicable
16. Information with Respect to S-2
or S-3 Companies................ Not Applicable
17. Information with Respect to
Companies Other Than S-2 or S-3
Companies....................... Not Applicable
18. Information if Proxies, Consents
or Authorizations are to be
Solicited....................... Not Applicable
19. Information if Proxies, Consents
or Authorizations are not to be
Solicited or in an Exchange
Offer........................... Management; The Exchange Offer; Certain
Transactions
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS SUBJECT TO COMPLETION, DATED JULY 7, 1998
$269,000,000
SBA COMMUNICATIONS CORPORATION
OFFER TO EXCHANGE ITS 12% SENIOR DISCOUNT NOTES DUE 2008,
FOR ALL OUTSTANDING 12% SENIOR DISCOUNT NOTES DUE 2008
-----------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON ,
1998 UNLESS EXTENDED.
SBA Communications Corporation, a Florida corporation ("SBACC"), is hereby
offering (the "Exchange Offer"), upon the terms and subject to the conditions
set forth in this Prospectus and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), to exchange $1,000 principal amount of its 12% Senior
Discount Notes due 2008 (the "Exchange Notes"), which exchange has been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a registration statement of which this Prospectus is a part (the
"Registration Statement"), for each $1,000 principal amount of its outstanding
12% Senior Discount Notes due 2008 (the "Private Notes"), of which $269,000,000
in aggregate principal amount at maturity was issued on March 2, 1998 (the
"Private Offering") and is outstanding as of the date hereof. The form and
terms of the Exchange Notes are the same as the form and terms of the Private
Notes except that (i) the exchange will have been registered under the
Securities Act, and, therefore, the Exchange Notes will not bear legends
restricting the transfer thereof and (ii) holders of the Exchange Notes will
not be entitled to certain rights of holders of the Private Notes under the
Registration Rights Agreement (as defined herein), which rights will terminate
upon the consummation of the Exchange Offer. The Exchange Notes will evidence
the same indebtedness as the Private Notes (which they replace) and will be
entitled to the benefits of an indenture dated as of March 2, 1998 governing
the Private Notes and the Exchange Notes (the "Indenture"). The Private Notes
and the Exchange Notes are sometimes referred to herein collectively as the
"Notes." See "The Exchange Offer" and "Description of Exchange Notes."
The Exchange Notes will mature on March 1, 2008. The Exchange Notes will bear
interest at the same rate and on the same terms as the Private Notes. The
Private Notes were issued at a substantial discount to their principal amount
at maturity. Consequently, the Exchange Notes will be issued at a substantial
discount to their principal amount at maturity. The Exchange Notes will accrete
in value from and including the date of issuance of the Private Notes (March 2,
1998) until March 1, 2003 at which time they will have an aggregate principal
amount of $269.0 million. Thereafter, cash interest will accrue on the Exchange
Notes and will be payable semiannually in arrears on March 1 and September 1,
commencing September 1, 2003, at a rate of 12% per annum. Holders whose Private
Notes are accepted for exchange will be deemed to have waived the right to
receive any interest accrued on the Private Notes.
SEE "RISK FACTORS" BEGINNING ON PAGE 16 FOR A DISCUSSION OF CERTAIN FACTORS
THAT INVESTORS SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER AND AN
INVESTMENT IN THE EXCHANGE NOTES.
(Continued on next page)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-----------
The date of this Prospectus is , 1998
<PAGE>
(Continued from Previous Page)
The Notes will be redeemable at the option of SBACC, in whole or in part, at
any time on or after March 1, 2004, at the redemption prices set forth herein,
plus accrued and unpaid interest, if any, thereon to the date of redemption.
In addition, prior to March 1, 2001, SBACC may redeem up to 20% of the
aggregate principal amount at maturity of Notes at 112.0% of the Accreted
Value (as defined) thereof, to the redemption date with the net cash proceeds
of one or more Public Equity Offerings or Strategic Equity Investments (each
as defined); provided that at least 80% of the aggregate principal amount at
maturity of Notes remains outstanding immediately after the occurrence of such
redemption.
The Notes will be general unsecured obligations of SBACC, will rank senior
in right of payment to any future indebtedness of the Company which is made
expressly junior thereto, and will rank pari passu in right of payment with
all current and future unsecured senior Indebtedness (as defined) of SBACC. As
of the date of this Prospectus, SBACC (unconsolidated) had no indebtedness
outstanding that would rank pari passu to the Notes. All of the operations of
SBACC are conducted through its subsidiaries, and SBACC's subsidiaries will
not be guarantors of the Notes. Accordingly, the Notes will be effectively
subordinated to all indebtedness and all other liabilities or obligations of
such subsidiaries, including borrowings under the $55.0 million Credit
Facility (as defined). See "Description of Credit Facility." As of March 31,
1998, SBACC's subsidiaries had approximately $6.4 million of liabilities which
constitute indebtedness that would be senior to the Notes. SBACC's
subsidiaries will be entitled to borrow substantial additional indebtedness
under the Credit Facility or otherwise. See "Capitalization."
Upon the occurrence of a Change of Control (as defined), each holder of
Notes will have the right to require SBACC to purchase all or any part of such
holder's Notes at a purchase price equal to 101% of the Accreted Value
thereof, to the date of purchase prior to March 1, 2003 or 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest to the
date of purchase on or after March 1, 2003. See "Description of Exchange
Notes."
SBACC will accept for exchange any and all validly tendered Private Notes
not withdrawn prior to 5:00 p.m., New York City time, on , 1998, unless
the Exchange Offer is extended by SBACC in its sole discretion (the
"Expiration Date"). Tenders of Private Notes may be withdrawn at any time
prior to the Expiration Date. Private Notes may be tendered only in integral
multiples of $1,000. The Exchange Offer is subject to certain customary
conditions. See "The Exchange Offer--Conditions."
Based on an interpretation by the staff of the Securities and Exchange
Commission (the "Commission") set forth in no-action letters issued to third
parties (See e.g., Exxon Capital Holdings Corp., SEC No-Action Letter
(available April 13, 1989) and Morgan Stanley & Co. Inc., SEC No-Action Letter
(available June 5, 1991), collectively, the "No-Action Letters"), SBACC
believes that the Exchange Notes issued pursuant to the Exchange Offer in
exchange for Private Notes may be offered for resale, resold and otherwise
transferred by a holder thereof (other than (i) a broker-dealer who purchases
such Exchange Notes directly from SBACC to resell pursuant to Rule 144A or any
other available exemption under the Securities Act or (ii) a person that is an
affiliate of SBACC within the meaning of Rule 405 under the Securities Act),
without compliance with the registration and prospectus delivery provisions of
the Securities Act; provided that the holder is acquiring the Exchange Notes
in the ordinary course of its business and is not participating, and had no
arrangement or understanding with any person to participate, in the
distribution of the Exchange Notes. Holders who tender their Private Notes in
the Exchange Offer with the intention of participating in a distribution of
the Exchange Notes will not be able to rely on the No-Action Letters or
similar no-action letters. Holders of Private Notes wishing to accept the
Exchange Offer must represent to SBACC, as required by the Registration Rights
Agreement, that such conditions have been met. Each broker-dealer that
receives Exchange Notes for its own account in exchange for Private Notes,
where such Private Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange
Notes. SBACC believes that none of the registered holders of the Private Notes
is an affiliate (as such term is defined in Rule 405 under the Securities Act)
of SBACC.
(Continued on Next Page)
ii
<PAGE>
(Continued from Previous Page)
Prior to the Exchange Offer, there has been no public market for the Notes.
SBACC does not intend to list the Exchange Notes on any securities exchange,
but the Private Notes are eligible for trading in the National Association of
Securities Dealers, Inc.'s Private Offerings, Resales and Trading through
Automatic Linkages (PORTAL) market. There can be no assurance that an active
market for the Notes will develop. To the extent that a market for the Notes
does develop, the market value of the Notes will depend on market conditions
(such as yields on alternative investments), general economic conditions,
SBACC's financial condition and certain other factors. Such conditions might
cause the Notes, to the extent that they are traded, to trade at a significant
discount from face value. See "Risk Factors--Absence of Public Market for the
Notes; Restrictions on Transfer."
Each broker-dealer that receives Exchange Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-
dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Notes received in exchange for Private Notes where
such Private Notes were acquired by such broker-dealer as a result of market-
making activities or other trading activities. SBACC has indicated its
intention to make this Prospectus (as it may be amended or supplemented)
available to any broker-dealer for use in connection with any such resale for
a period of 180 days after the Expiration Date. See "Plan of Distribution."
SBACC will not receive any proceeds from, and has agreed to bear the
expenses of, the Exchange Offer. No underwriter is being used in connection
with this Exchange Offer. See "The Exchange Offer."
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL SBACC ACCEPT SURRENDERS
FOR EXCHANGE FROM, HOLDERS OF PRIVATE NOTES IN ANY JURISDICTION IN WHICH THE
EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
NO PERSON IS AUTHORIZED IN CONNECTION WITH THE EXCHANGE OFFER TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY SBACC. NEITHER THE DELIVERY OF THIS PROSPECTUS OR THE
ACCOMPANYING LETTER OF TRANSMITTAL, NOR ANY EXCHANGE MADE HEREUNDER SHALL
UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
UNTIL , 1998 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
OFFERING TRANSACTIONS IN THE EXCHANGE NOTES, WHETHER OR NOT PARTICIPATING IN
THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS IN CONNECTION
THEREWITH. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
The Exchange Notes will be available initially only in book-entry form.
SBACC expects that the Exchange Notes issued pursuant to the Exchange Offer
will be issued in the form of one or more fully registered global notes that
will be deposited with, or on behalf of, the Depository Trust Company ("DTC"
or the "Depository") and registered in its name or in the name of Cede & Co.,
as its nominee. Beneficial interests in the global note representing the
Exchange Notes will be shown on, and transfers thereof will be effected only
through, records maintained by the Depository and its participants. After the
initial issuance of such global note, Exchange Notes in certificated form will
be issued in exchange for the global note only in accordance with the terms
and conditions set forth in the Indenture. See "The Exchange Offer--Book-Entry
Transfer" and "Book Entry; Delivery and Form."
(Continued on Next Page)
iii
<PAGE>
(Continued from Previous Page)
MARKET DATA
MARKET DATA USED THROUGHOUT THIS PROSPECTUS WERE OBTAINED FROM INTERNAL
COMPANY SURVEYS AND INDUSTRY PUBLICATIONS. INDUSTRY PUBLICATIONS GENERALLY
STATE THAT THE INFORMATION CONTAINED THEREIN HAS BEEN OBTAINED FROM SOURCES
BELIEVED TO BE RELIABLE, BUT THAT THE ACCURACY AND COMPLETENESS OF SUCH
INFORMATION IS NOT GUARANTEED. ALTHOUGH SBACC BELIEVES SUCH INFORMATION TO BE
RELIABLE, SBACC HAS NOT INDEPENDENTLY VERIFIED SUCH MARKET DATA. SIMILARLY,
INTERNAL COMPANY SURVEYS, WHILE BELIEVED BY SBACC TO BE RELIABLE, HAVE NOT
BEEN VERIFIED BY ANY INDEPENDENT SOURCES.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"). ALL STATEMENTS OTHER THAN
STATEMENTS OF HISTORICAL FACTS INCLUDED IN THIS PROSPECTUS, INCLUDING WITHOUT
LIMITATION, CERTAIN STATEMENTS UNDER THE CAPTIONS "PROSPECTUS SUMMARY," "PRO
FORMA FINANCIAL DATA," "THE COMPANY," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND "BUSINESS" AND LOCATED
ELSEWHERE HEREIN REGARDING THE COMPANY'S FINANCIAL POSITION AND OPERATING
STRATEGY, MAY CONSTITUTE FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY
BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS
ARE REASONABLE, IT CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS WILL PROVE TO
HAVE BEEN CORRECT. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THE COMPANY'S EXPECTATIONS ("CAUTIONARY STATEMENTS") ARE
DISCLOSED IN THIS PROSPECTUS, INCLUDING THOSE UNDER "RISK FACTORS" AND ALSO
INCLUDING THE FOLLOWING: (1) ABILITY TO OBTAIN NEEDED REGULATORY APPROVALS,
PRINCIPALLY LOCAL ZONING PERMITS AND VARIATIONS, IN EACH AREA IN WHICH THE
COMPANY SEEKS TO CONSTRUCT, OWN OR OPERATE A COMMUNICATION SITE AND THE
ABILITY TO CONTINUE TO COMPLY WITH ANY REGULATORY REQUIREMENTS AND ZONING
LIMITATIONS; (2) INCREASED COSTS OR DIFFICULTIES RELATED TO ACQUISITIONS; (3)
INABILITY TO OBTAIN ADDITIONAL LEASES ON TOWERS OR INABILITY TO OBTAIN SUCH
LEASES ON TERMS AS FAVORABLE AS EXPECTED; (4) UNANTICIPATED INCREASES IN
FINANCING AND OTHER COSTS OR THE INABILITY TO OBTAIN ADDITIONAL DEBT AND
EQUITY FINANCING ON ATTRACTIVE TERMS; (5) CHANGES IN GENERAL ECONOMIC OR
BUSINESS CONDITIONS, EITHER NATIONALLY OR IN THE REGIONS IN WHICH THE COMPANY
CONDUCTS BUSINESS; (6) INCREASED COMPETITION; AND (7) ABILITY TO REPAY
INDEBTEDNESS OF SUBSIDIARIES OF THE COMPANY OR TO REFINANCE SUCH INDEBTEDNESS
ON ATTRACTIVE TERMS, INCLUDING TERMS PERMITTING THE PAYMENT OF DIVIDENDS BY
SUCH SUBSIDIARIES IN AMOUNTS SUFFICIENT TO PAY INTEREST ON THE NOTES AND THE
OTHER OBLIGATIONS OF SBACC. ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING
STATEMENTS ATTRIBUTABLE TO THE COMPANY OR PERSONS ACTING ON ITS BEHALF ARE
EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS.
iv
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information (including the financial statements and the notes thereto) included
elsewhere in this Prospectus. Each prospective investor is urged to read this
Prospectus in its entirety. Unless otherwise indicated, (i) "SBACC" refers to
SBA Communications Corporation and (ii) "SBA" or the "Company" refers (A) to
SBACC, together with its subsidiaries SBA Telecommunications, Inc.
("Telecommunications"), SBA, Inc., SBA Leasing, Inc. ("Leasing"), SBA Towers,
Inc. ("Towers"), Communication Site Services, Inc. ("CSSI"), SBA Communications
International, Inc. ("International") and SBA Subsidiary Holdings, Inc.
("Holdings") and (B) prior to the formation of SBACC in the fourth quarter of
1996, to SBA, Inc. and Leasing.
THE COMPANY
The Company is a leading independent provider of communication site services,
offering a broad array of site development services to the wireless
communications industry. In order to capitalize on the trend toward colocation
and independent tower ownership in the wireless communications industry, the
Company is aggressively expanding its site leasing business by utilizing its
site development experience and relationships with wireless service providers
to source opportunities to build and acquire communication sites. The Company
believes that it is historically the largest provider of site development
services in the United States, having participated since its founding in 1989
in one or more aspects of the development of more than 9,000 antennae sites
(including over 3,500 in 1997) in 49 of the 51 major trading areas ("MTAs").
The Company anticipates significant future growth in its site leasing business
whereby the Company leases antennae space on towers it owns, leases or manages.
The Company is both acquiring towers suited for multi-tenant use and building
such towers, generally under build-to-suit programs whereby a wireless service
provider enters into a lease as an anchor tenant with the Company for antennae
space prior to the Company's commencement of tower construction. As of June 30,
1998, the Company owned 212 towers, had 74 towers pending acquisition under
written or verbal letters of intent or definitive agreements, and had non-
binding mandates to build up to approximately 410 additional towers (the
majority of which the Company expects will result in signed anchor tenant
leases). For a discussion of the process by which mandates lead to signed
anchor tenant leases and constructed towers, see "Business--Site Leasing
Business--Build-to-Suit Program." The Company's revenues and Annualized EBITDA
(as defined) for the year ended December 31, 1997 were $55.0 million and $7.6
million, respectively.
The Company offers an integrated "end-to-end" service with design,
construction and operating expertise to a range of wireless service providers,
including personal communications services ("PCS"), cellular, paging,
specialized mobile radio ("SMR"), enhanced specialized mobile radio ("ESMR")
and other providers. The Company's site development services include site
location analysis, site acquisition, zoning and land use permitting,
construction and construction management, Federal Aviation Administration
("FAA") compliance analysis and filings, contract and title administration and
building permit administration. The Company is typically paid fees for its site
development services on a project-by-project basis. In the site leasing
business, the Company's primary focus is the ownership of multi-tenant towers
and the leasing of antennae space on such towers to a variety of wireless
service providers under long-term lease contracts. The site leasing business
typically benefits from diversified recurring revenue and effective operating
leverage as a result of several factors, including: (i) the long-term contract
nature of lease revenues; (ii) low customer churn rates due to the high cost of
relocation; (iii) low variable operating costs, which cause increases in
revenues to generate disproportionately larger increases in tower cash flow;
(iv) low on-going maintenance capital expenditure requirements; (v) a customer
base diversified across geographic markets, industry segments (PCS, cellular,
paging, ESMR and SMR) and individual customers within these segments; and (vi)
the limited number of available tower sites serving a given area and consequent
barriers to entry, principally as a result of local opposition to the
proliferation of towers within such area.
1
<PAGE>
In the fourth quarter of 1996, based on its analysis of accelerating trends
in the wireless communications industry and the financial benefits of the site
leasing business, the Company determined to leverage its leadership in the site
development services business in order to expand into the ownership and leasing
of communication sites. Consequently, the Company has added build-to-suit
programs and other antennae site leasing options to its service offerings and
has sought the acquisition of attractive communication sites. Under a build-to-
suit program, the Company generally undertakes its site development services on
behalf of a wireless service provider but constructs a tower at the Company's
expense. In return, the wireless service provider enters into a long-term
anchor tenant lease and the Company retains ownership of the tower and has the
ability to colocate additional tenants. Management believes that many wireless
service providers are using build-to-suit programs as an alternative to tower
ownership and that this outsourcing trend is likely to continue. The Company's
build-to-suit programs provide an end-to-end solution to those wireless service
providers seeking to minimize their capital expenditures, overhead and time
associated with the build-out and on-going maintenance of their wireless
network infrastructure. Management believes its leadership in site development
services, its existing national field organization of more than 300 employees
and its strong relationships with wireless service providers position the
Company to be a leader in the developing build-to-suit market. While the
Company intends to continue to offer site development services to wireless
carriers, where demand and profitable opportunities exist, it will emphasize
its site leasing business through the construction of Company-owned towers
pursuant to build-to-suit programs for lease to wireless service providers, the
acquisition of existing sites and the leasing, sub-leasing and management of
other antennae sites. Management believes that as the site development industry
matures, the Company's revenues and gross profit from that business will
decline in the near term and this rate of decline will increase for the
foreseeable future as wireless service providers choose to outsource ownership
of communication sites in order to conserve capital. Management also believes
that, over the longer term, the Company's site leasing revenues will
correspondingly increase as carriers move to outsourced tower ownership and the
number of towers owned by the Company grows.
As a result of these trends and shift in business, the Company expects that
revenue and earnings before interest, taxes, depreciation and amortization
("EBITDA") will decline over the short term and capital expenditures will
increase sharply as the Company accumulates towers. In addition, the Company
anticipates that its operating expenses will remain at or above current levels
as the Company continues to construct and acquire tower assets. The Company's
results of operations in 1997 and 1998 have begun to reflect the impact of
these trends. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
Management believes that the number of communication sites (which include
towers, rooftops and other structures) in use will continue to increase with
the growth in demand for wireless services. This growth is the result of
several factors, including (i) the issuance of new wireless network licenses
requiring the construction of new wireless networks; (ii) the continuing build-
out of higher frequency technologies (such as PCS) which have a reduced cell
range and thus require a more dense network of towers; (iii) the need to expand
services and fill-in and upgrade existing networks; and (iv) the emergence of
new wireless technologies. In October 1995, the Personal Communications
Industry Association ("PCIA") estimated that the number of antennae sites in
the United States for both cellular and PCS providers will increase by an
additional 100,000 antennae sites (more than one of which can be located on a
single communication site) over the next ten years as cellular systems expand
coverage and PCS systems are deployed. Management believes that wireless
service providers have begun to focus their capital and operations primarily on
activities that build subscriber growth, such as marketing and distribution,
and, therefore, that wireless service providers will increasingly seek to
outsource communication site ownership, construction, management and
maintenance. The Company believes that it will benefit from this trend.
2
<PAGE>
BUSINESS STRATEGY
The Company's strategy is to build on its leadership position in site
development services to become a leading owner and operator of communication
sites. Key elements of the Company's strategy include:
BUILD, OWN AND LEASE TOWERS. The Company believes that there are various
financial considerations currently affecting wireless service providers,
including the need to optimize capital resources. Increasingly, these factors
have led wireless service providers to consider outsourcing the investment in,
and ownership of, towers. Management believes that it has positioned the
Company to meet these outsourcing needs, leveraging its expertise in the site
development business to construct towers with anchor tenants pursuant to build-
to-suit programs. The Company believes that it has one of the largest number of
non-binding build-to-suit mandates from wireless service providers in the
industry. The Company has received non-binding mandates from approximately
eight major wireless service providers to execute build-to-suit programs. As of
June 30, 1998, the Company had non-binding mandates to build up to
approximately 410 additional towers under build-to-suit programs.
ACQUIRE EXISTING TOWERS. The Company intends to continue to make strategic
acquisitions in the fragmented tower owner and operator industry. The Company's
strategy is to acquire only those towers that the Company believes will be
attractive to, and capable of use by, multiple tenants based on location,
height, local competition and available capacity. The Company will continue to
pursue larger acquisitions to provide critical mass and smaller acquisitions
that have the potential for more attractive returns. Management believes that
its existing national field organization provides it with a competitive
advantage in identifying opportunities for the acquisition of existing towers.
The Company regularly evaluates acquisition opportunities and engages in
negotiations with respect to acquisitions of individual tower sites, groups of
tower sites and entities that own or manage towers and related businesses.
However, except as otherwise contemplated herein, as of the date hereof, there
are currently no agreements with respect to any pending acquisitions.
MAINTAIN AND CAPITALIZE ON STRONG RELATIONSHIPS WITH MAJOR WIRELESS SERVICE
PROVIDERS. Management believes that it is well-positioned to be a preferred
partner in build-to-suit programs because of its strong relationships with
wireless service providers and proven operating experience. The Company
believes that it will be able to build upon its existing relationships with
wireless service providers to source further opportunities for build-to-suit
programs and lease antennae space on its owned towers. In many cases, the
personnel awarding site development projects for wireless service providers are
the same personnel who make decisions with respect to build-to-suit programs.
The Company is continually marketing its build-to-suit programs to its site
development service customers. The Company's build-to-suit customers include
AT&T Wireless, BellSouth Mobility, Nextel, PrimeCo PCS, Sprint PCS and Western
Wireless.
INCREASE USE OF COMPANY-OWNED TOWERS. The Company's strategy for its owned,
leased and managed towers is to maximize the number of tenants on each tower,
thereby increasing its leasing revenues per tower. Because most tower costs are
fixed, leasing available space on an existing tower results in minimal
additional ongoing expenses and therefore generates a disproportionately large
increase in operating cash flow. The Company believes that many of its towers
have or will have significant capacity available for antennae space leasing and
that increased use of its owned towers can be achieved at low incremental cost.
The Company generally constructs build-to-suit towers to accommodate multiple
tenants in addition to the anchor tenant. The Company actively markets space on
its owned towers through its internal sales force. Once the Company has
identified a site for acquisition or construction, the sales force immediately
commences marketing that site to potential tenants.
CONTINUE PROVISION OF SITE DEVELOPMENT SERVICES. The Company has performed an
array of site development services for over 35 wireless service providers
across the United States, including Sprint PCS, Pacific Bell Mobile Services,
AT&T Wireless, Nextel, PrimeCo PCS, PageNet and BellSouth Mobility.
3
<PAGE>
Management believes the Company is historically the largest provider of site
development services in the United States. The Company has a broad national
field organization that allows it to identify and participate in site
development projects across the country. Knowledge of local markets and strong
customer relationships with wireless service providers are competitive
strengths that position the Company to further capitalize on the site
development needs of the wireless communications industry. In 1997, the Company
acquired CSSI, which is a tower construction company operating primarily in the
southeastern United States. This acquisition increased the Company's expertise
in managing the construction component of its business which enabled the
Company to directly provide construction services to third parties and, on a
selective basis, for its own build-to-suit programs. The Company believes that
CSSI will enable the Company to capture more of the wireless service providers'
total site development business and build-to-suit programs and to enhance its
end-to-end approach to service.
COMPETITIVE STRENGTHS
Management believes that the Company has several important competitive
strengths that have contributed to its leadership position in the site
development business. Management believes that these strengths will enable it
to successfully expand its site leasing business. Key strengths include:
PROVEN OPERATING EXPERIENCE. The Company has been operating in the site
development business since 1989 and believes that it is historically the
largest provider of such services in the United States. The Company has
successfully participated in one or more aspects of the development of more
than 9,000 antennae sites (including over 3,500 in 1997). As a result,
management believes that the Company has built a strong national reputation
with wireless service providers as a leading provider of site development
services. Operating its site development business has enabled the Company and
management to gain experience executing all stages of site development, and
these same skills are utilized in the course of constructing a build-to-suit
tower. Management believes that this operating history and proven track record
give the Company a competitive advantage in the build-to-suit tower
construction business. In addition, as of June 30, 1998, the Company
administered approximately 1,065 antennae sites whereby it leases the sites
from site owners and subleases such sites to wireless service providers at a
profit. The Company has developed and will continue to improve the systems and
software to manage and oversee multiple sites and lease contracts. Management
believes that these systems and software capabilities, together with the
Company's operating expertise, will be critical to it in building a successful
national site leasing business.
MARKET EXPERIENCE. The Company believes that its national field organization
and site development experience in 49 of the 51 MTAs provide the Company with a
significant competitive advantage. Because of such experience, the Company has
its own knowledge base of many areas within most MTAs and, more importantly,
has the ability to more effectively analyze local requirements with respect to
a particular site development project or a build-to-suit mandate. The Company
also believes that its substantial field experience provides it with an
advantage in selecting and constructing new towers.
INTEGRATED PROVIDER OF SITE DEVELOPMENT SERVICES. Management believes that
the Company benefits from its integrated, end-to-end service capabilities, as
wireless service providers prefer the flexibility of a vendor who can perform,
directly or through subcontractors, any or all of the functions related to site
acquisition, development, construction and on-going operation.
CAPABILITY TO MANAGE MULTIPLE PROJECTS. The Company has been able to
successfully manage multiple site development projects in various locations
across the country at the same time. Management believes that the ability to
undertake concurrent build-to-suit programs in multiple markets will be
attractive to wireless service providers.
4
<PAGE>
RECENT EVENTS
Since June 1, 1997, the Company has taken a number of important steps to
expand its site leasing business, including:
THE CSSI ACQUISITION. On September 18, 1997, the Company consummated the
acquisition of CSSI and certain related tower assets of Segars Communications
Group, Inc. ("SCGI," and together with the acquisition of CSSI, the "CSSI
Acquisition"). The CSSI Acquisition provided the Company with 21 towers in
Florida and Georgia in varying stages of construction, together with a number
of parcels of leased real estate on which towers may be constructed in the
future, and gave the Company the in-house capability to construct towers in the
southeastern United States. The Company paid $7.0 million at closing, and
expects to invest up to an additional $4.8 million by September 1998 to
complete construction of the towers acquired and as a contingent payment to the
sellers, provided that certain tenant leasing goals are realized.
OTHER TOWER ACQUISITIONS. In addition to the 21 towers acquired in the CSSI
Acquisition, the Company has acquired 81 towers through June 1998 in 21
separate transactions for an aggregate initial investment of $34.4 million plus
up to an additional $2.8 million in consideration to be paid in 1998 in the
event certain tenant leasing goals are realized. As of June 30, 1998, the
Company has also entered into verbal or written letters of intent or definitive
agreements with respect to the purchase of 74 towers in 15 separate
transactions for an aggregate purchase price of $10.8 million. Certain of these
acquisitions are subject to definitive documentation and other closing
conditions, certain of which are out of the control of the Company. There can
be no assurance that any of these tower acquisitions will close on the terms
currently anticipated or at all.
MAJOR BUILD-TO-SUIT AWARD. The Company has been awarded a mandate for, and
has entered into a non-binding letter of intent with, BellSouth Mobility with
respect to 183 communication sites (as of June 30, 1998) to be located on newly
constructed towers or colocated on existing structures in 1998. The Company
will construct and own all new towers in the search rings issued with respect
to these 183 sites. The Company will also receive a site development fee for
any colocations arranged in these search rings. BellSouth Mobility will be the
anchor tenant on all new towers in these search rings. The Company currently
expects that a majority of these 183 search rings will result in build-to-suit
towers. These sites, which represent approximately 50% of the number of sites
awarded by BellSouth Mobility to be constructed or colocated in 1998, will be
located in eastern Tennessee, South Carolina and coastal Georgia. The award is
subject to definitive documentation which is expected to be finalized during
the third quarter of 1998.
PRINCIPAL EXECUTIVE OFFICES
The Company's principal executive offices are located at One Town Center
Road, Third Floor, Boca Raton, Florida 33486, and its telephone number is (561)
995-7670.
5
<PAGE>
THE EXCHANGE OFFER
THE EXCHANGE OFFER.......... The Company is hereby offering to exchange $1,000
principal amount of Exchange Notes for each
$1,000 principal amount of Private Notes that are
properly tendered and accepted. The Company will
issue Exchange Notes on or promptly after the
Expiration Date. As of the date hereof, there is
$269,000,000 aggregate principal amount at
maturity of Private Notes outstanding. See "The
Exchange Offer."
Based on an interpretation by the staff of the
Commission set forth in no action letters issued
to third parties, the Company believes that the
Exchange Notes issued pursuant to the Exchange
Offer in exchange for Private Notes may be
offered for resale, resold and otherwise
transferred by a holder thereof (other than (i) a
broker dealer who purchases such Exchange Notes
directly from the Company to resell pursuant to
Rule 144A or any other available exemption under
the Securities Act or (ii) a person that is an
affiliate of the Company within the meaning of
Rule 405 under the Securities Act), without
compliance with the registration and prospectus
delivery provisions of the Securities Act;
provided that the holder is acquiring Exchange
Notes in the ordinary course of its business and
is not participating, and had no arrangement or
understanding with any person to participate, in
the distribution of the Exchange Notes. (See e.g.
Exxon Capital Holdings Corp., SEC No-Action
Letter (available April 13, 1989) and Morgan
Stanley & Co. Inc., SEC No Action Letter
(available June 5, 1991), collectively, the "No
Action Letters"). Holders who tender their
Private Notes in the Exchange Offer with the
intention of participating in a distribution of
the Exchange Notes will not be able to rely on
the No Action Letters or similar no-action
letters. Each broker dealer that receives
Exchange Notes for its own account in exchange
for Private Notes, where such Private Notes were
acquired by such broker dealer as a result of
market making activities or other trading
activities, must acknowledge that it will deliver
a prospectus in connection with any resale of
such Exchange Notes. See "The Exchange Offer--
Resale of the Exchange Notes."
REGISTRATION RIGHTS The Private Notes were sold by the Company on
AGREEMENT................... March 2, 1998 to BT Alex. Brown Incorporated and
Lehman Brothers Inc. (the "Initial Purchasers")
pursuant to a Purchase Agreement, dated February
25, 1998, by and among the Company and the
Initial Purchasers (the "Purchase Agreement").
Pursuant to the Purchase Agreement, the Company
and the Initial Purchasers entered into a
Registration Rights Agreement, dated as of March
2, 1998 (the "Registration Rights Agreement"),
which grants the holders of the Private Notes
certain exchange and registration rights. The
Exchange Offer is intended to satisfy such
rights, which will terminate upon the
consummation of the Exchange Offer. The holders
of the Exchange Notes will not be entitled to any
exchange
6
<PAGE>
or registration rights with respect to the
Exchange Notes. See "The Exchange Offer--
Termination of Certain Rights."
EXPIRATION DATE............. The Exchange Offer will expire at 5:00 p.m., New
York City time, on , 1998, unless the
Exchange Offer is extended by the Company in its
sole discretion, in which case the term
"Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended. See
"The Exchange Offer--Expiration Date; Extensions;
Amendments."
ACCRUED INTEREST ON THE
EXCHANGE NOTES AND THE
PRIVATE NOTES............... The Exchange Notes will accrete in value from and
including the date of issuance of the Private
Notes (March 2, 1998) until March 1, 2003 at
which time they will have an aggregate principal
amount of $269.0 million. Thereafter, cash
interest will accrue on the Exchange Notes.
Holders whose Private Notes are accepted for
exchange will be deemed to have waived the right
to receive any interest accrued on the Private
Notes. See "The Exchange Offer--Interest on the
Exchange Notes."
CONDITIONS TO THE EXCHANGE
OFFER....................... The Exchange Offer is subject to certain
customary conditions that may be waived by the
Company. The Exchange Offer is not conditioned
upon any minimum aggregate principal amount of
Private Notes being tendered for exchange. See
"The Exchange Offer--Conditions."
PROCEDURES FOR TENDERING
PRIVATE NOTES............... Each holder of Private Notes wishing to accept
the Exchange Offer must complete, sign and date
the Letter of Transmittal, or a facsimile
thereof, in accordance with the instructions
contained herein and therein, and mail or
otherwise deliver such Letter of Transmittal, or
such facsimile, together with such Private Notes
and any other required documentation to State
Street Bank and Trust Company, as exchange agent
(the "Exchange Agent"), at the address set forth
herein. By executing the Letter of Transmittal,
the holder will represent to and agree with the
Company that, among other things, (i) the
Exchange Notes to be acquired by such holder of
Private Notes in connection with the Exchange
Offer are being acquired by such holder in the
ordinary course of its business, (ii) such holder
has no arrangement or understanding with any
person to participate in a distribution of the
Exchange Notes, (iii) that if such holder is a
broker dealer registered under the Exchange Act
or is participating in the Exchange Offer for the
purposes of distributing the Exchange Notes, such
holder will comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with a secondary
resale transaction of the Exchange Notes acquired
by such person and cannot rely on the position of
the staff of the Commission set forth in no
action letters (see "The Exchange Offer--Resale
of Exchange Notes"), (iv) such holder understands
that a secondary resale transaction described in
7
<PAGE>
clause (iii) above and any resales of Exchange
Notes obtained by such holder in exchange for
Private Notes acquired by such holder directly
from the Company should be covered by an
effective registration statement containing the
selling securityholder information required by
Item 507 or Item 508, as applicable, of
Regulation S-K of the Commission and (v) such
holder is not an "affiliate," as defined in Rule
405 under the Securities Act, of the Company.
(See e.g., Exxon Capital Holdings Corp., SEC No
Action Letter (available April 13, 1989) and
Morgan Stanley & Co. Inc., SEC No Action Letter
(available June 5, 1991), collectively, the "No
Action Letters"). Holders who tender their
Private Notes in the Exchange Offer with the
intention of participating in a distribution of
the Exchange Notes will not be able to rely on
the No Action Letters or similar no action
letters. If the holder is a broker dealer that
will receive Exchange Notes for its own account
in exchange for Private Notes that were acquired
as a result of market making activities or other
trading activities, such holder will be required
to acknowledge in the Letter of Transmittal that
such holder will deliver a prospectus in
connection with any resale of such Exchange
Notes; however, by so acknowledging and by
delivering a prospectus, such holder will not be
deemed to admit that it is an "underwriter"
within the meaning of the Securities Act. See
"The Exchange Offer--Procedures for Tendering."
SPECIAL PROCEDURES FOR
BENEFICIAL OWNERS........... Any beneficial owner whose Private Notes are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and who wishes to tender such Private Notes in
the Exchange Offer should contact such registered
holder promptly and instruct such registered
holder to tender on such beneficial owner's
behalf. If such beneficial owner wishes to tender
on such owner's own behalf, such owner must,
prior to completing and executing the Letter of
Transmittal and delivering such owner's Private
Notes, either make appropriate arrangements to
register ownership of the Private Notes in such
owner's name or obtain a properly completed bond
power from the registered holder. The transfer of
registered ownership may take considerable time
and may not be able to be completed prior to the
Expiration Date. See "The Exchange Offer--
Procedures for Tendering."
GUARANTEED
DELIVERY PROCEDURES......... Holders of Private Notes who wish to tender their
Private Notes and whose Private Notes are not
immediately available or who cannot deliver their
Private Notes, the Letter of Transmittal or any
other documentation required by the Letter of
Transmittal to the Exchange Agent prior to the
Expiration Date must tender their Private Notes
according to the guaranteed delivery procedures
set forth under "The Exchange Offer--Guaranteed
Delivery Procedures."
ACCEPTANCE OF THE PRIVATE
NOTES AND DELIVERY OF THE
EXCHANGE NOTES.............. Subject to the satisfaction or waiver of the
conditions to the Exchange Offer, the Company
will accept for exchange any and all
8
<PAGE>
Private Notes that are properly tendered in the
Exchange Offer prior to the Expiration Date. The
Exchange Notes issued pursuant to the Exchange
Offer will be delivered on the earliest
practicable date following the Expiration Date.
See "The Exchange Offer--Terms of the Exchange
Offer."
WITHDRAWAL RIGHTS........... Tenders of Private Notes may be withdrawn at any
time prior to the Expiration Date. See "The
Exchange Offer--Withdrawal of Tenders."
CERTAIN FEDERAL INCOME TAX
CONSIDERATIONS.............. For a discussion of certain material federal
income tax considerations relating to the
exchange of the Exchange Notes for the Private
Notes, see "Certain United States Federal Income
Tax Considerations."
THE EXCHANGE NOTES
The Exchange Offer applies to $269,000,000 in aggregate principal amount at
maturity of the Private Notes. The form and terms of the Exchange Notes are the
same as the form and terms of the Private Notes except that (i) the exchange
will have been registered under the Securities Act and, therefore, the Exchange
Notes will not bear legends restricting the transfer thereof and (ii) holders
of the Exchange Notes will not be entitled to certain rights of holders of the
Private Notes under the Registration Rights Agreement, which rights will
terminate upon consummation of the Exchange Offer. The Exchange Notes will
evidence the same indebtedness as the Private Notes (which they replace) and
will be issued under, and be entitled to the benefits of, the Indenture. For
further information and for definitions of certain capitalized terms used
below, see "Description of Exchange Notes."
SECURITIES OFFERED.......... $269,000,000 in aggregate principal amount at
maturity of 12% Senior Discount Notes due 2008.
MATURITY DATE............... March 1, 2008.
YIELD AND INTEREST.......... Interest will accrue at a rate of 12% per annum,
to an aggregate principal amount of $269.0
million by March 1, 2003. Cash interest will not
accrue on the Notes prior to March 1, 2003.
Thereafter, cash interest on the Notes will
accrue and be payable semiannually in arrears on
each March 1 and September 1, commencing
September 1, 2003, at a rate of 12% per annum.
ORIGINAL ISSUE DISCOUNT..... The Notes are being offered at an original issue
discount for U.S. federal income tax purposes.
Thus, although cash interest will not be payable
on the Notes prior to September 1, 2003, original
issue discount will accrue from the issue date of
the Notes and will be included as interest income
periodically (including for periods ending prior
to September 1, 2003) in a holder's gross income
for U.S. federal income tax purposes in advance
of receipt of the cash payments to which the
income is attributable. See "Certain United
States Federal Income Tax Considerations."
OPTIONAL REDEMPTION......... Except as described below, the Notes will not be
redeemable at the Company's option prior to March
1, 2004. Thereafter, the Notes will
9
<PAGE>
be subject to redemption at any time at the
option of the Company, in whole or in part, at
the redemption prices set forth herein plus
accrued and unpaid interest thereon, if any, to
the applicable redemption date. In addition, at
any time prior to March 1, 2001, the Company may
on any one or more occasions redeem up to 20% of
the aggregate principal amount at maturity of the
Notes issued at a redemption price of 112% of the
Accreted Value thereof, to the redemption date,
with the net cash proceeds from one or more
Public Equity Offerings or Strategic Equity
Investments; provided, however, that at least 80%
of the aggregate principal amount at maturity of
Notes issued remains outstanding immediately
after the occurrence of such redemption
(excluding Notes held by SBACC or any of its
subsidiaries). See "Description of Exchange
Notes--Optional Redemption."
RANKING..................... The Notes will be general unsecured obligations
of SBACC, will rank senior in right of payment to
any future indebtedness of the Company which is
made expressly junior thereto, and will rank pari
passu in right of payment with all current and
future unsecured senior Indebtedness of SBACC.
All of the operations of SBACC are conducted
through its subsidiaries, and SBACC's
subsidiaries will not be guarantors of the Notes.
Accordingly, the Notes will be effectively
subordinated to all indebtedness and all other
liabilities or obligations of such subsidiaries,
including borrowings under the $55.0 million
Credit Facility. As of March 31, 1998, SBACC's
subsidiaries would have approximately $6.4
million of indebtedness and other outstanding
liabilities (including trade payables). SBACC's
subsidiaries will be entitled to borrow
substantial additional indebtedness under the
Credit Facility or otherwise. See
"Capitalization."
CHANGE OF CONTROL........... Upon the occurrence of a Change of Control, the
holders of the Notes will have the right to
require the Company to repurchase such holders'
Notes, in whole or in part, at a price equal to
101% of the Accreted Value thereof to the date of
purchase prior to March 1, 2003 or 101% of the
principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase on or
after March 1, 2003. There can be no assurance
that the Company will be able to raise sufficient
funds to meet this obligation should it arise.
See "Description of Exchange Notes--Repurchase at
the Option of Holders--Change of Control."
CERTAIN COVENANTS........... The indenture pursuant to which the Exchange
Notes will be issued (the "Indenture") contains
certain covenants that, among other things, limit
the ability of the Company and its Restricted
Subsidiaries (as defined) to (i) incur additional
indebtedness and issue preferred stock; (ii) pay
dividends or make certain other restricted
payments; (iii) enter into transactions with
affiliates; (iv) make certain asset dispositions;
(v) merge or consolidate with, or transfer
substantially all its assets to, another Person
(as defined);
10
<PAGE>
(vi) create Liens securing Indebtedness (as
defined); or (vii) permit Subsidiaries to incur
restrictions on their ability to pay dividends to
the Company. Each of these covenants are subject
to important and substantial exceptions. In
addition, under certain circumstances, the
Company is required to offer to purchase the
Notes with the Net Proceeds (as defined) of
certain Asset Sales (as defined) at a price equal
to 100% of the principal amount (or Accreted
Value, as applicable) plus accrued and unpaid
interest thereon, if any, to the date of
purchase.
For additional information regarding the Notes, see "Description of Exchange
Notes."
RISK FACTORS
For a discussion of certain factors that should be considered in connection
with an investment in the Notes, see "Risk Factors."
11
<PAGE>
SUMMARY HISTORICAL FINANCIAL DATA
The following table setting forth summary historical financial data of the
Company as of and for the years ended December 31, 1994, 1995, 1996 and 1997
has been derived from, and is qualified by reference to, the audited financial
statements of the Company included elsewhere in this Prospectus. The historical
financial data as of and for the year ended December 31, 1993, as of March 31,
1998, and for the three months ended March 31, 1997 and 1998 has been derived
from unaudited financial statements of the Company. The financial statements
for periods ending on or prior to December 31, 1996 are the combined financial
statements of SBA, Inc. and Leasing (the "Predecessor Companies"), which were
acquired by SBACC during the first quarter of 1997 in connection with the
Company's exchange of shares of its Class B Common Stock for all of the issued
and outstanding shares of capital stock of the Predecessor Companies (the
"Corporate Reorganization"). The unaudited financial data have been prepared on
the same basis as the audited financial statements and, in the opinion of
management, include all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the information included therein. The
information set forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements and related notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
---------------------------------------------- ------------------
1993 1994 1995 1996 1997 1997 1998
----------- ------- ------- ------- ------- -------- --------
(UNAUDITED) (DOLLARS IN THOUSANDS)(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues:
Site development reve-
nue.................. $6,109 $10,604 $22,700 $60,276 $48,241 $ 12,457 $ 12,531
Site leasing revenue.. 125 896 2,758 4,530 6,759 1,558 2,159
------ ------- ------- ------- ------- -------- --------
Total revenues.......... 6,234 11,500 25,458 64,806 55,000 14,015 14,690
Cost of revenues
(exclusive of
depreciation shown
below):
Cost of site develop-
ment revenue......... 4,928 7,358 13,993 39,822 31,470 8,094 9,003
Cost of site leasing
revenue.............. 77 647 2,121 3,638 5,356 1,272 1,507
------ ------- ------- ------- ------- -------- --------
Total cost of revenues.. 5,005 8,005 16,114 43,460 36,826 9,366 10,510
------ ------- ------- ------- ------- -------- --------
Gross profit............ 1,229 3,495 9,344 21,346 18,174 4,649 4,180
------ ------- ------- ------- ------- -------- --------
General and administra-
tive(1)................ 1,133 1,541 5,731 17,991 8,402 1,543 3,564
Sales and marketing(2).. -- 86 237 697 2,697 778 365
Depreciation and amorti-
zation................. 5 5 73 160 514 41 507
------ ------- ------- ------- ------- -------- --------
Operating income (loss). 91 1,863 3,303 2,498 6,561 2,287 (256)
Interest (income)....... (1) (2) (6) (7) (644) (59) (764)
Interest expense........ 9 19 11 139 407 36 1,880
------ ------- ------- ------- ------- -------- --------
Income (loss) before in-
come taxes............. 83 1,846 3,298 2,366 6,798 2,310 (1,372)
Provision for income
taxes(2)............... 33 738 1,319 946 5,596 3,523 86
------ ------- ------- ------- ------- -------- --------
Net income (loss)....... $ 50 $ 1,108 $ 1,979 $ 1,420 $ 1,202 $ (1,213) $ (1,458)
====== ======= ======= ======= ======= ======== ========
OTHER DATA:
EBITDA(3)(6)............ $ 96 $ 1,868 $ 4,702 $15,512 $ 7,075 $ 2,328 $ 251
Annualized EBITDA(4).... 96 1,979 4,829 15,612 7,125 3,057 4,770
Capital expenditures.... 14 51 660 145 16,292 92 11,070
Ratio of earnings to
fixed charges(5)....... 4.6x 41.8x 33.8x 5.8x 4.1x 10.4x 0.3x
Net cash provided by
(used in) operating ac-
tivities............... -- 873 (533) 1,215 6,506 7,632 (7,503)
Net cash used in invest-
ing activities......... -- (51) (660) (145) (16,292) (92) (11,070)
Net cash provided by
(used in) financing ac-
tivities............... -- (689) 1,298 (1,036) 15,584 6,293 136,074
<CAPTION>
AS OF DECEMBER 31, AS OF MARCH 31,
---------------------------------------------- ------------------
1993 1994 1995 1996 1997 1998
----------- ------- ------- ------- ------- ------------------
(UNAUDITED) (DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT
END OF PERIOD):
Total assets............ $ 922 $ 2,610 $ 7,429 $18,060 $44,797 $183,282
Total debt(6)........... -- 1 1,500 4,921 10,184 151,740
Redeemable preferred
stock.................. -- -- -- -- 30,983 31,421
Common stockholders' eq-
uity (deficit)......... 265 1,745 4,793 102 (4,344) (6,240)
</TABLE>
(footnotes on following page)
12
<PAGE>
- --------
(1) For the year ended December 31, 1995, general and administrative expense
includes cash compensation expense of $1.3 million representing the amount
of officer compensation in excess of what would have been paid had the
officer employment agreements entered into in 1997 been in effect during
that period. For the year ended December 31, 1996, general and
administrative expense includes non-cash compensation expense of $7.9
million incurred in the Corporate Reorganization and cash compensation
expense of $4.9 million representing the amount of officer compensation in
excess of what would have been paid had the officer employment agreements
entered into in 1997 been in effect during that period. See "Certain
Transactions."
(2) Provision for income taxes represents a pro forma calculation (40%) for the
years ended December 31, 1993, 1994, 1995 and 1996, when the Company was
treated as an S Corporation under Subchapter S of the Code (as defined).
Provision for income taxes for the year ended December 31, 1997 and for the
three months ended March 31, 1997 and March 31, 1998 represents an actual
provision. The effective rate is in excess of the 40% rate used in the pro
forma calculations due to the tax effect of the conversion of the Company
to a C Corporation. See "Reorganization and Prior S Corporation Status."
(3) EBITDA represents earnings before interest income, interest expense, other
income, income taxes, depreciation and amortization and certain non-
recurring charges (as described below). EBITDA is commonly used in the
telecommunications industry to analyze companies on the basis of operating
performance, leverage and liquidity. EBITDA is not intended to represent
cash flows for the periods presented, nor has it been presented as an
alternative to operating income or as an indicator of operating performance
and should not be considered in isolation or as a substitute for measures
of performance prepared in accordance with generally accepted accounting
principles. Companies calculate EBITDA differently and, therefore, EBITDA
as presented for the Company may not be comparable to EBITDA reported by
other companies. See the Company's Consolidated Statements of Cash Flows in
the Company's Consolidated Financial Statements contained elsewhere in this
Prospectus. EBITDA for the years ended December 31, 1995 and 1996 excludes
cash compensation expense of $1.3 million and $4.9 million, respectively,
representing the amounts of officer compensation in excess of what would
have been paid had the officer employment agreements entered into in 1997
been in effect during such periods. Additionally, EBITDA for the year ended
December 31, 1996 also excludes the effect of non-cash compensation expense
of $7.9 million incurred in the Corporate Reorganization.
(4) Annualized EBITDA for the years ended December 31, 1993, 1994, 1995, 1996
and 1997 and for the three months ended March 31, 1997 and 1998 is defined
as the sum of (i) EBITDA for the most recent calendar quarter attributable
to the Company's site leasing business multiplied by four and (ii) EBITDA,
less all site leasing EBITDA for the most recent four calendar quarters.
For the purpose of calculating Annualized EBITDA, selling general and
administrative expenses not specifically allocable to the site leasing
business are allocated between the Company's site leasing EBITDA and site
development EBITDA on a pro rata basis based on the revenues generated by
each of such businesses. Annualized EBITDA is presented as additional
information because management believes it to be a useful indicator of the
Company's ability to meet debt service and capital expenditure requirements
and because it is expected that certain debt covenants of the Company will
utilize Annualized EBITDA to measure compliance with such covenants. It is
not, however, intended as an alternative measure of operating results or
cash flow from operations (as determined in accordance with generally
accepted accounting principles). Annualized EBITDA as presented herein is
equivalent to Adjusted Consolidated Cash Flow, as such term is defined in
the Indenture. Tower cash flow, as presented herein and as defined in the
Indenture, is the equivalent of site leasing EBITDA. Tower cash flow, which
requires an allocation of the Company's total operating expenses to its
site leasing business, for the fiscal quarter ended March 31, 1997 was
($256,000).
(5) For purposes of computing the ratio of earnings to fixed charges, earnings
represent net income before income taxes and fixed charges. Fixed charges
consist of interest expense, the component of rental expense believed by
management to be representative of the interest factor thereon,
amortization of deferred financing costs and preferred stock dividends.
(6) Total debt does not include amounts owed to the stockholder of $0.1 million
and $10.7 million as of December 31, 1995 and 1996, respectively. These
amounts were paid in March 1997.
13
<PAGE>
SUMMARY UNAUDITED PRO FORMA FINANCIAL DATA
The following table presents summary unaudited pro forma financial data of
the Company for the year ended December 31, 1997. The pro forma summary
operating data for the year ended December 31, 1997 give effect to the CSSI
Acquisition, the Private Offering and the application of a portion of the net
proceeds from the Private Offering to repay outstanding indebtedness
(collectively, the "Transactions") as if each had occurred at the beginning of
the period presented. The pro forma summary of operating data for the three
months ended March 31, 1998 gives effect to the Private Offering as if it had
occurred at the beginning of the period presented. The information set forth
below should be read in conjunction with "Unaudited Pro Forma Condensed
Consolidated Financial Statements", "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Consolidated Financial
Statements and related notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DECEMBER 31, 1997 ENDED
(DOLLARS IN THOUSANDS) MARCH 31, 1998
---------------------- --------------
<S> <C> <C>
OPERATING DATA:
Revenues:
Site development revenue.............. $ 53,246 $12,531
Site leasing revenue.................. 6,953 2,159
-------- -------
Total revenues.......................... 60,199 14,690
Cost of revenues (exclusive of deprecia-
tion shown below)
Cost of site development revenue...... 35,324 9,003
Cost of site leasing revenue.......... 5,396 1,507
-------- -------
Total cost of revenues.................. 40,720 10,510
-------- -------
Gross profit............................ 19,479 4,180
General and administrative.............. 9,186 3,564
Sales and marketing..................... 2,700 365
Depreciation and amortization........... 1,072 507
-------- -------
Operating income........................ 6,521 (256)
Interest expense, net................... 18,486 4,215
-------- -------
Loss before income taxes................ (11,965) (4,471)
Provision for income taxes(1)........... 5,579 48
-------- -------
Net loss................................ $(17,544) $(4,519)
======== =======
OTHER DATA:
EBITDA(2)............................... $ 7,593 $ 251
Annualized EBITDA(3).................... 8,105 5,828
Capital expenditures.................... 16,292 16,292
Ratio of earnings to fixed charges(4)... .4x .1x
Net cash used in operating activities... (11,730) (10,507)
Net cash used in investing activities... (16,292) (11,070)
Net cash provided by financing activi-
ties................................... 151,322 139,078
</TABLE>
- --------
(1) Provision for income taxes for the year ended December 31, 1997 represents
an actual provision. The effective rate is in excess of the 40% rate used
in the pro forma calculations due to the tax effect of the conversion of
the Company to a C Corporation. See "Reorganization and Prior S Corporation
Status."
(2) EBITDA represents earnings before interest income, interest expense, other
income, income taxes, depreciation and amortization and certain non-
recurring charges. EBITDA is commonly used in the telecommunications
industry to analyze companies on the basis of operating performance,
leverage and liquidity. EBITDA is not intended to represent cash flows for
the periods presented, nor has it been presented as an alternative to
operating income or as an indicator of operating performance and should not
be considered in
(footnotes continue on following page)
14
<PAGE>
isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles. Companies
calculate EBITDA differently and, therefore, EBITDA as presented for the
Company may not be comparable to EBITDA reported by other companies. See the
Company's Consolidated Statements of Cash Flows in the Company's
Consolidated Financial Statements contained elsewhere in this Prospectus.
(3) Annualized EBITDA for the year ended December 31, 1997 is defined as the
sum of (i) EBITDA for the most recent calendar quarter attributable to the
Company's site leasing business multiplied by four and (ii) EBITDA, less
all site leasing EBITDA for the most recent four calendar quarters. For
the purpose of calculating Annualized EBITDA, selling general and
administrative expenses not specifically allocated to the site leasing
business are allocated between the Company's site leasing EBITDA and site
development EBITDA on a pro rata basis based on the revenues generated by
each of such businesses. Annualized EBITDA is presented as additional
information because management believes it to be a useful indicator of the
Company's ability to meet debt service and capital expenditure
requirements and because it is expected that certain debt covenants of the
Company will utilize Annualized EBITDA to measure compliance with such
covenants. It is not, however, intended as an alternative measure of
operating results or cash flow from operations (as determined in
accordance with generally accepted accounting principles). Annualized
EBITDA as presented herein is equivalent to Adjusted Consolidated Cash
Flow, as such term is defined in the Indenture.
(4) For purposes of computing the pro forma ratio of earnings to fixed
charges, pro forma earnings represent, pro forma net income before income
taxes and pro forma fixed charges. Pro forma fixed charges consist of pro
forma interest expense, the component of rental expense believed by
management to be representative of the interest factor thereon,
amortization of deferred financing costs and preferred stock dividends.
Pro forma earnings would have been insufficient to cover fixed charges by
$12.9 million for the year ended December 31, 1997 and by $5.4 million for
the three months ended March 31, 1998.
15
<PAGE>
RISK FACTORS
This Prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and 21E of the Exchange Act. Although the
Company believes that its plans, intentions and expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
plans, intentions or expectations will be achieved. Important factors that
could cause actual results to differ materially from the Company's forward-
looking statements are set forth below and elsewhere in this Prospectus. All
forward-looking statements attributable to the Company or persons acting on
its behalf are expressly qualified in their entirety by the cautionary
statements set forth below.
FAILURE TO EXCHANGE PRIVATE NOTES
Exchange Notes will be issued in exchange for Private Notes only after
timely receipt by the Exchange Agent of such Private Notes, a properly
completed and duly executed Letter of Transmittal and all other required
documentation. Therefore, holders of Private Notes desiring to tender such
Private Notes in exchange for Exchange Notes should allow sufficient time to
ensure timely delivery. Neither the Exchange Agent nor the Company is under
any duty to give notification of defects or irregularities with respect to
tenders of Private Notes for exchange. Private Notes that are not tendered or
are tendered but not accepted will, following consummation of the Exchange
Offer, continue to be subject to the existing restrictions upon transfer
thereof. In addition, any holder of Private Notes who tenders in the Exchange
Offer for the purpose of participating in a distribution of the Exchange Notes
will be required to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Private Notes, where such Private Notes were acquired by such
broker-dealer as a result of market-making activities or any other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. To the extent that Private Notes are
tendered and accepted in the Exchange Offer, the trading market for untendered
and tendered but unaccepted Private Notes could be adversely affected due to
the limited amount, or "float," of the Private Notes that are expected to
remain outstanding following the Exchange Offer. Generally, a lower "float" of
a security could result in less demand to purchase such security and could,
therefore, result in lower prices for such security. For the same reason, to
the extent that a large amount of Private Notes are not tendered or are
tendered and not accepted in the Exchange offer, the trading market for the
Exchange Notes could be adversely affected. See "Plan of Distribution" and
"The Exchange Offer."
TRANSITION TO TOWER OWNERSHIP; EXPECTED DECLINE IN SITE DEVELOPMENT REVENUES
The Company's growth strategy depends on its ability to successfully
transition from its site development business to the site leasing business.
Substantially all of the Company's revenues have historically come from the
site development business, and the Company expects to leverage its experience
and relationships in the site development business to build its site leasing
business. The construction and acquisition by the Company of towers are key
elements to this growth strategy. The success of the Company's site leasing
business will depend on its ability to construct and acquire towers and
profitably manage the leasing of antennae sites on those towers. In
particular, the profitability of the Company's site leasing business will
depend on the ability to secure additional tenants following initial tower
construction or acquisition. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Tower Economics." The Company
has only limited experience in owning towers, and there can be no assurance
that it will be successful in acquiring or constructing towers or securing
additional tenants.
In addition, the Company believes that wireless service providers have begun
to move away from the traditional build-out formula whereby such providers
contract for site development services for a fee and invest the capital
necessary to build and own their own network of communication towers. The
Company believes that build-to-suit programs, whereby wireless service
providers outsource tower ownership and lease antennae sites on independently-
owned towers, is rapidly becoming the preferred method of wireless network
expansion. As a result, the Company has begun to experience a decline in its
site development revenues in fiscal 1997, and the
16
<PAGE>
Company expects a further decline in its site development revenues in fiscal
1998. The Company does not expect that revenues recognized from its site
development business will return to the level experienced in fiscal 1996. The
Company expects that its site development business will decline in the near
term and this rate of decline will increase for the foreseeable future as its
customers move toward build-to-suit programs and other outsourcing
alternatives while moving away from wireless service provider-funded site
development and ownership. In addition, the Company anticipates that its
operating expenses will increase significantly as the Company implements its
strategy of acquiring tower assets. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
The Company's success in the site leasing business will depend to a large
extent on management's expectations and assumptions concerning future demand
for independently-owned communication sites and numerous other factors, many
of which are beyond the Company's control. Any material error in any of these
expectations or assumptions, as well as the Company's ability to bid for and
manage the substantial number of projects for which it currently has mandates,
could have a material adverse effect on the Company's prospects, financial
condition or results of operations.
VARIABILITY IN QUARTERLY AND ANNUAL PERFORMANCE
Demand for the Company's site development services fluctuates from period to
period and within periods. These fluctuations are caused by a number of
factors, including the timing of customers' capital expenditures, the number
and significance of active customer engagements during a quarter, delays
incurred in connection with a project, employee hiring, consultant utilization
and the rate and volume of wireless service providers' tower build-outs. While
such demand fluctuates, the Company incurs certain fixed costs, such as
maintaining a staff and office space in anticipation of future contracts, even
when there may be no current business. The timing of revenues is difficult to
forecast as the Company's sales cycle can be relatively long and may depend on
factors such as the size and scope of assignments, budgetary cycles and
pressures and general economic conditions. Seasonal factors, such as vacation
days and total business days in a quarter, and the business practices of
customers, such as deferring commitments on new projects until after the end
of the calendar year or the customers' fiscal year, may add to the variability
of revenues and could therefore have a material adverse effect on the
Company's prospects, financial condition or results of operations.
Consequently, the operating results of the Company's site development business
for any particular period may vary significantly, and should not be considered
as necessarily being indicative of longer-term results.
RISKS ASSOCIATED WITH CONSTRUCTION AND ACQUISITION OF TOWERS
The Company's growth strategy depends on its ability to construct, acquire
and operate towers in conjunction with the expansion by wireless service
providers of their tower network infrastructure. The Company's ability to
construct new towers can be affected by a number of factors beyond its
control, including zoning and local permitting requirements, FAA
considerations, availability of tower components and construction equipment,
skilled construction personnel and bad weather conditions. In addition, as the
concern over tower proliferation has grown in recent years, certain
communities have placed restrictions on new tower construction or have delayed
granting permits required for construction. There can be no assurance (i) of
the number of mandates that the Company will be awarded or the number of
mandates that will result in towers; (ii) that the Company will be able to
overcome regulatory or other barriers to new construction; (iii) that the
number of towers planned for construction will be completed in accordance with
the requirements of the Company's customers; or (iv) that there will be a
significant need for the construction of new towers once the wireless service
providers complete their tower network infrastructure build-out. Certain of
the Company's anchor tenant leases contain penalty or forfeiture provisions in
the event the towers are not completed within specified time periods.
With respect to the acquisition of towers, the Company competes with certain
wireless service providers, broadcasters, site developers and other
independent tower owners and operators for acquisitions of towers, and expects
such competition to increase. Increased competition for acquisitions may
result in fewer acquisition opportunities for the Company, as well as higher
acquisition prices. The Company regularly explores acquisition
17
<PAGE>
opportunities, and the Company is currently actively negotiating to acquire
additional towers, although no agreements with respect to any such
acquisitions have been reached other than with respect to 74 towers (as of
June 30, 1998) that the Company intends on acquiring in the near term. There
can be no assurance that the Company will be able to identify towers or tower
companies to acquire in the future.
The Company currently estimates that it will make at least $175.0 million of
capital expenditures through June 1999 for the construction and acquisition of
communication sites, primarily towers. Based on the Company's current
operations and anticipated revenue growth, management believes that, if its
business strategy is successful, cash flow from operations and available cash
(including the proceeds from the Private Offering), together with anticipated
borrowings under the Credit Facility, will be sufficient to fund the Company's
anticipated capital expenditures through June 30, 1999. Thereafter, however,
or in the event the Company exceeds its currently anticipated capital
expenditures by June 30, 1999, the Company anticipates that it will need to
seek additional equity or debt financing to fund its business plan. The
availability of additional financing cannot be assured and depending on the
terms of proposed acquisitions and financing, could be restricted by the terms
of the Credit Facility and the Indenture. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
No assurance can be given that the Company will be able to identify, finance
and complete future acquisitions on acceptable terms or that the Company will
be able to manage profitably and market available space on its towers. The
extent to which the Company is unable to construct or acquire additional
towers, or manage profitably such tower operations, may have a material
adverse effect on the Company's prospects, financial condition or results of
operations.
In addition, the timeframe for the current wireless build-out cycle may be
limited to the next few years, and many PCS networks have already been built
out in large markets. A failure by the Company to move quickly and
aggressively to obtain growth capital and capitalize on this infrastructure
opportunity could have a material adverse effect on the Company's prospects,
financial condition or results of operations with respect to both site
development services and site leasing.
Implementation of the Company's strategy to expand its site leasing business
may impose significant strains on the Company's management, operating systems
and financial resources. In addition, the Company anticipates that its
operating expenses will increase significantly as the Company implements its
strategy of acquiring tower assets. Failure by the Company to manage its
growth or unexpected difficulties encountered during expansion could have a
material adverse effect on the Company's prospects, financial condition or
results of operations. The pursuit and integration of build-to-suit prospects,
acquisitions, investments, joint ventures and strategic alliances will require
substantial attention from the Company's senior management, which will limit
the amount of time available to devote to the Company's existing operations.
Future acquisitions by the Company could result in the incurrence of debt and
contingent liabilities and an increase in amortization expenses related to
goodwill and other intangible assets, which could have a material adverse
effect upon the Company's prospects, financial condition or results of
operations.
DEPENDENCE ON DEMAND FOR WIRELESS COMMUNICATIONS; RISK ASSOCIATED WITH NEW
TECHNOLOGIES
Substantially all of the Company's customers to date have been providers of
wireless communications services and, therefore, the success of the Company is
dependent on the success of such providers of wireless communications
services. Demand for the Company's services is dependent on demand for
communication sites from wireless service providers, which, in turn, is
dependent on the demand for wireless services. Most types of wireless services
currently require ground-based network facilities, including communication
sites for transmission and reception. The extent to which wireless service
providers lease such communication sites depends on a number of factors beyond
the Company's control, including the level of demand for such wireless
services, the financial condition and access to capital of such providers, the
strategy of providers with respect to owning or leasing communication sites,
government licensing of broadcast rights, changes in telecommunications
regulations and general economic conditions. In addition, wireless service
providers frequently enter into roaming agreements with competitors allowing
each other to utilize one another's wireless communications facilities to
accommodate customers who are out of range of their home provider's services.
Such roaming
18
<PAGE>
agreements may be viewed by wireless service providers as a superior
alternative to leasing antennae space on communications sites owned by the
Company. The proliferation of such roaming agreements could have a material
adverse effect on the Company's prospects, financial condition or results of
operations.
The wireless communications industry has undergone significant growth in
recent years. A slowdown in the growth of, or reduction in, demand in a
particular wireless segment could adversely affect the demand for
communication sites. For example, the Company anticipates that a significant
amount of its revenues over the next several years will be generated from
providers in the PCS market and, as such, the Company will be subject to
downturns in PCS demand. Moreover, wireless service providers often operate
with substantial leverage, and financial problems for the Company's customers
could result in accounts receivable going uncollected, in the loss of a
customer and the associated lease revenue, or in a reduced ability of these
customers to finance expansion activities.
The emergence of new technologies could also have a negative impact on the
Company's operations. For example, the Federal Communications Commission (the
"FCC") has granted license applications for three low-earth orbiting satellite
systems that are intended to provide mobile voice and data services. Although
such systems are highly capital-intensive and technologically untested, mobile
satellite systems could compete with land-based wireless communications
systems, thereby reducing the demand for the infrastructure services provided
by the Company. The occurrence of any of these factors could have a material
adverse effect on the Company's prospects, financial condition or results of
operations.
COMPETITION
The Company competes for site leasing tenants with (i) wireless service
providers that own and operate their own tower footprints and lease, or may in
the future decide to lease, antennae space to other providers, (ii) site
development companies which acquire antennae space on existing towers for
wireless service providers, manage new tower construction and provide site
development services, (iii) other independent tower companies and (iv)
traditional local independent tower operators. Wireless service providers that
own and operate their own tower footprints generally are substantially larger
and have greater financial resources than the Company. The Company believes
that tower location and capacity, price, quality of service and density within
a geographic market historically have been and will continue to be the most
significant competitive factors affecting the site leasing business.
While the Company believes it is currently the largest provider of site
development services to the wireless communications industry in the United
States, numerous companies have entered and continue to enter into the
business. In addition, many of these are local companies that market their
services based on knowledge of the community. There can be no assurance that
the Company will maintain its current position and the Company is subject to
numerous risks as a result of competition.
The Company competes for acquisition and new tower construction
opportunities primarily with site developers and other independent tower
companies. The Company believes that competition for tower acquisitions and
new tower construction opportunities will increase and that additional
competitors will enter the tower market. Some of these additional competitors
have or are expected to have greater financial resources than the Company.
NO ASSURANCE THAT MANDATES WILL YIELD BINDING AGREEMENTS
As of June 30, 1998, the Company had non-binding mandates to build up to
approximately 410 towers under build-to-suit programs. Although the Company
believes that the majority of these non-binding mandates will result in long-
term anchor leases for specific communication towers, there are a number of
steps that need to occur before any such leases are executed. These steps
include, in some cases, finalization of build-out plans by the customers who
have awarded the mandates, completion of due diligence by the Company and its
customers and finalization of other definitive
19
<PAGE>
documents between the parties. As a result, there can be no assurance as to
the percentage of current and future non-binding mandates that will ultimately
result in binding anchor tenant leases and constructed towers.
NEED TO ATTRACT, RETAIN AND MANAGE PROFESSIONAL STAFF
The Company's business involves the delivery of professional services and is
labor-intensive. The Company's success depends in large part upon its ability
to attract, develop, motivate and retain skilled employees. There is
significant competition for employees with the skills required to perform the
services offered by the Company from other wireless communications firms and
other enterprises. There can be no assurance that the Company will be able to
attract and retain a sufficient number of highly-skilled employees in the
future or that it will continue to be successful in training, retaining and
motivating employees. The loss of a significant number of employees and/or the
Company's inability to hire a sufficient number of qualified employees could
have a material adverse effect on the Company's prospects, financial condition
or results of operations.
CUSTOMER CONCENTRATION
The Company derives a significant portion of its revenues from a small
number of customers. For example, during 1996 and 1997, the Company's five
largest customers accounted for approximately 93.7% and 85.9%, respectively,
of the Company's revenues from site development services. Four of the five
largest customers in 1996 were also among the Company's five largest customers
for the year ended December 31, 1997. Sprint PCS, the Company's largest
customer for the years ended December 31, 1997 and 1996, accounted for 53.6%
and 57.4%, respectively, of the Company's revenues from site development
services during this period. Other large customers include Pacific Bell Mobile
Systems, which accounted for 14.0% and 20.2% of the Company's revenues from
site development services for the years ended December 31, 1997 and 1996,
respectively, and AT&T Wireless, which accounted for 12.5% of the Company's
revenues from site development services for the year ended December 31, 1996.
Customers engage the Company on a project-by-project basis, and a customer can
generally terminate an assignment at any time without penalty. In addition, a
customer's need for site development services can decrease, and there can be
no assurance that the Company will be successful in establishing relationships
with new clients. Moreover, there can be no assurance that the Company's
existing customers will continue to engage the Company for additional
projects, and the Company has experienced and expects to continue to
experience a decline in overall demand for its site development services. The
loss of any significant customer could have a material adverse effect on the
Company's prospects, financial condition or results of operations.
MANAGEMENT OF GROWTH
The Company's revenues for the year ended December 31, 1997 increased $29.5
million, or 116%, from revenues for the 1995 fiscal year. From January 1, 1995
to December 31, 1997, the work force of the Company increased from 82 to 365
employees. This growth has placed, and will likely continue to place a
substantial strain on the Company's administrative, operational and financial
resources. The Company's executive officers have had no experience in managing
companies as large as the Company. In addition, as part of its business
strategy, the Company may acquire complementary businesses or expand into new
businesses. There can be no assurance that the Company will be able to manage
its growth successfully, or that its management, personnel or operational and
financial control systems will be adequate to support expanded operations. Any
such inabilities or inadequacies would have a material adverse effect on the
Company's prospects, financial condition or results of operations.
DISCRETIONARY USE OF FUNDS
The Company intends to use the remaining proceeds of the Private Offering to
build and acquire additional communications sites and, if attractive
opportunities become available, to acquire other companies that own towers, as
well as for general corporate and working capital purposes. The Company cannot
predict in which, if any, of its existing or future opportunities it will
ultimately invest. While the Company currently expects to use the remaining
proceeds of the Private Offering as set forth above, if the Company's plans
change, the Company would use any remaining cash to fund other development
projects and or acquisitions and for general corporate and working capital
purposes. See "Use of Proceeds."
20
<PAGE>
PROJECT RISKS
Most of the Company's site development services and build-to-suit programs
involve projects which are critical to the operations of its customers'
businesses and which provide benefits that may be difficult to quantify. The
Company's failure to meet customer expectations in the performance of its
services could damage the Company's reputation and adversely affect its
ability to attract new business. In addition, the Company could incur
substantial costs and expend significant resources correcting errors in its
work and could become liable for damages caused by such errors. When the
Company bids on contracts where the pricing is fixed, the Company could incur
losses with regard to such projects if the expenditures associated with such
projects exceed the Company's estimate in making its bid pursuant to that
contract.
REGULATORY COMPLIANCE AND APPROVAL
The Company is subject to a variety of regulations, including those at the
federal, state and local level. Both the FCC and the FAA regulate towers and
other sites used for wireless communications transmitters and receivers. Such
regulations control siting and marking of towers and may, depending on the
characteristics of the tower, require registration of tower facilities.
Wireless communications devices operating on towers are separately regulated
and independently licensed based upon the regulation of the particular
frequency used. All proposals to construct new communication sites or to
modify existing communication sites are reviewed by both the FCC and the FAA
to ensure that a site will not present a hazard to aviation. Owners of towers
may have an obligation to paint them or install lighting to conform to FCC and
FAA standards and to maintain such painting or lighting. Tower owners may also
bear the responsibility for notifying the FAA of any tower lighting failures.
The Company generally indemnifies its customers against any failure to comply
with applicable standards. Failure to comply with applicable requirements may
lead to civil penalties.
Local regulations include city or other local ordinances, zoning
restrictions and restrictive covenants imposed by community developers. These
regulations vary greatly, but typically require tower owners to obtain
approval from local officials or community standards organizations prior to
tower construction. Local regulations can delay or prevent new tower
construction or site upgrade projects, thereby limiting the Company's ability
to respond to customers' demands. In addition, such regulations increase the
costs associated with new tower construction. There can be no assurance that
existing regulatory policies will not adversely affect the timing or cost of
new tower construction or that additional regulations will not be adopted
which increase such delays or result in additional costs to the Company. Such
factors could have a material adverse effect on the Company's prospects,
financial condition or results of operations and on the Company's ability to
implement and/or achieve its business objectives in the future.
The Company's customers may also become subject to new regulations or
regulatory policies which adversely affect the demand for communication sites.
In addition, if the Company pursues international opportunities, it will be
subject to regulation in foreign jurisdictions.
TITLE TO REAL PROPERTY
The Company's real property interests relating to its towers consist of fee
interests, leasehold interests, private easements and licenses and easements
and rights-of-way granted by governmental entities. With respect to acquired
towers, the Company generally obtains title insurance on most fee and leased
properties and relies on title warranties from sellers with respect to other
acquired properties. The Company's ability to protect its rights against
persons claiming superior rights in towers depends on the Company's ability to
(i) recover under title policies, the policy limits of which may be less than
the purchase price of a particular tower; (ii) in the absence of title
insurance coverage, realize on title warranties given by tower sellers, which
warranties often terminate after the expiration of a specific period
(typically one to three years); and (iii) realize on title covenants from
landlords contained in lease agreements.
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ENVIRONMENTAL MATTERS
The Company's operations are subject to federal, state and local
environmental laws and regulations regarding the use, storage, disposal,
emission, release and remediation of hazardous and nonhazardous substances,
materials or wastes ("Environmental Laws"). Under certain Environmental Laws,
the Company could be held strictly, jointly and severally liable for the
remediation of hazardous substance contamination at its facilities or at
third-party waste disposal sites, and could also be held liable for any
personal or property damage related to such contamination. Although the
Company believes that it is in substantial compliance with and has no material
liability under all applicable Environmental Laws, there can be no assurance
that the costs of compliance with existing or future Environmental Laws and
liability related thereto will not have a material adverse effect on the
Company's prospects, financial condition or results of operations. See
"Business--Regulatory and Environmental Matters."
RISKS ASSOCIATED WITH DAMAGE TO TOWERS
The Company's towers are subject to risks associated with natural disasters
such as tornadoes, hurricanes and earthquakes. The Company maintains insurance
to cover the estimated cost of replacing damaged towers (subject to certain
caps). The Company also maintains third party liability insurance to protect
the Company in the event of an accident involving a tower. A tower accident
for which the Company is uninsured or underinsured, or damage to a tower or
group of towers, could have a material adverse effect on the Company's
prospects, financial condition or results of operations.
PERCEIVED HEALTH RISKS ASSOCIATED WITH RADIO FREQUENCY EMISSIONS
The Company and the wireless service providers that utilize the Company's
towers are subject to government requirements and other guidelines relating to
radio frequency ("RF") emissions. The potential connection between RF
emissions and certain negative health effects, including some forms of cancer,
has been the subject of substantial study by the scientific community in
recent years. To date, the results of these studies have been inconclusive.
Although the Company has not been subject to any claims relating to RF
emissions, there can be no assurance that it will not be subject to such
claims.
CONTROL OF THE COMPANY BY EXECUTIVE MANAGEMENT
Steven E. Bernstein, President and Chief Executive Officer of the Company,
by virtue of his ownership of 100% of the outstanding shares of Class B Common
Stock, and Ronald G. Bizick, II, Executive Vice President-Sales, as of June
30, 1998, control 50.3% of all votes on a primary basis and 49.8% of all votes
on a fully diluted basis. As a result, executive management has the ability to
elect three out of five of the Company's directors and the ability to control
the outcome of all matters determined by a vote of the Company's common
stockholders. See "--Dependence on Key Personnel" and "Management."
DEPENDENCE ON KEY PERSONNEL
The Company's success depends to a significant extent upon the continued
services of Steven E. Bernstein, its President and Chief Executive Officer,
Ronald G. Bizick, II, its Executive Vice President-Sales and Marketing, Robert
M. Grobstein, its Chief Financial Officer, Michael N. Simkin, its Chief
Operating Officer and Jeffrey A. Stoops, its Senior Vice President-Corporate
Development and General Counsel. Messrs. Bizick, Grobstein, Simkin and Stoops
have employment agreements. The Company does not have an employment agreement
with Steven E. Bernstein, its President and Chief Executive Officer. Mr.
Bernstein's compensation and other terms of employment will be determined by
the Board of Directors. For further information, see "Management." Although
the Company maintains key person life insurance on Mr. Bernstein, such
insurance would not adequately compensate for the loss of the services of Mr.
Bernstein. The loss of the services of Messrs. Bernstein, Bizick, Grobstein,
Simkin, Stoops or other key managers or employees, could have a material
adverse effect upon the Company's prospects, financial condition or results of
operations.
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SUBSTANTIAL LEVERAGE; RESTRICTIONS IMPOSED BY THE TERMS OF THE COMPANY'S
INDEBTEDNESS
The Company is highly leveraged. As of March 31, 1998, the Company had total
consolidated indebtedness of approximately $151.7 million, total redeemable
preferred stock of $31.4 million and total stockholders' deficit of $6.2
million. After giving pro forma effect to the Private Offering, excluding the
CSSI Acquisition, the Company's pro forma earnings would have been inadequate
to service its pro forma fixed charges by $12.9 million for the year ended
December 31, 1997. The Company expects that its earnings will continue to be
inadequate to service its pro forma fixed charges at least through fiscal
1998. The Company and its subsidiaries will be permitted to incur substantial
additional indebtedness in the future, including under the $55.0 million
Credit Facility. See "Description of Credit Facility" and "Description of
Exchange Notes."
The degree to which the Company is leveraged could have important
consequences to holders of the Exchange Notes, including, but not limited to:
(i) making it more difficult for the Company to satisfy its obligations with
respect to the Notes, (ii) increasing the Company's vulnerability to general
adverse economic and industry conditions, (iii) limiting the Company's ability
to obtain additional financing to fund its growth strategy, future working
capital, capital expenditures and other general corporate requirements, (iv)
requiring the dedication of a substantial portion of the Company's cash flow
from operations to the payment of principal of, and interest on, its
indebtedness, thereby reducing the availability of such cash flow to fund its
growth strategy, working capital, capital expenditures or other general
corporate purposes, (v) limiting the Company's flexibility in planning for, or
reacting to, changes in its business and the industry, and (vi) placing the
Company at a competitive disadvantage vis-a-vis less leveraged competitors. In
addition, the degree to which the Company is leveraged could prevent it from
repurchasing any Notes tendered to it upon the occurrence of a Change of
Control. See "Description of Credit Facility."
The Company's ability to make scheduled payments of principal of, or to pay
interest on, its debt obligations, and its ability to refinance any such debt
obligations (including the Notes), or to fund planned capital expenditures,
will depend on its future performance, which, to a certain extent, is subject
to general economic, financial, competitive, legislative, regulatory and other
factors that are beyond its control. The Company's business strategy
contemplates substantial capital expenditures in connection with its planned
tower buildout and acquisitions. Based on the Company's current operations and
anticipated revenue growth, management believes that, if its business strategy
is successful, cash flow from operations and available cash (including the
proceeds from the Private Offering), together with anticipated borrowings
under the Credit Facility, will be sufficient to fund the Company's
anticipated capital expenditures through June 30, 1999. Thereafter, however,
or in the event the Company exceeds its currently anticipated capital
expenditures by June 30, 1999, the Company anticipates that it will need to
seek additional equity or debt financing to fund its business plan. Failure to
obtain any such financing could require the Company to significantly reduce
its planned capital expenditures, scale back the scope of its tower buildout
or acquisitions and/or delay its transition to tower ownership, any of which
could have a material adverse effect on the Company's prospects, financial
condition or results of operations. In addition, the Company may need to
refinance all or a portion of its indebtedness (including the Notes and/or the
New Credit Facility) on or prior to its scheduled maturity. There can be no
assurance that the Company will generate sufficient cash flow from operations
in the future, that anticipated revenue growth will be realized or that future
borrowings or equity contributions will be available in amounts sufficient to
service its indebtedness and make anticipated capital expenditures. In
addition, there can be no assurance that the Company will be able to effect
any required refinancings of its indebtedness (including the Notes) on
commercially reasonable terms or at all. See "--Holding Company Structure;
Restrictions on Access to Cash Flow of Subsidiaries" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
The Indenture and the Credit Facility contain numerous restrictive
covenants, including but not limited to covenants that restrict the Company's
ability to incur indebtedness, pay dividends, create liens, sell assets and
engage in certain mergers and acquisitions. In addition, the Credit Facility
requires subsidiaries of the Company to maintain certain financial ratios.
Restrictions on the ability of the Company to incur additional indebtedness
may be waived, however, with the consent of the holders of a majority in
principal amount of the Notes outstanding. The Indenture also allows the
Company to designate current or future subsidiaries as Unrestricted
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Subsidiaries. The ability of the Company to comply with the covenants and
other terms of the Credit Facility and the Indenture and to satisfy its
respective debt obligations (including, without limitation, borrowings and
other obligations under the Credit Facility) will depend on the future
operating performance of the Company. In the event the Company fails to comply
with the various covenants contained in the Credit Facility or the Indenture,
as applicable, it would be in default thereunder, and in any such case, the
maturity of substantially all of its long-term indebtedness could be
accelerated. A default under the Indenture would also constitute an event of
default under the Credit Facility. See "Description of Credit Facility" and
"Description of Exchange Notes."
HOLDING COMPANY STRUCTURE; EFFECTIVE SUBORDINATION; RESTRICTIONS ON ACCESS TO
CASH FLOW OF SUBSIDIARIES
SBACC is a holding company with no business operations of its own. SBACC's
only significant asset is and will be the outstanding capital stock of its
subsidiaries. SBACC conducts, and will conduct, all of its business operations
through its subsidiaries. Accordingly, SBACC's only source of cash to pay
interest on and principal of the Notes is distributions with respect to its
ownership interest in its subsidiaries from the net earnings and cash flow
generated by such subsidiaries. Although the Notes do not require cash
interest payments until September 1, 2003, at such time the Notes will have
accreted to $269.0 million and will require annual cash interest payments of
$32.3 million. In addition, the Notes mature on March 1, 2008. SBACC currently
expects that the earnings and cash flow of its subsidiaries will be retained
and used by such subsidiaries in their operations, including to service their
respective debt obligations. Even if SBACC determined to pay a dividend on or
make a distribution in respect of the capital stock of its subsidiaries, there
can be no assurance that SBACC's subsidiaries will generate sufficient cash
flow to pay such a dividend or distribute such funds to SBACC or that
applicable state law and contractual restrictions, including negative
covenants contained in the debt instruments of such subsidiaries, will permit
such dividends or distributions. The Notes are not guaranteed by SBACC's
subsidiaries. As a result, all indebtedness, including trade payables, of such
subsidiaries, including borrowings under the Credit Facility, are structurally
senior to the Notes. As of March 31, 1998, SBACC's subsidiaries (on a pro
forma basis) had no borrowing availability under the Credit Facility, and $6.4
million of liabilities outstanding, which would have been structurally senior
in right of payment to the Notes. See "Capitalization" and "Description of
Credit Facility."
The Credit Facility, subject to certain limited exceptions, prohibits
dividends or other distributions by SBACC's subsidiaries to SBACC at any time
prior to September 1, 2003. Thereafter, the Credit Facility will permit
dividend payments by SBACC's subsidiaries to SBACC sufficient to pay the
interest on the Notes coming due in that year and thereafter but only if no
default or event of default then exists under certain covenants of the Credit
Facility or otherwise, as those covenants are then in effect. See "Description
of Credit Facility". In addition, SBACC's subsidiaries are permitted under the
terms of the Indenture to incur certain additional indebtedness that may
restrict or prohibit the making of distributions, the payment of dividends or
the making of loans by such subsidiaries to SBACC. Accordingly, SBACC does not
anticipate that it will receive any material distributions from its
subsidiaries prior to September 1, 2003 and there can be no assurance that
sufficient amounts will be available to service interest on the Notes that
becomes payable on a semiannual basis commencing in 2003. In the event of any
or all of SBACC's subsidiaries becoming subject to bankruptcy proceedings
prior to payment of the Notes neither the holders of Notes nor SBACC will be
expected to have claims in such proceedings. Only after such subsidiaries'
creditors are fully paid would any remaining value of such subsidiaries'
assets be available to SBACC or its creditors, including the holders of the
Notes. See "--Substantial Leverage; Restrictions Imposed by the Terms of the
Company's Indebtedness" and "Description of Credit Facility."
The Credit Facility permits distributions to SBACC in an amount sufficient
to pay scheduled interest payments on the Notes commencing in 2003, provided
that there is then no default or event of default outstanding under the Credit
Facility, including under the financial maintenance tests set forth in the
Credit Facility. While management believes that, assuming the Company is able
to meet its scheduled build out program as contemplated, it will be in
compliance with the covenants expected to be contained in the Credit Facility
and,
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therefore, able to make distributions to SBACC in amounts sufficient to pay
scheduled interest on the Notes, no assurances that such will be the case can
be given. If the Company is not able to make distributions to SBACC so that
SBACC can make payments on the Notes, SBACC and the Company will be required
to pursue other alternatives which may include refinancing the Credit
Facility, seeking other sources of debt or equity capital (if available), or
other alternatives.
The Company currently anticipates that, in order to pay the principal of the
Notes or to redeem or repurchase the Notes upon a Change of Control, the
Company will be required to adopt one or more alternatives, such as
refinancing its indebtedness or selling its equity securities or the equity
securities or assets of its subsidiaries. There can be no assurance that any
of the foregoing actions could be effected on satisfactory terms, that any of
the foregoing actions would enable SBACC to pay the principal amount of the
Notes or that any of such actions would be permitted by the terms of the
Indenture or any other debt instruments of SBACC or SBACC's subsidiaries then
in effect. See "--Substantial Leverage; Restrictions Imposed by the Terms of
the Company's Indebtedness."
ORIGINAL ISSUE DISCOUNT; APPLICABLE HIGH YIELD DISCOUNT OBLIGATIONS
The Exchange Notes will bear interest at the same rate and on the same terms
as the Private Notes. Therefore, the Exchange Notes will be issued at a
substantial discount from their stated principal amount at maturity.
Consequently, although cash interest on the Exchange Notes generally will not
be payable prior to September 1, 2003, original issue discount ("OID") will be
includable in the gross income of a holder of the Exchange Notes for U.S.
federal income tax purposes in advance of the receipt of such cash payments on
the Exchange Notes. See "Certain United States Federal Income Tax
Considerations" for a more detailed discussion of the U.S. federal income tax
consequences of the purchase, ownership and disposition of the Exchange Notes.
If a bankruptcy case is commenced by or against the Company under the U.S.
Bankruptcy Code after the issuance of the Exchange Notes, the claim of a
holder of Exchange Notes with respect to the principal amount thereof would
likely be limited to an amount equal to the sum of (i) the initial offering
price and (ii) that portion of the OID that is not deemed to constitute
"unmatured interest" for purposes of the U.S. Bankruptcy Code. Any OID that
was not accrued as of any such bankruptcy filing would constitute "unmatured
interest."
If the Exchange Notes provide initial holders with a yield to maturity which
exceeds the Treasury-based interest rate in effect for the month of their
issuance plus five percentage points, then OID with respect to the Exchange
Notes will not be deductible by the Company until paid. In the event that such
yield to maturity equals or exceeds such interest rate plus six percentage
points, then a portion of such OID will not be deductible by the Company on a
permanent basis.
REPURCHASE OF THE NOTES UPON A CHANGE OF CONTROL
Upon a Change of Control, the holders of the Notes have the right to require
the Company to repurchase such holders' Notes, in whole or in part, at a price
equal to 101% of the Accreted Value thereof to the date of purchase prior to
March 1, 2003 or 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase on or after March 1, 2003. If a
Change of Control were to occur, the Company may not have the financial
resources to repurchase all of the Notes and repay any other indebtedness that
would become payable upon the occurrence of such Change of Control. The Change
of Control purchase feature of the Notes may in certain circumstances
discourage or make more difficult a sale or takeover of the Company. See
"Description of Exchange Notes--Repurchase at the Option of Holders--Change of
Control."
ABSENCE OF PUBLIC MARKET; RESTRICTIONS ON TRANSFER
As of the date hereof, the only registered holder of Private Notes is Cede &
Co., as the nominee of DTC. The Company believes that, as of the date hereof,
such holder is not an "affiliate" (as such term is defined in Rule 405 under
the Securities Act) of the Company. Prior to the Private Offering, there had
been no market for
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the Notes and there can be no assurance that such a market will develop or, of
such a market develops, as to the liquidity of such market. The Exchange Notes
will not be listed on any securities exchange, but the Private Notes are
eligible for trading in the National Association of Securities Dealers, Inc.'s
Private Offering, Resales and Trading through Automatic Linkages (PORTAL)
market. The Exchange Notes are new securities for which there is currently no
market. The Exchange Notes may trade at a discount from their initial offering
price, depending upon prevailing interest rates, the market for similar
securities, the performance of the Company and other factors. The Company has
been advised by the Initial Purchasers that they intend to make a market in
the Exchange Notes, as well as the Private Notes, as permitted by applicable
laws and regulations; however, the Initial Purchasers are not obligated to do
so and any such market making activities may be discontinued at any time
without notice. In addition, such market making activities may be limited
during the Exchange Offer and the pendency of the Shelf Registration Statement
(as defined in the Registration Rights Agreement). Therefore, there can be no
assurance that an active market for the Notes will develop. See "The Exchange
Offer" and "Plan of Distribution."
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THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Private Notes were sold by the Company on March 2, 1998 (the "Closing
Date") to the Initial Purchasers pursuant to the Purchase Agreement. The
Initial Purchasers subsequently sold the Private Notes to "qualified
institutional buyers" ("QIBs"), as defined in Rule 144A under the Securities
Act ("Rule 144A"), in reliance on Rule 144A. As a condition to the sale of the
Private Notes, the Company and the Initial Purchaser entered into the
Registration Rights Agreement on March 2, 1998. Pursuant to the Registration
Rights Agreement, the Company agreed that, unless the Exchange Offer is not
permitted by applicable law or Commission policy, it would (i) file with the
Commission a Registration Statement under the Securities Act with respect to
the Exchange Notes within 60 days after the Closing Date, (ii) use its best
efforts to cause such Registration Statement to become effective under the
Securities Act within 150 days after the Closing Date and (iii) use its best
efforts to consummate the Exchange Offer within 30 days after the date on
which the Registration Statement was declared effective by the Commission. A
copy of the Registration Rights Agreement has been filed as an exhibit to the
Registration Statement. The Registration Statement is intended to satisfy
certain of the Company's obligations under the Registration Rights Agreement
and the Purchase Agreement.
RESALE OF THE EXCHANGE NOTES
With respect to the Exchange Notes, based upon an interpretation by the
staff of the Commission set forth in certain no-action letters issued to third
parties, the Company believes that a holder (other than (i) a broker-dealer
who purchases such Exchange Notes directly from the Company to resell pursuant
to Rule 144A or any other available exemption under the Securities Act or (ii)
any such holder that is an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act) who exchanges Private Notes for Exchange
Notes in the ordinary course of business and who is not participating, does
not intend to participate, and has no arrangement with any person to
participate, in a distribution of the Exchange Notes, will be allowed to
resell Exchange Notes to the public without further registration under the
Securities Act and without delivering to the purchasers of the Exchange Notes
a prospectus that satisfies the requirements of Section 10 of the Securities
Act. See e.g. Exxon Capital Holdings Corp., SEC No-Action Letter (available
April 13, 1989) and Morgan Stanley & Co. Inc., SEC No-Action Letter (available
June 5, 1991). However, if any holder acquires Exchange Notes in the Exchange
Offer for the purpose of distributing or participating in the distribution of
the Exchange Notes or is a broker-dealer, such holder cannot rely on the
position of the staff of the Commission enumerated in certain no-action
letters issued to third parties and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction, unless an exemption from registration is otherwise
available. Each broker-dealer that receives Exchange Notes for its own account
in exchange for Private Notes, where such Private Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. The Letter of Transmittal states that
by so acknowledging and by delivering a prospectus, a broker-dealer will not
be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of
Exchange Notes received in exchange for Private Notes where such Private Notes
were acquired by such broker-dealer as a result of market-making or other
trading activities. Pursuant to the Registration Rights Agreement, the Company
has agreed to make this Prospectus, as it may be amended or supplemented from
time to time, available to broker-dealers for use in connection with any
resale for a period of 180 days after the Expiration Date. See "Plan of
Distribution."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Private
Notes validly tendered and not withdrawn prior to the Expiration Date. The
Company will issue $1,000 principal amount of Exchange Notes in exchange for
each $1,000 principal amount of outstanding Private Notes surrendered pursuant
to the Exchange Offer. Private Notes may be tendered only in integral
multiples of $1,000.
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The form and terms of the Exchange Notes are the same as the form and terms
of the Private Notes except that (i) the exchange will be registered under the
Securities Act and, therefore, the Exchange Notes will not bear legends
restricting the transfer thereof and (ii) holders of the Exchange Notes will
not be entitled to any of the rights of holders of Private Notes under the
Registration Rights Agreement, which rights will terminate upon the
consummation of the Exchange Offer. The Exchange Notes will evidence the same
indebtedness as the Private Notes (which they replace) and will be issued
under, and be entitled to the benefits of, the Indenture, which also
authorized the issuance of the Private Notes, such that both series of Notes
will be treated as a single class of debt securities under the Indenture.
As of the date of this Prospectus, $269,000,000 in aggregate principal
amount of the Private Notes are outstanding and registered in the name of Cede
& Co., as nominee for DTC. Only a registered holder of the Private Notes (or
such holder's legal representative or attorney-in-fact) as reflected on the
records of the Trustee under the Indenture may participate in the Exchange
Offer. There will be no fixed record date for determining registered holders
of the Private Notes entitled to participate in the Exchange Offer.
Holders of the Private Notes do not have any appraisal or dissenters' rights
under the Indenture in connection with the Exchange Offer. The Company intends
to conduct the Exchange Offer in accordance with the provisions of the
Registration Rights Agreement and the applicable requirements of the
Securities Act, the Exchange Act and the rules and regulations of the
Commission thereunder.
The Company shall be deemed to have accepted validly tendered Private Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
of Private Notes for the purposes of receiving the Exchange Notes from the
Company.
Holders who tender Private Notes in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Private
Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than certain applicable taxes described below, in connection
with the Exchange Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time on
, 1998, unless the Company, in its sole discretion, extends the Exchange
Offer, in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will (i) notify the
Exchange Agent of any extension by oral or written notice, (ii) mail to the
registered holders an announcement thereof and (iii) issue a press release or
other public announcement which shall include disclosure of the approximate
number of Private Notes deposited to date, each prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date. Without limiting the manner in which the Company may choose to make a
public announcement of any delay, extension, amendment or termination of the
Exchange Offer, the Company shall have no obligation to publish, advertise, or
otherwise communicate any such public announcement, other than by making a
timely release to an appropriate news agency.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Private Notes, (ii) to extend the Exchange Offer or (iii) if any
conditions set forth below under "--Conditions" shall not have been satisfied,
to terminate the Exchange Offer by giving oral or written notice of such
delay, extension or termination to the Exchange Agent. Any such delay in
acceptance, extension, termination or amendment will be followed as promptly
as practicable by oral or written notice thereof to the registered holders. If
the Exchange Offer is amended in a manner determined by the Company to
constitute a material change, the Company will promptly disclose such
amendment by means of a prospectus supplement that will be distributed to the
registered holders, and the Company will extend the Exchange Offer for a
period of five to ten business days, depending upon the significance of the
amendment and the manner of disclosure to the registered holders, if the
Exchange Offer would otherwise expire during such five to ten business day
period.
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INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will bear interest at the same rate and on the same terms
as the Private Notes. Consequently, the Exchange Notes will be issued at a
substantial discount to their principal amount at maturity. The Exchange Notes
will accrete in value from and including the date of issuance of the Private
Notes (March 2, 1998) until March 1, 2003 at which time they will have an
aggregate principal amount of $269.0 million. Thereafter, cash interest will
accrue on the Exchange Notes and will be payable semiannually in arrears on
March 1 and September 1, commencing September 1, 2003, at a rate of 12% per
annum. Holders whose Private Notes are accepted for exchange will be deemed to
have waived the right to receive any interest accrued on the Private Notes.
PROCEDURES FOR TENDERING
Only a registered holder of Private Notes may tender such Private Notes in
the Exchange Offer. To tender in the Exchange Offer, a holder of Private Notes
must complete, sign and date the Letter of Transmittal, or a facsimile
thereof, have the signatures thereon guaranteed if required by the Letter of
Transmittal, and mail or otherwise deliver such Letter of Transmittal or such
facsimile to the Exchange Agent at the address set forth below under "--
Exchange Agent" for receipt prior to the Expiration Date. In addition, either
(i) certificates for such Private Notes must be received by the Exchange Agent
along with the Letter of Transmittal, (ii) a timely confirmation of a book-
entry transfer (a "Book-Entry Confirmation") of such Private Notes, if such
procedure is available, into the Exchange Agent's account at the Depository
pursuant to the procedure for book-entry transfer described below, must be
received by the Exchange Agent prior to the Expiration Date or (iii) the
holder must comply with the guaranteed delivery procedures described below.
The tender by a holder that is not withdrawn prior to the Expiration Date
will constitute an agreement between such holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the
Letter of Transmittal.
THE METHOD OF DELIVERY OF PRIVATE NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR PRIVATE NOTES SHOULD
BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS
FOR SUCH HOLDERS.
Any beneficial owner(s) of the Private Notes whose Private Notes are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee and who wishes to tender should contact the registered holder
promptly and instruct such registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes to tender on such owner's own
behalf, such owner must, prior to completing and executing the Letter of
Transmittal and delivering such owner's Private Notes, either make appropriate
arrangements to register ownership of the Private Notes in such owner's name
or obtain a properly completed bond power from the registered holder. The
transfer of registered ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal described
below (see "--Withdrawal of Tenders"), as the case may be, must be guaranteed
by an Eligible Institution (as defined below) unless the Private Notes
tendered pursuant thereto are tendered (i) by a registered holder who has not
completed the box titled "Special Delivery Instructions" on the Letter of
Transmittal or (ii) for the account of an Eligible Institution. In the event
that signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, are required to be guaranteed, such guarantee must be made by a
member firm of a registered national securities exchange or of the National
Association of Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States or an "eligible
guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange
Act which is a member of one of the recognized signature guarantee programs
identified in the Letter of Transmittal (an "Eligible Institution").
29
<PAGE>
If the Letter of Transmittal is signed by a person other than the registered
holder of any Private Notes listed therein, such Private Notes must be
endorsed or accompanied by a properly completed bond power, signed by such
registered holder as such registered holder's name appears on such Private
Notes.
If the Letter of Transmittal or any Private Notes or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and unless waived by the
Company, evidence satisfactory to the Company of their authority to so act
must be submitted with the Letter of Transmittal.
The Exchange Agent and the Depository have confirmed that any financial
institution that is a participant in the Depository's system may utilize the
Depository's Automated Tender Offer Program to tender Private Notes.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Private Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and
all Private Notes not properly tendered or any Private Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Private Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Private Notes must be cured within such time as the
Company shall determine. Although the Company intends to notify holders of
defects or irregularities with respect to tenders of Private Notes, neither
the Company, the Exchange Agent nor any other person shall incur any liability
for failure to give such notification. Tenders of Private Notes will not be
deemed to have been made until such defects or irregularities have been cured
or waived.
While the Company has no present plan to acquire any Private Notes that are
not tendered in the Exchange Offer or to file a registration statement to
permit resales of any Private Notes that are not tendered pursuant to the
Exchange Offer, the Company reserves the right in its sole discretion to
purchase or make offers for any Private Notes that remain outstanding
subsequent to the Expiration Date or, as set forth below under "--Conditions,"
to terminate the Exchange Offer and, to the extent permitted by applicable
law, purchase Private Notes in the open market, in privately negotiated
transactions or otherwise. The terms of any such purchases or offers could
differ from the terms of the Exchange Offer.
By tendering, each holder of Private Notes will represent to the Company
that, among other things, (i) Exchange Notes to be acquired by such holder of
Private Notes in connection with the Exchange Offer are being acquired by such
holder in the ordinary course of business of such holder, (ii) such holder has
no arrangement or understanding with any person to participate in the
distribution of the Exchange Notes, (iii) if such Holder is a resident of the
State of California, it falls under the self-executing institutional investor
exemption set forth under Section 25102(i) of the Corporate Securities Law of
1968 and Rules 260.102.10 and 260.105.14 of the California Blue Sky
Regulations, (iv) if such Holder is a resident of the Commonwealth of
Pennsylvania, it falls under the self-executing institutional investor
exemption set forth under Sections 203(c), 102(d) and (k) of the Pennsylvania
Securities Act of 1972, Section 102.111 of the Pennsylvania Blue Sky
Regulations and an interpretive opinion dated November 16, 1985, (v) such
holder acknowledges and agrees that any person who is a broker-dealer
registered under the Exchange Act or is participating in the Exchange Offer
for the purposes of distributing the Exchange Notes must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction of the Exchange Notes acquired
by such person and cannot rely on the position of the staff of the Commission
set forth in certain no-action letters, (vi) such holder understands that a
secondary resale transaction described in clause (v) above and any resales of
Exchange Notes obtained by such holder in exchange for Private Notes acquired
by such holder directly from the Company should be covered by an effective
registration statement containing the selling securityholder information
required by Item 507 or Item 508, as applicable, of Regulation S-K of the
Commission and (vii) such holder is not an "affiliate," as defined in Rule 405
under the Securities Act, of the Company. If the holder is a broker-dealer
that will receive Exchange Notes for such holder's own account in exchange for
Private Notes that were
30
<PAGE>
acquired as a result of market-making activities or other trading activities,
such holder will be required to acknowledge in the Letter of Transmittal that
such holder will deliver a prospectus in connection with any resale of such
Exchange Notes; however, by so acknowledging and by delivering a prospectus,
such holder will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
RETURN OF PRIVATE NOTES
If any tendered Private Notes are not accepted for any reason set forth in
the terms and conditions of the Exchange Offer or if Private Notes are
withdrawn or are submitted for a greater principal amount than the holders
desire to exchange, such unaccepted, withdrawn or non-exchanged Private Notes
will be returned without expense to the tendering holder thereof (or, in the
case of Private Notes tendered by book-entry transfer into the Exchange
Agent's account at the Depository pursuant to the book-entry transfer
procedures described below, such Private Notes will be credited to an account
maintained with the Depository) as promptly as practicable.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Private Notes at the Depository for purposes of the Exchange Offer
within two business days after the date of this Prospectus, and any financial
institution that is a participant in the Depository's systems may make book-
entry delivery of Private Notes by causing the Depository to transfer such
Private Notes into the Exchange Agent's account at the Depository in
accordance with the Depository's procedures for transfer. However, although
delivery of Private Notes may be effected through book-entry transfer at the
Depository, the Letter of Transmittal or facsimile thereof, with any required
signature guarantees and any other required documents, must, in any case, be
transmitted to and received by the Exchange Agent at the address set forth
below under "--Exchange Agent" on or prior to the Expiration Date or pursuant
to the guaranteed delivery procedures described below.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Private Notes and (i) whose Private Notes
are not immediately available or (ii) who cannot deliver their Private Notes,
the Letter of Transmittal or any other required documents to the Exchange
Agent prior to the Expiration Date, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by the Company (by
facsimile transmission, mail or hand delivery) setting forth the name and
address of the holder, the certificate number(s) of such Private Notes and
the principal amount of Private Notes tendered, stating that the tender is
being made thereby and guaranteeing that, within five New York Stock
Exchange trading days after the Expiration Date, the Letter of Transmittal
(or a facsimile thereof), together with the certificate(s) representing the
Private Notes in proper form for transfer or a Book-Entry Confirmation, as
the case may be, and any other documents required by the Letter of
Transmittal, will be deposited by the Eligible Institution with the
Exchange Agent; and
(c) Such properly executed Letter of Transmittal (or facsimile thereof),
as well as the certificate(s) representing all tendered Private Notes in
proper form for transfer and all other documents required by the Letter of
Transmittal are received by the Exchange Agent within five New York Stock
Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Private Notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Private Notes may be
withdrawn at any time prior to the Expiration Date.
31
<PAGE>
To withdraw a tender of Private Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to the Expiration Date. Any such
notice of withdrawal must (i) specify the name of the person having deposited
the Private Notes to be withdrawn (the "Depositor"), (ii) identify the Private
Notes to be withdrawn (including the certificate number or numbers and
principal amount of such Private Notes) and (iii) be signed by the holder in
the same manner as the original signature on the Letter of Transmittal by
which such Private Notes were tendered (including any required signature
guarantees). All questions as to the validity, form and eligibility (including
time of receipt) of such notices will be determined by the Company in its sole
discretion, whose determination shall be final and binding on all parties. Any
Private Notes so withdrawn will be deemed not to have been validly tendered
for purposes of the Exchange Offer and no Exchange Notes will be issued with
respect thereto unless the Private Notes so withdrawn are validly retendered.
Properly withdrawn Private Notes may be retendered by following one of the
procedures described above under "The Exchange Offer-Procedures for Tendering"
at any time prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange the Exchange Notes for, any
Private Notes, and may terminate the Exchange Offer as provided herein before
the acceptance of such Private Notes, if the Exchange Offer violates
applicable law, rules or regulations or an applicable interpretation of the
staff of the Commission.
If the Company determines in its sole discretion that any of these
conditions are not satisfied, the Company may (i) refuse to accept any Private
Notes and return all tendered Private Notes to the tendering holders, (ii)
extend the Exchange Offer and retain all Private Notes tendered prior to the
expiration of the Exchange Offer, subject, however, to the rights of holders
to withdraw such Private Notes (see "--Withdrawal of Tenders") or (iii) waive
such unsatisfied conditions with respect to the Exchange Offer and accept all
properly tendered Private Notes that have not been withdrawn. If such waiver
constitutes a material change to the Exchange Offer, the Company will promptly
disclose such waiver by means of a prospectus supplement that will be
distributed to the registered holders of the Private Notes, and the Company
will extend the Exchange Offer for a period of five to ten business days,
depending upon the significance of the waiver and the manner of disclosure to
the registered holders, if the Exchange Offer would otherwise expire during
such five to ten business day period.
TERMINATION OF CERTAIN RIGHTS
All rights under the Registration Rights Agreement (including registration
rights) of holders of the Private Notes eligible to participate in the
Exchange Offer will terminate upon consummation of the Exchange Offer except
with respect to the Company's continuing obligations (i) to indemnify such
holders (including any broker-dealers) and certain parties related to such
holders against certain liabilities (including liabilities under the
Securities Act), (ii) to provide, upon the request of any holder of a
transfer-restricted Private Note, the information required by Rule 144A(d)(4)
under the Securities Act in order to permit resales of such Private Notes
pursuant to Rule 144A, (iii) to use its best efforts to keep the Registration
Statement effective to the extent necessary to ensure that it is available for
resales of transfer-restricted Private Notes by broker-dealers for a period of
up to 180 days from the Expiration Date and (iv) to provide copies of the
latest version of the Prospectus to broker-dealers upon their request for a
period of up to 180 days after the Expiration Date.
ADDITIONAL INTEREST
In the event of a registration default, the Company is required to pay as
liquidated damages, Additional Interest (as defined in the Registration Rights
Agreement) to each holder of Transfer Restricted Securities (as defined
below), during the first 90-day period immediately following the occurrence of
such registration default in an amount equal to $0.05 per week per $1,000
Accreted Value of Private Notes constituting Transfer Restricted Securities
held by such holder. Such Additional Interest rate will increase by an
additional $0.05 per week at the beginning of each subsequent 90-day period
during which the registration default continues. Transfer
32
<PAGE>
Restricted Securities shall mean each Private Note until (i) the date on which
such Private Note has been exchanged for an Exchange Note in the Exchange
Offer, (ii) the date on which such Private Note has been effectively
registered under the Securities Act and disposed of in accordance with the
Shelf Registration Statement (as defined in the Registration Rights Agreement)
or (iii) the date on which such Private Note is distributed to the public
pursuant to Rule 144(k) under the Securities Act. The amount of the Additional
Interest will increase by an additional $0.05 per week per $1,000 Accreted
Value of Private Notes constituting Transfer Restricted Securities for each
subsequent 90-day period until all registration defaults have been cured, up
to a maximum Additional Interest of $0.50 per week per $1,000 Accreted Value
of Private Notes constituting Transfer Restricted Securities. Following the
cure of all Registration Defaults, the payment of Additional Interest will
cease. The filing and effectiveness of the Registration Statement of which
this Prospectus is a part and the consummation of the Exchange Offer will
eliminate all rights of the holders of Private Notes eligible to participate
in the Exchange Offer to receive damages that would have been payable if such
actions had not occurred.
EXCHANGE AGENT
State Street Bank and Trust Company has been appointed as Exchange Agent of
the Exchange Offer. Questions and requests for assistance, requests for
additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notice of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:
By Registered or Certified Mail: By Hand Delivery:
State Street Bank and Trust Company State Street Bank and Trust Company
Two International Place Two International Place
Boston, MA 02110 Boston, MA 02110
Attention: Corporate Trust Attention: Corporate Trust
Fourth Floor Fourth Floor
By Overnight Delivery: By Facsimile:
State Street Bank and Trust Company (617) 664 5371
Two International Place
Boston, MA 02110 Confirm by Telephone:
Attention: Corporate Trust
Fourth Floor (617) 664 5602
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection
therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company and are estimated in the aggregate to be approximately
$150,000. Such expenses include registration fees, fees and expenses of the
Exchange Agent and the Trustee, accounting and legal fees and printing costs,
among others.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Private Notes pursuant to the Exchange Offer. If, however, a transfer tax
is imposed for any reason other than the exchange of the Private Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons) will be
payable by the tendering holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted with the Letter of Transmittal,
the amount of such transfer taxes will be billed directly to such tendering
holder.
33
<PAGE>
CONSEQUENCE OF FAILURES TO EXCHANGE
Participation in the Exchange Offer is voluntary. Holders of the Private
Notes are urged to consult their financial and tax advisors in making their
own decisions on what action to take.
The Private Notes that are not exchanged for the Exchange Notes pursuant to
the Exchange Offer will remain restricted securities. Accordingly, such
Private Notes may be offered, resold, pledged or otherwise transferred only
(1) to a person who the seller reasonably believes is a QIB in a transaction
meeting the requirements of Rule 144A, in a transaction meeting the
requirements of Rule 144 under the Securities Act, outside the United States
to a foreign person in a transaction meeting the requirements of Rule 904
under the Securities Act, or in accordance with another exemption from the
registration requirements of the Securities Act (and based upon an opinion of
counsel if the Company so requests), (2) to the Company or (3) pursuant to an
effective registration statement, and, in each case, in accordance with any
applicable securities laws of any State of the United States or any other
applicable jurisdiction.
ACCOUNTING TREATMENT
For accounting purposes, the Company will recognize no gain or loss as a
result of the Exchange Offer. The expenses of the Exchange Offer will be
amortized over the term of the Exchange Notes.
34
<PAGE>
USE OF PROCEEDS
The Company will not receive proceeds from the Exchange Offer. The net
proceeds to the Company from the Private Offering were approximately $144.5
million after deducting the Initial Purchasers' discounts and estimated
transaction fees and expenses payable by the Company.
The remaining net proceeds raised by the Company in the Private Offering
will be used, together with borrowings under the Credit Facility, for the
construction and acquisition of towers and for general corporate purposes,
including working capital. The Company expects that the remaining net proceeds
from the Private Offering, together with borrowings anticipated to be
available under the Credit Facility, will be sufficient to meet its capital
needs through June 30, 1999. However, if acquisition or other opportunities
present themselves more rapidly than management currently anticipates, the
Company may be required to seek additional sources of debt or equity capital
prior to June 30, 1999 or to scale back the scope of its tower buildout or
acquisitions. The Company regularly evaluates acquisition opportunities and
engages in negotiations with respect to acquisitions of individual tower
sites, groups of tower sites and entities that own or manage communication
towers and related businesses. In addition, the Company is currently actively
negotiating to acquire additional towers, although no agreements with respect
to any such acquisitions have been reached other than with respect to the
towers described under the caption "Recent Events." There can be no assurance
that the Company will be able to identify towers or tower companies to acquire
in the future. See "Risk Factors--Discretionary Use of Funds."
REORGANIZATION AND PRIOR S CORPORATION STATUS
Prior to 1997, the business currently conducted by the Company was conducted
by the Predecessor Companies. Effective January 1, 1997 (the "Effective
Date"), in connection with the private placement of shares of its 4% Series A
Convertible Preferred Stock (the "Series A Preferred Stock") which was
consummated on March 7, 1997 (the "Preferred Stock Offering"), the Company
issued its shares of Class B Common Stock for all of the issued and
outstanding shares of capital stock of the Predecessor Companies.
Until the Effective Date, the Predecessor Companies elected to be treated as
S Corporations under Subchapter S of the Internal Revenue Code of 1986, as
amended ("the Code") and comparable state tax laws. As a result, until the
Effective Date the earnings of the Predecessor Companies were attributable,
with certain exceptions, for federal and certain state income tax purposes to
their existing stockholder rather than to the Predecessor Companies.
35
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the Company
as of December 31, 1997 on an historical basis and as adjusted for the Private
Offering. This table should be read in conjunction with the Historical
Financial Statements of the Company included elsewhere in this Prospectus and
the related Notes thereto.
<TABLE>
<CAPTION>
DECEMBER 31, 1997
--------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
--------------------
<S> <C> <C>
Cash and cash equivalents.................................. $ 6,109 $150,646
======= ========
Long-term debt (less current maturities):
Credit Facility.......................................... $ -- $ --
12% Senior Discount Notes due 2008....................... -- 150,237
------- --------
Total long-term debt................................... -- 150,237
------- --------
Preferred stock............................................ 30,983 30,983
Stockholders' equity:
Class A Common Stock..................................... -- --
Class B Common Stock..................................... 81 81
Paid-in capital.......................................... -- --
Retained earnings........................................ (4,425) (4,425)
------- --------
Total stockholders' equity (deficit)................... (4,344) (4,344)
------- --------
Total capitalization................................. $26,639 $176,876
======= ========
</TABLE>
36
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial
statements (the "Pro Forma Financial Statements") are based on the historical
financial statements of SBA and the historical financial statements of CSSI
and SCGI during the periods presented, adjusted to give effect to the CSSI
Acquisition and the Private Offering.
The Unaudited Pro Forma Condensed Consolidated Statement of Operations for
the year ended December 31, 1997 gives effect to the CSSI and SCGI
Acquisitions and the Private Offering as if they had occurred as of January 1,
1997. The unaudited pro forma condensed consolidated statement of operations
for the three months ended March 31, 1998 gives effect to the Private Offering
as if it had occurred as of January 1, 1998. The pro forma adjustments are
described in the accompanying notes and are based upon available information
and certain assumptions that management believes are reasonable.
The Pro Forma Financial Statements do not purport to represent what SBA's
results of operations or financial condition would actually have been had the
CSSI Acquisition and the Private Offering in fact occurred on such dates or to
project SBA's results of operations or financial condition for any future date
or period. The Pro Forma Financial Statements should be read in conjunction
with the consolidated financial statements included elsewhere in this
Prospectus and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
The CSSI Acquisition is accounted for under the purchase method of
accounting. The total purchase price for the CSSI Acquisition has been
allocated to the identifiable tangible and intangible assets and liabilities
of the applicable acquired business based upon SBA's preliminary estimate of
their fair values with the remainder allocated to goodwill and other
intangible assets. The final purchase price and the related allocation of
total purchase price to acquired assets and liabilities is subject to revision
for contingent consideration of up to approximately $2,600,000 to be paid to
the seller in the event that certain tenant leasing goals are realized. As of
March 31, 1998 approximately $2,500,000 of contingent consideration has been
paid by the Company to the previous owner of CSSI. This amount has been
included as a component of the purchase price in the Unaudited Pro Forma
Condensed Consolidated Financial Statements for the year ended December 31,
1997.
37
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
SBA CSSI(1) SCGI(1) ADJUSTMENTS TOTAL
-------- ------- ------- ----------- --------
<S> <C> <C> <C> <C> <C>
Revenues:
Site development reve-
nue.................. $ 48,241 $ 5,005 $ -- $ -- $ 53,246
Site leasing revenue.. 6,759 -- 194 -- 6,953
-------- ------- ---- ------- --------
Total revenues...... 55,000 5,005 194 -- 60,199
Cost of revenues (exclu-
sive of depreciation
shown below):
Cost of site develop-
ment................. 31,470 3,936 -- (82)(2) 35,324
Cost of site leasing.. 5,356 -- 72 (32)(2) 5,396
-------- ------- ---- ------- --------
Total cost of reve-
nue................ 36,826 3,936 72 (114) 40,720
-------- ------- ---- ------- --------
Gross profit........ 18,174 1,069 122 114 19,479
Operating expenses:
General and adminis-
trative.............. 8,402 766 18 -- 9,186
Sales and marketing... 2,697 2 1 -- 2,700
Depreciation and amor-
tization............. 514 11 -- 547(2)(3) 1,072
-------- ------- ---- ------- --------
Total operating ex-
penses............. 11,613 779 19 547 12,958
-------- ------- ---- ------- --------
Operating income........ 6,561 290 103 (433) 6,521
Interest
expense/(income)..... (237) 16 41 18,666(4)(5)(6) 18,486
-------- ------- ---- ------- --------
Earnings (Loss) before
provision for income
taxes.................. 6,798 274 62 (19,099) (11,965)
Provision for income
taxes.................. 5,596 -- -- (17)(7) 5,579
-------- ------- ---- ------- --------
Net income (loss)... 1,202 274 62 (19,082) (17,544)
--------
Dividends on preferred
stock.................. 983 -- -- -- 983
-------- ------- ---- ------- --------
Net income (loss) to
common stockholders.... 219 274 62 (19,082) (18,527)
======== ======= ==== ======= ========
Other data:
EBITDA.................. 7,593(8)
========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of
Operations.
38
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
SBA ADJUSTMENTS TOTAL
-------- ----------- --------
<S> <C> <C> <C>
Revenues:
Site development revenue................ $ 12,531 $ -- $ 12,531
Site leasing revenue.................... 2,159 -- 2,159
-------- ------- --------
Total revenues........................ 14,690 -- 14,690
Cost of revenues (exclusive of deprecia-
tion shown below):
Cost of site development................ 9,003 -- 9,003
Cost of site leasing.................... 1,507 -- 1,507
-------- ------- --------
Total cost of revenue................. 10,510 -- 10,510
-------- ------- --------
Gross profit.......................... 4,180 -- 4,180
Operating expenses:
General and administrative.............. 3,564 -- 3,564
Sales and marketing..................... 365 -- 365
Depreciation and amortization........... 507 -- 507
-------- ------- --------
Total operating expenses.............. 4,436 -- 4,436
-------- ------- --------
Operating (loss).......................... (256) -- (256)
Interest expense/(income)............... 1,116 3,099(5)(6) 4,215
-------- ------- --------
Loss before provision for income taxes.... (1,372) (3,099) (4,471)
Provision for income taxes................ 86 (38) 48
-------- ------- --------
Net loss.............................. (1,458) (3,061) (4,519)
--------
Dividends on preferred stock.............. (438) -- (438)
-------- ------- --------
Net loss to common stockholders........... (1,896) 3,061 (4,957)
======== ======= ========
Other data:
EBITDA....................................
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of
Operations.
39
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(1) On September 18, 1997, the Company acquired certain assets, and assumed
certain liabilities of CSSI and SCGI in a business acquisition which was
accounted for using the purchase method. The accompanying unaudited pro
forma statements of operations for CSSI and SCGI reflect the results of
operations from January 1, 1997 to September 18, 1997. The results of
operations of CSSI and SCGI subsequent to September 18, 1997 are included
in the Company's results of operations.
(2) Reflects reclassification of depreciation for CSSI and SCGI previously
classified as "Cost of revenue."
(3) Reflects incremental amortization of goodwill acquired in connection with
the CSSI Acquisition and additional depreciation resulting from a step up
in basis of assets acquired. Goodwill is being amortized over 15 years.
(4) Reflects interest expense reduction as if the Notes had been issued
January 1, 1997 and the proceeds were used to retire outstanding debt.
(5) Reflects interest expense as if the Notes had been issued January 1, 1997
for the year ended December 31, 1997 and January 1, 1998 for the three
months ended March 31, 1998.
(6) Reflects amortization of deferred financing costs incurred in connection
with the Private Offering. Deferred financing costs are being amortized
over the ten-year term of the debt.
(7) Reflects a pro forma provision for taxes (at 40%) for the year ended
December 31, 1997, for CSSI and SCGI, when each company was an S
Corporation under Subchapter S of the Code (as defined) and the income tax
effect of the incremental amortization of goodwill and depreciation of
property and equipment as a result of the CSSI Acquisition. See
"Reorganization and Prior S Corporation Status." For the three months
ended March 31, 1998, the amount represents the pro forma income tax
effect of the incremental amortization of deferred financing costs
incurred in connection with the Private Offering.
(8) EBITDA represents earnings before interest income, interest expense, other
income, income taxes, depreciation and amortization. EBITDA is commonly
used in the telecommunications industry to analyze companies on the basis
of operating performance, leverage and liquidity. EBITDA is not intended
to represent cash flows for the periods presented, nor has it been
presented as an alternative to operating income or as an indicator of
operating performance and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
generally accepted accounting principles. Companies calculate EBITDA
differently and, therefore, EBITDA as presented for the Company may not be
comparable to EBITDA reported by other companies. See the Company's
Consolidated Statements of Cash Flows in the Company's Consolidated
Financial Statements contained elsewhere in this Prospectus.
40
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
The following table setting forth summary historical financial data of the
Company as of and for the years ended December 31, 1994, 1995, 1996 and 1997
has been derived from, and is qualified by reference to, the audited financial
statements of the Company included elsewhere in this Prospectus. The
historical financial data as of and for the year ended December 31, 1993, as
of March 31, 1998, and for the three months ended March 31, 1997 and 1998 has
been derived from unaudited financial statements of the Company. The financial
statements for periods ending on or prior to December 31, 1996 are the
combined financial statements of the Predecessor Companies, which were
acquired by SBACC during the first quarter of 1997 in connection with the
Corporate Reorganization. The unaudited financial data have been prepared on
the same basis as the audited financial statements and, in the opinion of
management, include all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the information included therein. The
information set forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements and related notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
---------------------------------------------- -----------------
1993 1994 1995 1996 1997 1997 1998
----------- ------- ------- ------- ------- ------- --------
(UNAUDITED) (DOLLARS IN THOUSANDS)(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues:
Site development reve-
nue.................. $6,109 $10,604 $22,700 $60,276 $48,241 $12,457 $ 12,531
Site leasing revenue.. 125 896 2,758 4,530 6,759 1,558 2,159
------ ------- ------- ------- ------- ------- --------
Total revenues.......... 6,234 11,500 25,458 64,806 55,000 14,015 14,690
Cost of revenues
(exclusive of
depreciation shown
below):
Cost of site develop-
ment revenue......... 4,928 7,358 13,993 39,822 31,470 8,094 9,003
Cost of site leasing
revenue.............. 77 647 2,121 3,638 5,356 1,272 1,507
------ ------- ------- ------- ------- ------- --------
Total cost of revenues.. 5,005 8,005 16,114 43,460 36,826 9,366 10,510
------ ------- ------- ------- ------- ------- --------
Gross profit............ 1,229 3,495 9,344 21,346 18,174 4,649 4,180
------ ------- ------- ------- ------- ------- --------
General and administra-
tive(1)................ 1,133 1,541 5,731 17,991 8,402 1,543 3,564
Sales and marketing(2).. -- 86 237 697 2,697 778 365
Depreciation and amorti-
zation................. 5 5 73 160 514 41 507
------ ------- ------- ------- ------- ------- --------
Operating income (loss). 91 1,863 3,303 2,498 6,561 2,287 (256)
Interest (income)....... (1) (2) (6) (7) (644) (59) (764)
Interest expense........ 9 19 11 139 407 36 1,880
------ ------- ------- ------- ------- ------- --------
Income (loss) before in-
come taxes............. 83 1,846 3,298 2,366 6,798 2,310 (1,372)
Provision for income
taxes(2)............... 33 738 1,319 946 5,596 3,523 86
------ ------- ------- ------- ------- ------- --------
Net income (loss)....... $ 50 $ 1,108 $ 1,979 $ 1,420 $ 1,202 $(1,213) $ (1,458)
====== ======= ======= ======= ======= ======= ========
OTHER DATA:
EBITDA(3)(6)............ $ 96 $ 1,868 $ 4,702 $15,512 $ 7,075 $ 2,328 $ 251
Annualized EBITDA(4).... 96 1,979 4,829 15,612 7,125 3,057 4,770
Capital expenditures.... 14 51 660 145 16,292 92 11,070
Ratio of earnings to
fixed charges(5)....... 4.6x 41.8x 33.8x 5.8x 4.1x 10.4x 0.3x
Net cash provided by
(used in) operating ac-
tivities............... -- 873 (533) 1,215 6,506 7,632 (7,503)
Net cash used in invest-
ing activities......... -- (51) (660) (145) (16,292) (92) (11,070)
Net cash provided by
(used in) financing ac-
tivities............... -- (689) 1,298 (1,036) 15,584 6,293 136,074
<CAPTION>
AS OF DECEMBER 31, AS OF MARCH 31,
---------------------------------------------- -----------------
1993 1994 1995 1996 1997 1998
----------- ------- ------- ------- ------- -----------------
(UNAUDITED) (DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT
END OF PERIOD):
Total assets............ $ 922 $ 2,610 $ 7,429 $18,060 $44,797 $183,282
Total debt(6)........... -- 1 1,500 4,921 10,184 151,740
Redeemable preferred
stock.................. -- -- -- -- 30,983 31,421
Common stockholders' eq-
uity (deficit)......... 265 1,745 4,793 102 (4,344) (6,240)
</TABLE>
(footnotes on following page)
41
<PAGE>
- --------
(1) For the year ended December 31, 1995, general and administrative expense
includes cash compensation expense of $1.3 million representing the amount
of officer compensation in excess of what would have been paid had the
officer employment agreements entered into in 1997 been in effect during
that period. For the year ended December 31, 1996, general and
administrative expense includes non-cash compensation expense of $7.9
million incurred in the Corporate Reorganization and cash compensation
expense of $4.9 million representing the amount of officer compensation in
excess of what would have been paid had the officer employment agreements
entered into in 1997 been in effect during that period. See "Certain
Transactions."
(2) Provision for income taxes represents a pro forma calculation (40%) for
the years ended December 31, 1993, 1994, 1995 and 1996, when the Company
was treated as an S Corporation under Subchapter S of the Code (as
defined). Provision for income taxes for the year ended December 31, 1997
and for the three months ended March 31, 1997 and March 31, 1998
represents an actual provision. The effective rate is in excess of the 40%
rate used in the pro forma calculations due to the tax effect of the
conversion of the Company to a C Corporation. See "Reorganization and
Prior S Corporation Status."
(3) EBITDA represents earnings before interest income, interest expense, other
income, income taxes, depreciation and amortization and certain non-
recurring charges (as described below). EBITDA is commonly used in the
telecommunications industry to analyze companies on the basis of operating
performance, leverage and liquidity. EBITDA is not intended to represent
cash flows for the periods presented, nor has it been presented as an
alternative to operating income or as an indicator of operating
performance and should not be considered in isolation or as a substitute
for measures of performance prepared in accordance with generally accepted
accounting principles. Companies calculate EBITDA differently and,
therefore, EBITDA as presented for the Company may not be comparable to
EBITDA reported by other companies. See the Company's Consolidated
Statements of Cash Flows in the Company's Consolidated Financial
Statements contained elsewhere in this Prospectus. EBITDA for the years
ended December 31, 1995 and 1996 excludes cash compensation expense of
$1.3 million and $4.9 million, respectively, representing the amounts of
officer compensation in excess of what would have been paid had the
officer employment agreements entered into in 1997 been in effect during
such periods. Additionally, EBITDA for the year ended December 31, 1996
also excludes the effect of non-cash compensation expense of $7.9 million
incurred in the Corporate Reorganization.
(4) Annualized EBITDA for the years ended December 31, 1993, 1994, 1995, 1996
and 1997 and for the three months ended March 31, 1997 and 1998 is defined
as the sum of (i) EBITDA for the most recent calendar quarter attributable
to the Company's site leasing business multiplied by four and (ii) EBITDA,
less all site leasing EBITDA for the most recent four calendar quarters.
For the purpose of calculating Annualized EBITDA, selling general and
administrative expenses not specifically allocable to the site leasing
business are allocated between the Company's site leasing EBITDA and site
development EBITDA on a pro rata basis based on the revenues generated by
each of such businesses. Annualized EBITDA is presented as additional
information because management believes it to be a useful indicator of the
Company's ability to meet debt service and capital expenditure
requirements and because it is expected that certain debt covenants of the
Company will utilize Annualized EBITDA to measure compliance with such
covenants. It is not, however, intended as an alternative measure of
operating results or cash flow from operations (as determined in
accordance with generally accepted accounting principles). Annualized
EBITDA as presented herein is equivalent to Adjusted Consolidated Cash
Flow, as such term is defined in the Indenture. Tower cash flow, as
presented herein and as defined in the Indenture, is the equivalent of
site leasing EBITDA. Tower cash flow, which requires an allocation of the
Company's total operating expenses to its site leasing business, for the
fiscal quarter ended March 31, 1997 was ($256,000).
(5) For purposes of computing the ratio of earnings to fixed charges, earnings
represent net income before income taxes and fixed charges. Fixed charges
consist of interest expense, the component of rental expense believed by
management to be representative of the interest factor thereon,
amortization of deferred financing costs and preferred stock dividends.
(6) Total debt does not include amounts owed to the stockholder of $0.1
million and $10.7 million as of December 31, 1995 and 1996, respectively.
These amounts were paid in March 1997.
42
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company is a leading independent provider of communication site services
to the wireless communications industry. The Company is transitioning its
revenue stream from project driven revenues to recurring revenues through the
leasing of antennae space at or on communications facilities. The Company's
strategy is to utilize its historical leadership position in the site
development business, a project revenue business, to become a leading owner
and operator of communication towers, a recurring revenue business.
While the Company intends to continue to offer site development services to
wireless carriers, where demand and profitable opportunities exist, it will
emphasize it site leasing business through the construction of Company-owned
towers pursuant to build-to-suit programs for lease to wireless service
providers, the acquisition of existing sites and the leasing, sub-leasing and
management of other antennae sites. Management believes that as the site
development industry matures, revenues and gross profit from that business
will decline in the near term and this rate of decline will increase for the
foreseeable future as wireless service providers choose to outsource ownership
of communication sites in order to conserve capital. Management also believes
that, over the longer term, site leasing revenues will correspondingly
increase as carriers move to outsourced tower ownership and the number of
towers owned by the Company grows.
As a result of these trends and shift in business, the Company expects that
revenue and earnings before interest, taxes, depreciation and amortization
("EBITDA") will decline over the short term and capital expenditures will
increase sharply as the Company accumulates towers. In addition, the Company
anticipates that its operating expenses will remain at or above current levels
as the Company continues to construct and acquire tower assets. As of June 30,
1998, SBACC had no Unrestricted Subsidiaries, as defined in the Indenture.
The Company also became a taxpayer commencing January 1, 1997 as a result of
the Corporate Reorganization, and will report federal income taxes on its
financial statements and be responsible for the payment thereof. Finally, as a
result of the March 1997 preferred stock offering and certain other matters,
the Company expects that its ongoing compensation expense will not include the
amounts of cash and non-cash compensation experienced in 1996 as (i) the
Company executed employment contracts with certain senior executives which
limit incentive bonuses to those individuals and (ii) the Company implemented
a stock option plan that does not permit the grant of options at an exercise
price below fair market value.
The Company's revenues are generated through contracts for site development
services and site leasing services. The Company provides site development
services on a contract basis which is usually customer and project specific.
The Company generally charges for site development services on either a time
and materials basis, with or without a success fee, or a fixed price basis.
For the year ended December 31, 1997, approximately 61% of site development
services were performed on a time and materials basis. For the year ended
December 31, 1996, the approximate percentage was 80%. The balance of services
were performed on a fixed fee basis. SBA also provides site leasing services
on a contract basis. The Company's antennae site leases are typically long-
term agreements with renewal periods. Leases are generally paid on a monthly
basis. Because of the low variable operating costs of the site leasing
business, additional tenants on a tower generate disproportionately larger
increases in tower cash flow.
The Company is in the process of acquiring and constructing towers to be
owned by the Company and leased to wireless services providers. The Company
intends to continue to make strategic acquisitions in the fragmented tower
owner and operator industry. The Company completed its first tower acquisition
in June 1997, and spent $16.3 million in capital expenditures in fiscal 1997
on the acquisition and construction of tower assets and the acquisition of a
tower construction company. Of the 212 towers owned by the Company as of June
30, 1998, 125 towers were constructed by the Company pursuant to build-to-suit
programs.
43
<PAGE>
As of June 30, the Company had non-binding mandates to build up to
approximately 410 additional towers under build-to-suit programs (the majority
of which the Company expects will result in binding anchor tenant lease
agreements). The Company believes it has one of the largest numbers of non-
binding build-to-suit mandates from wireless service providers in the
industry. In addition, the Company is currently actively negotiating to
acquire additional towers, although no agreements with respect to any such
acquisitions have been reached other than with respect to 74 towers (as of
June 30, 1998) that the Company intends on acquiring in the near term. There
can be no assurance that the Company will be able to identify towers or tower
companies to acquire in the future.
TOWER ECONOMICS
The Company intends to increase the site leasing portion of its business by
constructing new multi-tenant towers, primarily through build-to-suit programs
for wireless service providers, and by making selective acquisitions of
existing towers. The Company evaluates potential tower construction and
acquisition opportunities for projected future operating results before making
any capital investments.
The total cost of constructing a tower can vary significantly from site to
site. The primary components of tower costs are the tower structure and
related components, tower foundations, labor, site preparation and finish and
providing vehicular and utilities access. If the Company is responsible for
the zoning of a site prior to construction (which is often the case), the cost
associated with obtaining such zoning may also be material. The Company
estimates that the average cost of constructing a multi-tenant build-to-suit
tower is approximately $225,000 exclusive of land costs, although this
estimate may vary from site to site. While the Company may purchase the
underlying property, the Company typically leases any necessary real estate
pursuant to a long-term lease. The typical property lease has a term of five
years, with the Company having the option to renew the lease for up to four
additional five-year terms, and usually provides for annual or periodic price
increases.
As part of its build-to-suit strategy, the Company generally begins
construction of a new tower only if an anchor tenant (which is typically a
PCS, cellular or ESMR provider) has signed an antennae site lease agreement
with the Company. The tower site is marketed to other wireless service
providers whose monthly rents vary based usually on the different antennae
installations and tower loading requirements of each type of service. The
typical PCS, cellular or ESMR provider pays a monthly rent substantially
greater than that of the typical paging provider. Other tenants, including
local wireless service providers, generally pay lower monthly rent. Anchor
tenants usually receive a discount over subsequent tenants of the same type of
wireless service. In certain cases, an anchor tenant may also enjoy an
introductory lease rate for a period of time. The Company's objective is to
construct towers for identified anchor tenants in locations where it believes
it can secure other wireless providers as additional tenants. Through the
addition of new tenants, the Company seeks to achieve a target multiple of
tower-level cash flow to the cost of construction by the end of a specified
period following construction. The Company believes that its targeted
multiple, which it constantly evaluates and is subject to change from time to
time, can be achieved through a variety of tenant mixes ranging from two to
three PCS, cellular or ESMR tenants to a greater number of paging or local
wireless service providers. Additional tenants provide an increase in revenue
without generating significant increases in operating expense. The expenses
associated with tower ownership are limited and generally remain fixed
regardless of the number of tenants on the tower. These expenses are primarily
ground lease payments, real estate taxes, utilities, insurance and
maintenance. Because of the operating leverage of the site leasing business,
additional tenant leases generate a disproportionately higher increase in
tower cash flow.
Build-to-suit projects typically originate from a Company proposal submitted
in response to a request from a wireless service provider. If the wireless
service provider accepts the terms of the proposal submitted by the Company,
the provider will award the Company a non-binding mandate to pursue (i)
specific sites; (ii) search rings; or (iii) general areas. Based on the status
of the site the Company has been given a mandate to pursue, the Company will
perform due diligence investigations for a designated period (typically not to
exceed 30 days) during which time the Company will analyze the site based on a
number of factors, including collocation
44
<PAGE>
opportunities, zoning and permitting issues, economic potential of the site,
difficulty of constructing a multi-tenant tower and remoteness of the site.
These mandates are non-binding agreements and either party may terminate the
mandate at any time.
If the Company concludes that it is economically feasible to construct the
tower after the Company's due diligence investigation during the mandate, the
Company will enter into an antennae site lease agreement with the provider.
The antennae site lease agreements provide, among other terms, that all
obligations are conditioned on the Company receiving all necessary zoning
approvals where zoning remains to be obtained. Certain of the antennae site
lease agreements contain penalty or forfeiture provisions in the event the
tower is not completed within specified time periods. The Company has
negotiated several master build-to-suit agreements (including antennae site
lease terms) with wireless service providers in those markets where the
Company believes that such agreements would encourage wireless service
providers to award the Company with build-to-suit programs.
The Company also regularly explores tower acquisition opportunities as part
of its growth strategy. While the Company evaluates potential acquisitions on
an individual basis, the Company's acquisition criteria are similar to its
construction criteria. In general, the Company seeks to acquire towers with
existing revenues in locations where it believes it will be able to secure
other wireless service providers as tenants so that the tower will generate a
targeted multiple of tower-level cash flow by a certain time period after its
acquisition. Factors that the Company evaluates in making this determination
include the existing number of tenants, current revenue of the tower, tower
location, available tower capacity for additional tenants and the availability
and likelihood of securing additional tenants.
While the Company utilizes projections of future tower cash flows when
evaluating potential tower constructions or acquisitions, there can be no
assurance that the Company's projections will prove to be accurate nor can
there be any assurance the Company will be able to successfully market a tower
to other tenants or implement its build-out strategy on the timetable
currently contemplated or at all. The economics of each tower are affected by
numerous factors, many of which are beyond the Company's control, and there
can be no assurance that any particular tower will generate the revenue
projected at the time it is first constructed or acquired by the Company. See
"Risk Factors."
RESULTS OF OPERATIONS
As the Company transitions its business by expanding into site leasing,
operating results in prior periods may not be meaningful predictors of future
prospects. Readers of the foregoing should be aware of the significant changes
in the nature and scope of the Company's business when reviewing the following
discussion of comparative historical results. Management expects that the
acquisitions consummated to date, any future acquisitions and the Company's
build-to-suit programs will have a material impact on future revenues,
expenses and net income. In particular, operating expenses, depreciation and
amortization and interest expense are expected to increase significantly in
future periods. Management believes that the Company's build-to-suit programs
will have a material adverse effect on future operations until such time (if
ever) as the newly constructed towers attain higher levels of utilization.
Three Months Ended March 31, 1998 Compared to Three Months Ended March 31,
1997
Total revenues increased 5% to $14.7 million for the three months ended
March 31, 1998 from $14.0 million for the three months ended March 31, 1997.
Site development revenues remained constant at $12.5 million for the three
months ended March 31, 1998 and the three months ended March 31, 1997. Site
leasing revenues increased 39% to $2.2 million in the three months ended March
31, 1998 from $1.6 million in the three months ended March 31, 1997, due
primarily to the ownership by the Company of revenue producing towers not
owned in the 1997 period. Lease/sublease revenues increased 8% to $1.7 million
for the three months ended March 31, 1998 from $1.6 million for the three
months ended March 31, 1997 primarily due to the continued growth of
lease/sublease business from new and existing paging clients. Tower leasing
revenues increased to $.5 million for the three months ended March 31, 1998
from $0 for the three months ended March 31, 1997, due to the fact that the
Company owned no towers in the prior period.
45
<PAGE>
Total cost of revenues increased 12% to $10.5 million for the three months
ended March 31, 1998 from $9.4 million for the three months ended March 31,
1997. Site development cost of revenues increased 11% to $9.0 million for the
1998 period from $8.1 million for the 1997 period, due primarily to the
increased costs associated with maturing or completed projects. Site leasing
cost of revenues increased 19% to $1.5 million in the 1998 period from $1.3
million in the 1997 period, due primarily to higher site leasing revenues.
Gross profit decreased 10% to $4.2 million for the 1998 period from $4.6
million for the 1997 period, due primarily to the increase in the cost of site
development revenues. Gross profit for site development services decreased 19%
to $3.5 million for the three months ended March 31, 1998 from $4.4 million
for the three months ended March 31, 1997. Gross profit for the site leasing
business increased 128% to $.7 million for the 1998 period from $.3 million
for the 1997 period. As a percentage of total revenues, gross profit decreased
to 28% for the three months ended March 31, 1998 from 33% for the three months
ended March 31, 1997.
Sales and marketing expenses decreased 53% to $.4 million for the three
months ended March 31, 1998 from $.8 million for the three months ended March
31, 1997, due principally to the Company's elimination of its regional office
strategy.
General and administrative expenses increased 131% to $3.6 million for the
three months ended March 31, 1998 from $1.5 million for the three months ended
March 31, 1997, primarily due to the addition of personnel, the expansion of
office space and overall increases in operating expenses attributable to the
growth in the organization and building the Company's tower development
infrastructure. As a percentage of total revenues, general and administrative
expenses increased to 24% for the three months ended March 31, 1998 from 11%
for the three months ended March 31, 1997.
Operating income (loss) decreased 111% to $(.3) million for the three months
ended March 31, 1998 from $2.3 million for the three months ended March 31,
1997. Interest (income) expense was $1.1 million for the three months ended
March 31, 1998 as compared to $(.02) million for the three months ended March
31, 1997. The primary differences between the periods relate to the above
mentioned variances as well as increased depreciation associated with the
increased amount of fixed assets and increased interest expense associated
with the Notes (defined below).
Provision for income taxes was $.1 million for the three months ended March
31, 1998 as compared to $3.5 million for the three months ended March 31,
1997. The provision for income taxes in the 1998 period was higher than that
at the statutory U.S. Federal rate (34%) period as a result primarily of non-
deductible interest and the current impact of the corporate reorganization
which took place in 1997. The provision for income taxes in the 1997 period
also exceeded the amount computed at the statutory U.S. Federal rate (34%) as
a result of the income tax effect of the corporate reorganization in 1997.
Net loss increased 20% to $(1.5) million for the three months ended March
31, 1998 from $(1.2) million for the three months ended March 31, 1997. These
increased losses resulted from an increase in cost of site development
revenue, increased general and administrative expenses, and increased interest
expense offset by a decrease in the provision for income taxes.
EBITDA decreased 89% to $.3 million in the three months ended March 31, 1998
from $2.3 million in the three months ended March 31, 1997, as a result of the
factors discussed above. Tower Cash Flow, as defined in the Company's
Indenture related to the Notes, as defined below, (the "Indenture"), (which
requires an allocation of the Company's total operating expenses to its site
leasing business) for the quarter ending March 31, 1998 was $(.3) million.
Adjusted EBITDA, as defined in the Indenture, for the twelve months ended
March 31, 1998 was $4.8 million. Neither EBITDA or Adjusted EBITDA represents
cash flow from operations as defined by generally accepted accounting
principles.
Twelve Months Ended December 31, 1997 Compared to Twelve Months Ended
December 31, 1996
Total revenues decreased 15% to $55.0 million for the twelve months ended
December 31, 1997 from $64.8 million for the twelve months ended December 31,
1996. Site development revenues decreased 20% to
46
<PAGE>
$48.2 million for the twelve months ended December 31, 1997 from $60.3 million
for the twelve months ended December 31, 1996, due primarily to the decreased
demand for site development services from A- and B- block broadband PCS
licensees. This was partially offset by the increased demand for services from
D-, E-, and F- block broadband PCS licensees and ESMR providers. The decreased
demand from A- and B- block licensees resulted from (i) the nearly completed
build-out of their initial markets, (ii) the delayed commencement of the
anticipated build-out of secondary or tertiary markets and (iii) the
increasing acceptance by these licensees of outsourced communication site
infrastructure through build-to-suit programs. Site leasing revenues increased
49% to $6.8 million in the twelve months ended December 31, 1997 from $4.5
million in the twelve months ended December 31, 1996, due primarily to the
continued growth of the lease/sublease business from new and existing paging
clients and the acquisition by the Company of 30 revenue producing towers. At
December 31, 1997, the Company's lease/sublease business covered approximately
1,041 antennae sites with an average monthly revenue of approximately $521 per
site. At December 31, 1996, the Company's site leasing services covered
approximately 980 antennae sites with an average monthly revenue of
approximately $482 per site.
Total cost of revenues decreased 15% to $36.8 million for the twelve months
ended December 31, 1997 from $43.5 million for the twelve months ended
December 31, 1996. Site development cost of revenues decreased 21% to $31.5
for the 1997 period from $39.8 million for the 1996 period, due primarily to
decreased site development revenues. Site leasing cost of revenues increased
47% to $5.4 million in the 1997 period from $3.6 million in the 1996 period,
due primarily to the increased volume of lease payments to site owners. Gross
profits decreased 15% to $18.2 million for the 1997 period from $21.3 million
for the 1996 period, due primarily to the decrease in site development
revenues. Gross profit for site development services decreased 18% to $16.8
million for the twelve months ended December 31, 1997 from $20.5 million for
the twelve months ended December 31, 1996. Gross profit for the site leasing
business increased 57% to $1.4 million for the 1997 period from $0.9 million
for the 1996 period. As a percentage of total revenues, gross profits remained
constant at 33% for the 1997 period and the 1996 period.
Sales and marketing expenses increased 273% to $2.7 million for the twelve
months ended December 31, 1997 from $0.7 million for the twelve months ended
December 31, 1996, due primarily to the establishment of regional offices. Due
to the discontinuance by the Company of its regional office strategy, it is
anticipated that sales and marketing expenses will decrease in future periods.
General and administrative expenses decreased 54% to $8.4 million for the
twelve months ended December 31, 1997 from $18.0 million for the twelve months
ended December 1996 due primarily to a reduction in executive compensation
resulting from employment contracts executed in 1997, and increased 1996
expenses associated with a bonus of $4.0 million paid to Mr. Bernstein in
1996, the sole stockholder of the Company, and non-cash compensation expenses
of $7.9 million relating to the granting of options to other officers of the
Company. As a percentage of total revenues, general and administrative
expenses decreased to 15% for 1997 from 28% in 1996. Excluding the effect of
the above mentioned bonus and non-cash compensation expense, general and
administrative expenses as a percentage of revenues would have increased to
15% for the 1997 period from 10% for the 1996 period. This increase was due to
the addition of personnel and increased operating expenses required to grow
the site leasing business.
Operating income increased 163% to $6.6 million for the twelve months ended
December 31, 1997 from $2.5 million for the twelve months ended December 31,
1996. Other income (expense) was not material in either period. Net income
decreased 49% to $1.2 million for the twelve months ended December 31, 1997
from $2.4 million for the twelve months ended December 31, 1996. On a pro
forma basis, net income decreased 15% to $1.2 million for the twelve months
ended December 31, 1997 from $1.4 million for the twelve months ended December
31, 1996. These decreases resulted from a reduction in site development
revenues and the inclusion of a provision for income taxes in 1997. Prior to
1997, the Company was not subject to tax at the corporate level.
Earnings before interest, taxes, depreciation and amortization ("EBITDA")
increased 166% to $7.1 million in the twelve months ended December 31, 1997
from $2.7 million in the twelve months ended December 31, 1996, as a result of
the factors discussed above. Tower Cash Flow, as defined in the Indenture,
which requires
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an allocation of the Company's total operating expenses to its site leasing
business, for the fourth quarter ended December 31, 1997 was ($0.1 million).
Annualized EBITDA for the year ended December 31, 1997 was $7.6 million.
Twelve Months Ended December 31, 1996 Compared to Twelve Months Ended
December 31, 1995
Total revenues increased 155% to $64.8 million for the twelve months ended
December 31, 1996 from $25.5 million for the twelve months ended December 31,
1995. Site development revenues increased 166% to $60.3 million for the 1996
period from $22.7 million for the 1995 period, due primarily to the increased
demand for site development services from A- and B- block broadband PCS
licensees. Site leasing revenues increased 64% to $4.5 million in the 1996
period from $2.8 million in the 1995 period, due primarily to the continued
growth of lease/sublease business from new and existing paging clients. At
December 31, 1996, the Company's site leasing services covered approximately
980 sites with an average monthly revenue of approximately $482 per site. At
December 31, 1995, the Company's site leasing services covered 640 sites with
an average monthly revenue of approximately $430 per site.
Total cost of revenues increased 170% to $43.5 million for the twelve months
ended December 31, 1996 from $16.1 million for the twelve months ended
December 31, 1995. Site development cost of revenues increased 185% to $39.8
million for the 1996 period from $14.0 million for the 1995 period, due
primarily to higher personnel costs necessary to support the expansion of the
business. Site leasing cost of revenues increased 72% to $3.6 million in the
1996 period from $2.1 million in the 1995 period, due primarily to the
increased volume of lease payments to site owners. Gross profit increased 128%
to $21.3 million for the 1996 period from $9.3 million for the 1995 period,
due primarily to the increase in site development revenues. Gross profit for
site development services increased 135% to $20.5 million for the twelve
months ended December 31, 1996 from $8.7 million for the twelve months ended
December 31, 1995. Gross profit for site leasing services increased 40% to
$0.9 million for the 1996 period from $0.6 million for 1995 period. As a
percentage of total revenues, gross profit decreased to 33% for the 1996
period from 37% for the 1995 period. This decrease was primarily due to the
processing of pass-through costs (such as surveys, title reports and option
fees) as a service to clients without markups and an increase in operations
support personnel.
Sales and marketing expenses increased 205% to $0.7 million for the twelve
months ended December 31, 1996 from $0.2 million for the twelve months ended
December 31, 1995, due principally to increased marketing activity and the
hiring of additional sales and marketing personnel.
General and administrative expenses increased 213% to $18.0 million for the
twelve months ended December 31, 1996 from $5.7 million for the twelve months
ended December 31, 1995, due primarily to an increase in the bonus paid to Mr.
Bernstein, the sole stockholder of the Company and non-cash compensation
expenses of $7.9 million relating to the granting of options to other officers
of the Company. The bonus was $4.0 million for the 1996 period and $1.8
million for the 1995 period. Excluding the bonuses and non-cash compensation
expenses, general and administrative expenses would have increased 54% to $6.2
million in the latter period from $4.0 million in the earlier period,
primarily reflecting costs of the addition of personnel and increased
operating cost. As a percentage of total revenues, general and administrative
expenses increased to 28% for the 1996 period from 23% for the 1995 period.
Excluding the effect of the above mentioned bonus and non-cash compensation
expenses, general and administrative expenses as a percentage of revenues
would have decreased to 10% for the 1996 period from 16% for the 1995 period.
This decrease is attributable to significantly increased revenues offset by
economies of scale.
Operating income decreased 24% to $2.5 million for the twelve months ended
December 31, 1996 from $3.3 million for the twelve months ended December 31,
1995. Other income (expense) was not material in either period. Accordingly,
net income decreased 28% to $2.4 million for the 1996 period from $3.3 million
for the 1995 period, due primarily to the non-cash compensation expenses of
$7.9 million. Excluding the bonuses to Mr. Bernstein and the non-cash
compensation expense described above, net income would have increased 181%
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to $14.3 million for the twelve months ended December 31, 1996 from $5.1
million for the twelve months ended December 31, 1995. On a pro forma basis,
net income decreased 28% to $1.4 million for the year ended December 31, 1996
from $2.0 million for the year ended December 31, 1995.
EBITDA declined 21% to $2.7 million in the twelve months ended December 31,
1996 from $3.4 million for the twelve months ended December 31, 1995, as a
result of the factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
The Company is a holding company with no business operations of its own. The
Company's only significant asset is the outstanding capital stock of its
subsidiaries. The Company conducts all its business operations through its
subsidiaries. Accordingly, the Company's only source of cash to pay its
obligations is distributions with respect to its ownership interest in its
subsidiaries from the net earnings and cash flow generated by such
subsidiaries. Even if the Company determined to pay a dividend on or make a
distribution in respect of the capital stock of its subsidiaries, there can be
no assurance that its subsidiaries will generate sufficient cash flow to pay
such a dividend or distribute such funds.
As a result of a preferred stock offering in March 1997, the Company
realized net proceeds of $25.3 million after deducting the agents' commission,
offering expenses and a stock redemption. These proceeds were used primarily
for the repayment of short-term debt, for the funding of various expansion
costs, for the construction and acquisition of various towers and for general
working capital.
Net cash used in operations during the three months ended March 31, 1998 was
$7.5 million compared to net cash provided by operations of $7.6 million in
the comparable period in 1997. The decrease in net cash provided by operations
was primarily attributable to the decrease in net income together with changes
in the account balances associated with accounts receivable, accounts payable,
intangibles and various tax accounts for the respective periods. Net cash used
in investing activities for the three months ended March 31,1998 was $11.1
million compared to $.1 million for the three months ended March 31,1997. The
increase in cash used for investing activities resulted primarily from the
acquisition of 23 towers and the construction of build-to-suit towers. Net
cash provided by financing activities for the three months ended March 31,
1998 was $136.1 million compared to net cash used in financing activities of
$6.3 million for the same period in 1997. The increase in net cash provided by
financing activities was attributable to the proceeds from the Notes.
Net cash provided by operations during the twelve months ended December 31,
1997 was $6.5 million compared to $1.2 million in the comparable period in
1996. The increase in net cash provided by operations was primarily
attributable to the decrease in net income together with changes in the
account balances associated with accounts receivable, accounts payable,
intangibles and various tax accounts for the respective periods. Net cash used
in investing activities for the twelve months ended December 31, 1997 was
$16.3 million compared to $0.1 million for the twelve months ended December
31, 1996. The increase in cash used for investing activities resulted from the
acquisition of towers and a tower construction company. Net cash provided by
financing activities for the twelve months ended December 31, 1997 was $15.6
million compared to net cash used in financing activities of $1.0 million for
the same period in 1996. The increase in net cash provided by financing
activities was primarily attributable to the proceeds from the preferred stock
offering.
As of March 31, 1998 and December 31, 1997 the Company had positive working
capital of $132.9 million and $.02 million, respectively. The Company had
negative working capital of $0.6 million as of December 31, 1996.
On March 2, 1998 the Company issued $269 million 12% Senior discount notes
due 2008 (the "Notes"). This offering provided approximately $150.2 million of
gross proceeds to the Company. From these gross proceeds, the Company repaid
approximately $20.2 million of existing indebtedness and paid approximately
$5.7 million of fees and expenses. The remaining proceeds will be used
primarily for the acquisition and construction of wireless communications
towers, and for general corporate purposes including working capital. Prior to
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March 1, 2003, interest expense on the Notes will consist solely of non-cash
accretion of original issue discount and the Notes will not require cash
interest payments. After such time, the Notes will have accreted to $269.0
million and will require annual cash interest payments of approximately $32.3
million. In addition, the Notes mature on March 1, 2008.
In June 1998, the Company amended and restated its existing credit facility,
which was originally executed in August 1997. The amended credit facility (the
"Credit Facility") provides for revolving credit loans of $55.0 million and an
additional $55.0 million incremental facility to SBA Telecommunications, Inc.
which may be made available within the initial 24 months of the credit
facility, each to fund the acquisition and construction of towers, to provide
working capital and for general corporate purposes. There is no availability
under the Credit Facility, other than for the issuance of letters of credit,
until the later of (i) September 30, 1998 or (ii) Telecommunications having on
a consolidated basis minimum adjusted EBITDA (as defined in the Credit
Facility) of $2.5 million. Availability thereafter is limited to $25 million
until such time as the Company owns, leases or manages 400 towers and has
expended all but $10 million of the proceeds from the Notes. Availability is
further limited at all times by certain financial covenants and ratios, and
other conditions. The Credit Facility provides for quarterly interest payments
commencing as soon as any funds are borrowed thereunder, and the incremental
facility is expected to have a 24-month revolving period after which any
outstanding amounts will convert to a term loan and begin to amortize.
Availability under the Credit Facility is subject to a reduction schedule that
commences on March 31, 2001. The schedule provides for a quarterly 5%
amortization rate with a balloon payment on June 29, 2005.
The Company currently estimates that it will make at least $175.0 million of
capital expenditures through June 1999 for the construction and acquisition of
communication sites, primarily towers. The Company and its subsidiaries expect
to use the net proceeds, together with the availability anticipated under the
Credit Facility to fund these capital expenditures. However, the exact amount
of the Company's future capital expenditures will depend on a number of
factors. In 1998, the Company currently anticipates that it will build a
significant number of towers for which the Company has mandates pursuant to
its build-to-suit program. The Company also intends to continue to explore
opportunities to acquire additional towers. The Company's actual capital
expenditures through June 1999 will depend in part upon the attractiveness of
acquisition opportunities that become available during the period, the needs
of its primary build-to-suit customers and the availability of additional debt
or equity capital on acceptable terms. In the event that the net proceeds from
the Notes or borrowings under the Credit Facility have otherwise been utilized
when an acquisition or construction opportunity arises, the Company would be
required to seek additional debt or equity financing, there can be no
assurance that any such financing will be available on commercially reasonable
terms or at all or that any additional debt financing would be permitted by
the terms of the Company's existing indebtedness.
The Company's ability to make scheduled payments of principal of, or to pay
interest on, its debt obligations, and its ability to refinance any such debt
obligations (including the Notes), or to fund planned capital expenditures,
will depend on its future performance, which, to a certain extent, is subject
to general economic, financial, competitive, legislative, regulatory and other
factors that are beyond its control. The Company's business strategy
contemplates substantial capital expenditures in connection with its planned
tower build-out and acquisition. Based on the Company's current operations and
anticipated revenue growth, management believes that, if its business strategy
is successful, cash flow from operations and available cash (including the
proceeds from the Notes), together with borrowings anticipated to be available
under the Credit Facility, will be sufficient to fund the Company's
anticipated capital expenditures through June 1999. Thereafter, however, or in
the event the Company exceeds its currently anticipated capital expenditures
for fiscal 1998 or through June 1999, the Company anticipates that it will
need to seek additional equity or debt financing to fund its business plan.
Failure to obtain any such financing could require the Company to
significantly reduce its planned capital expenditures, scale back the scope of
its tower build-out or acquisitions and/or delay its transition to tower
ownership, any of which could have a material adverse effect on the Company's
prospects financial condition or results of operations. In addition the
Company may need to refinance all or a portion of its indebtedness (including
the Notes and/or the Credit Facility) on or prior to its scheduled maturity.
There can be no assurance
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that the Company will generate sufficient cash flow from operations in the
future, that anticipated revenue growth will be realized or that future
borrowings or equity contributions will be available in amounts sufficient to
service its indebtedness and make anticipated capital expenditures. In
addition, there can be no assurance that the Company will be able to effect
any required refinancing of its indebtedness (including the Notes) on
commercially reasonable terms or at all.
YEAR 2000
The Company is aware of the issues associated with the Year 2000 (the "Year
2000") as it relates to information systems. The Year 2000 is not expected to
have a material impact on the Company's current information systems because
its current software is either already Year 2000 compliant or required changes
are not expected to be material. Based on the nature of the Company's business
the Company anticipates it is not likely to experience material business
interruption due to the impact of Year 2000 compliance on its customers and
vendors. As a result, the Company does not anticipate that incremental
expenditures to address Year 2000 compliance will be material to the Company's
liquidity, financial position or results of operations over the next few
years.
INFLATION
The impact of inflation on the Company's operations has not been significant
to date. However, there can be no assurance that a high rate of inflation in
the future will not have material adverse effect on the Company's operating
results.
MARKET RISK
The Company is exposed to market risks, including changes in interest rates
and currency exchange rates. Based on the Company's interest rate and foreign
exchange rate exposure at March 31, 1998, a 10% change in the current interest
rate or historical currency rate movements would not have a material effect on
the Company's financial position or results of operations over the next fiscal
year.
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INDUSTRY OVERVIEW
GENERAL
The Company is a leading independent provider of communication site
services, offering a broad array of site development services to the wireless
communications industry. In order to capitalize on the trend toward colocation
and independent tower ownership in the wireless communications industry, the
Company is aggressively expanding its site leasing business by utilizing its
site development services experience and relationships with wireless service
providers to source opportunities to build and acquire communication sites.
The wireless communications industry continues to grow as consumers become
more aware of the benefits of wireless services, current wireless technologies
are used in more applications, the cost of wireless services to consumers
declines and new wireless technologies are developed. Changes in U.S. federal
regulatory policy, including the implementation of the Telecommunications Act
of 1996 (the "1996 Telecom Act"), have led to a significant number of new
competitors in the industry through the auction of frequency spectrum for a
wide range of uses, most notably PCS. This competition, combined with a
growing reliance on wireless services by consumers, has led to an increased
demand for higher quality, uninterrupted service and improved coverage, which,
in turn, has led to increased demand for communication sites as new providers
build out their networks and existing providers upgrade and expand their
networks to maintain their competitiveness. The Company believes that, as the
wireless communications industry has become more competitive, wireless service
providers have sought operating and capital efficiencies by outsourcing
certain network services and build-out activities and by colocating
transmission equipment with other providers on multi-tenant towers. The need
for colocation has also been driven by the growing trend by municipalities to
slow the proliferation of towers by requiring that towers accommodate multiple
tenants.
All of these factors have provided an opportunity for the Company to provide
and own communication sites, lease antennae space on such sites and provide
related network infrastructure and support services.
NETWORKS AND TOWERS
Wireless service providers require wireless transmission "networks" in order
to provide service to their customers. Each of these networks is configured
specifically to meet the coverage requirements of the particular provider and
includes transmission equipment such as antennae placed at various locations
throughout the service area. These locations, or "communication sites," are
critical to the operation of a wireless network. A communication site may have
the capacity for multiple antennae installations, or "antennae sites,"
depending on the size and type of the communication site. The value of a tower
generally depends on its location and the number of antennae that it can
support.
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Set forth below is a diagram illustrating the basic functions of each of the
primary components of a "wireless network."
Wireless Communications Network
[ARTWORK APPEARS HERE]
Carrier Switching Office
Local Wireline
Local Telephone Switching Office
Local Wireline
Data
Local Wireline
Voice Telephony
Microwave "Backhaul"
Tower
Mobile Phone
Car Phone
Tower
Pager
Communication sites consist of towers, rooftops and other structures upon
which antennae are placed. A typical tower includes a compound enclosing the
tower and an equipment shelter (which houses a variety of transmitting,
receiving and switching equipment). The tower can be either a self-supported
or guyed model. There are two types of self-supported models: the lattice and
the monopole. A lattice model is usually tapered from the bottom up and can
have three or four sides of open-framed steel supports. A monopole is a free-
standing tubular structure. Guyed towers gain their support capacity from a
series of guy cables attaching separate levels of the tower to anchor
foundations in the ground. Monopoles typically range in height from 50-200
feet, lattice towers can reach up to 1000 feet and guyed towers can reach 2000
feet or more.
Rooftop sites are more common in urban areas where tall buildings are
generally available and multiple communication sites are required because of
high wireless traffic density. One advantage of a rooftop site is that zoning
regulations typically permit installation of antennae. In cases of such high
population density, neither height nor extended radius of coverage are as
important and the installation of a tower structure may prove to be impossible
because of zoning restrictions, land cost and land availability. Other
structures on which antennae have been installed include electric transmission
towers, silos, water tanks, windmills and smokestacks.
Operation of Two-Way Wireless Systems
Wireless transmission networks use a variety of radio frequencies to
transmit voice and data. Wireless transmission networks include two-way radio
applications, such as cellular, wide band and narrow band PCS and ESMR
networks, and one way radio applications, such as paging services. Each
application operates within a distinct radio frequency. Although cellular
represents the largest segment of the wireless communications industry, other
wireless technologies are expected to grow significantly.
Two-way wireless service areas are divided into multiple regions called
"cells," each of which contains a base station consisting of a low-power
transmitter, a receiver and signaling equipment, typically located on a
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tower. The cells are usually configured in a grid pattern, although terrain
factors (including natural and man-made obstructions) and signal coverage
patterns may result in irregularly shaped cells and overlaps or gaps in
coverage. Cellular system cells generally have a radius ranging from two miles
to 25 miles and PCS system cells generally have a radius ranging from one-
quarter mile to 12 miles, depending on the PCS technology being used,
installation, height and the terrain. Growing demand for cell sites is one of
the primary reasons for growing demand for the Company's services. The base
station in each cell is connected by microwave, fiber optic cable or telephone
wires to a switch, which uses computers and specially developed software to
control the operation of the wireless telephone system for its entire service
area. The switch controls the transfer of calls from cells within the system
and connects calls to the local landline telephone system or to a long
distance telephone carrier.
Each wireless transmission network is planned to meet a certain level of
subscriber density and traffic demand in addition to providing a certain
geographic coverage. Each transmission requires a certain amount of radio
frequency, so a system's capacity is limited by the amount of frequency that
is available. The same frequency can be reused by each separate transmitter,
subject to certain interference limitations. The design of each wireless
system involves the placement of transmission equipment in locations that will
make optimal use of available frequency based upon projected usage patterns,
subject to the availability of such locations and the ability to use them for
wireless transmission under applicable zoning requirements.
Wireless Communications
The wireless communications industry now provides a broad range of services,
including cellular, PCS, paging, SMR and ESMR. The industry has benefited in
recent years from increasing demand for its services, and industry experts
expect this demand to continue to increase. The following table sets forth
industry estimates regarding projected subscriber growth for certain types of
wireless communications services:
<TABLE>
<CAPTION>
1997-2001 2001-2006
ESTIMATED PROJECTED PROJECTED COMPOUNDED COMPOUNDED
1997 2001 2006 ANNUAL ANNUAL
SUBSCRIBERS SUBSCRIBERS SUBSCRIBERS GROWTH RATE GROWTH RATE
----------- ----------- ----------- ----------- -----------
(IN MILLIONS, EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C> <C>
Cellular(1)........ 52.8 79.1 91.4 14.4% 3.7%
PCS(1)............. 3.5 29.7 54.7 104.0% 16.5%
Paging(2).......... 48.6 61.9 67.8 8.4% 2.3%
ESMR(1)............ 1.3 6.7 11.0 72.7% 13.2%
</TABLE>
- --------
(1) Data is from January 1998.
(2) Data is from January 1997, except year end 1997 number.
Source: Paul Kagan Associates, Inc. There can be no assurance that these
projections will prove to be accurate.
The Company believes that more communication sites will be required in the
future to accommodate the expected increase in demand for wireless
communications services. Current emerging wireless communications systems,
such as PCS and ESMR, represent an immediate and sizable market for providers
of communication site services as they build out large nationwide and regional
networks. The development of higher frequency technologies such as PCS offer
the Company opportunities as the reduced cell range of those technologies
require a more dense network of towers. While several PCS and ESMR providers
have already built limited networks in certain markets, these providers still
need to fill in "dead zones" and expand geographic coverage. The Cellular
Telecommunications Industry Association (the "CTIA") estimates that, as of
June 30, 1997, there were 38,650 antennae sites in the United States. In
October 1995, the PCIA estimated that the number of antennae sites in the
United States for both cellular and PCS providers will increase by an
additional 100,000 antennae sites (more than one of which can be located on a
single communication site) over the next ten years as cellular systems expand
coverage and PCS systems are deployed.
As a result of advances in digital technology, ESMR operators have also
begun to design and deploy digital mobile telecommunications networks in
competition with cellular providers. In response to the increased competition,
cellular operators are re-engineering their networks by increasing the number
of sites, locating sites
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within a smaller radius, filling in "dead zones" and converting from analog to
digital cellular service in order to manage subscriber growth, extend
geographic coverage and provide competitive services. The demand for
communication sites is also being stimulated by the development of new paging
applications, such as e-mail and voicemail notification and two-way paging, as
well as other wireless data applications.
Licenses are also being awarded, and technologies are being developed, for
numerous new wireless applications that will require networks of communication
sites. These future potential applications include the auction of licenses
scheduled for February 1998 for local multi-point distribution services,
including wireless local loop, wireless cable television, data and Internet
access. Radio spectrum required for these technologies has, in many cases,
already been awarded and licensees have begun to build out and offer services
through new wireless systems. Examples of these systems include local loop
networks operated by WinStar and Teligent, wireless cable networks operated by
companies such as Cellular Vision and CAI Wireless, and data networks being
constructed and operated by RAM Mobile Data, MTEL and Ardis.
CHARACTERISTICS OF THE TOWER INDUSTRY
In addition to the increased demand for wireless services and the need to
develop and expand wireless communications networks, the Company believes that
other trends influencing the wireless communications industry have important
implications for independent tower operators. In this increasingly competitive
wireless industry environment, the Company believes that many providers are
dedicating their capital and operations primarily to those activities that
directly contribute to subscriber growth, such as marketing and distribution.
Management believes these providers, therefore, will seek to reduce costs and
increase efficiency through the outsourcing of infrastructure network
functions such as communication site ownership, construction, operation and
maintenance. Further, in order to speed new network deployment or expansion
and generate efficiencies, providers are increasingly colocating transmission
equipment with that of other wireless service providers. The trend towards
colocation has been furthered by the "Not-In-My-Backyard" arguments generated
by local zoning/planning authorities in opposition to the proliferation of
towers.
Management believes that, in addition to the favorable growth and
outsourcing trends in the wireless communications industry and high barriers
to entry as a result of regulatory and local zoning restrictions associated
with new tower sites, tower operators benefit from several favorable
characteristics. The ability of tower operators to provide antennae sites to
customers on multiple tenant towers diversifies them against the specific
technology, product and market risks typically faced by any individual
provider. The emergence of new technologies, providers, products and markets
may allow independent tower operators to further diversify against such risks.
The Company believes that independent tower operators also benefit from the
contract nature of the site leasing business and the predictability and
stability of these recurring revenues. In addition, the site leasing business
has low variable operating costs and significant operating leverage. Towers
generally are fixed cost assets with minimal variable operating costs
associated with additional tenants. A tower operator can generally expect to
experience increasing operating margins when new tenants are added to existing
towers.
The site leasing business typically experiences low customer churn rates as
a result of the high costs that would be incurred by a wireless service
provider were it to relocate an antennae to another site and consequently be
forced to re-engineer its network. Moving a single antennae may alter the pre-
engineered maximum signal coverage, requiring a reconfigured network at
significant cost to maintain the same coverage. Municipal approvals are
becoming increasingly difficult to obtain and may also affect the provider's
decision to relocate. The costs associated with network reconfiguration and
municipal approval and the time required to complete these activities are not
justified by any potential savings in reduced site rental expense.
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BUSINESS
GENERAL
The Company is a leading independent provider of communication site
services, offering a broad array of site development services to the wireless
communications industry. In order to capitalize on the trend toward colocation
and independent tower ownership in the wireless communications industry, the
Company is aggressively expanding its site leasing business by utilizing its
site development experience and relationships with wireless service providers
to source opportunities to build and acquire communication sites. The Company
believes that it is historically the largest provider of site development
services in the United States, having participated since its founding in 1989
in one or more aspects of the development of more than 9,000 antennae sites
(including over 3,500 in 1997) in 49 of the 51 MTAs. The Company anticipates
significant future growth in its site leasing business whereby the Company
leases antennae space on towers it owns, leases or manages. The Company is
both acquiring towers suited for multi-tenant use and building such towers,
generally under build-to-suit programs whereby a wireless service provider
enters into a lease as an anchor tenant with the Company for antennae space
prior to the Company's commencement of tower construction. As of June 30,
1998, the Company owned 212 towers, had 74 towers pending acquisition under
written or verbal letters of intent or definitive agreements, and had non-
binding mandates to build up to approximately 410 additional towers (the
majority of which the Company expects will result in signed anchor tenant
leases). For a discussion of the process by which mandates lead to signed
anchor tenant leases and constructed towers, see "Business--Site Leasing
Business--Build-to-Suit Program." The Company's revenues and Annualized EBITDA
(as defined) for the year ended December 31, 1997 were $55.0 million and $7.6
million, respectively.
The Company offers an integrated "end-to-end" service with design,
construction and operating expertise to a range of wireless service providers,
including PCS, cellular, paging, SMR, ESMR and other providers. The Company's
site development services include site location analysis, site acquisition,
zoning and land use permitting, construction and construction management, FAA
compliance analysis and filings, contract and title administration and
building permit administration. The Company is typically paid fees for its
site development services on a project-by-project basis. In the site leasing
business, the Company's primary focus is the ownership of multi-tenant towers
and the leasing of antennae space on such towers to a variety of wireless
service providers under long-term lease contracts. The site leasing business
typically benefits from diversified recurring revenue and effective operating
leverage as a result of several factors, including: (i) the long-term contract
nature of lease revenues; (ii) low customer churn rates due to the high cost
of relocation; (iii) low variable operating costs, which cause increases in
revenues to generate disproportionately larger increases in tower cash flow;
(iv) low on-going maintenance capital expenditure requirements; (v) a customer
base diversified across geographic markets, industry segments (PCS, cellular,
paging, ESMR and SMR) and individual customers within these segments; and (vi)
the limited number of available tower sites serving a given area and
consequent barriers to entry, principally as a result of local opposition to
the proliferation of towers within such area.
In the fourth quarter of 1996, based on its analysis of accelerating trends
in the wireless communications industry and the financial benefits of the site
leasing business, the Company determined to leverage its leadership in the
site development services business in order to expand into the ownership and
leasing of communication sites. Consequently, the Company has added build-to-
suit programs and other antennae site leasing options to its service offerings
and has sought the acquisition of attractive communication sites. Under a
build-to-suit program, the Company generally undertakes its site development
services on behalf of a wireless service provider but constructs a tower at
the Company's expense. In return, the wireless service provider enters into a
long-term anchor tenant lease and the Company retains ownership of the tower
and has the ability to colocate additional tenants. Management believes that
many wireless service providers are using build-to-suit programs as an
alternative to tower ownership and that this outsourcing trend is likely to
continue. The Company's build-to-suit programs provide an end-to-end solution
to those wireless service providers seeking to minimize their capital
expenditures, overhead and time associated with the build-out and on-going
maintenance of their wireless network infrastructure. Management believes its
leadership in site development services, its existing national field
organization of more than 300 employees and its strong relationships with
wireless service providers
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position the Company to be a leader in the developing build-to-suit market.
While the Company intends to continue to offer site development services to
wireless carriers, where demand and profitable opportunities exist, it will
emphasize its site leasing business through the construction of Company-owned
towers pursuant to build-to-suit programs for lease to wireless service
providers, the acquisition of existing sites and the leasing, sub-leasing and
management of other antennae sites. Management believes that as the site
development industry matures, the Company's revenues and gross profit from
that business will decline in the near term and this rate of decline will
increase for the foreseeable future as wireless service providers choose to
outsource ownership of communication sites in order to conserve capital.
Management also believes that, over the longer term, the Company's site
leasing revenues will correspondingly increase as carriers move to outsourced
tower ownership and the number of towers owned by the Company grows.
As a result of these trends and shift in business, the Company expects that
revenue and earnings before interest, taxes, depreciation and amortization
("EBITDA") will decline over the short term and capital expenditures will
increase sharply as the Company accumulates towers. In addition, the Company
anticipates that its operating expenses will remain at or above current levels
as the Company continues to construct and acquire tower assets. The Company's
results of operations in 1997 and 1998 have begun to reflect the impact of
these trends. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
Management believes that the number of communication sites (which include
towers, rooftops and other structures) in use will continue to increase with
the growth in demand for wireless services. This growth is the result of
several factors, including (i) the issuance of new wireless network licenses
requiring the construction of new wireless networks; (ii) the continuing
build-out of higher frequency technologies (such as PCS) which have a reduced
cell range and thus require a more dense network of towers; (iii) the need to
expand services and fill-in and upgrade existing networks; and (iv) the
emergence of new wireless technologies. In October 1995, the PCIA estimated
that the number of antennae sites in the United States for both cellular and
PCS providers will increase by an additional 100,000 antennae sites (more than
one of which can be located on a single communication site) over the next ten
years as cellular systems expand coverage and PCS systems are deployed.
Management believes that wireless service providers have begun to focus their
capital and operations primarily on activities that build subscriber growth,
such as marketing and distribution, and, therefore, that wireless service
providers will increasingly seek to outsource site ownership, construction,
management and maintenance. The Company believes that it will benefit from
this trend.
BUSINESS STRATEGY
The Company's strategy is to build on its leadership position in site
development services to become a leading owner and operator of communication
sites. Key elements of the Company's strategy include:
BUILD, OWN AND LEASE TOWERS. The Company believes that there are various
financial considerations currently affecting wireless service providers,
including the need to optimize capital resources. Increasingly, these factors
have led wireless service providers to consider outsourcing the investment in,
and ownership of, communication sites. Management believes that it has
positioned the Company to meet these outsourcing needs, leveraging its
expertise in the site development business to construct towers with anchor
tenants pursuant to build-to-suit programs. The Company believes that it has
one of the largest number of non-binding build-to-suit mandates from wireless
service providers in the industry. The Company has received non-binding
mandates from approximately eight major wireless service providers to execute
build-to-suit programs. As of June 30, 1998, the Company had non-binding
mandates to build up to approximately 410 additional towers under build-to-
suit programs.
ACQUIRE EXISTING TOWERS. The Company intends to continue to make strategic
acquisitions in the fragmented tower owner and operator industry. The
Company's strategy is to acquire only those towers that the Company believes
will be attractive to, and capable of use by, multiple tenants based on
location, height, local competition and available capacity. The Company will
continue to pursue larger acquisitions to provide critical mass and smaller
acquisitions that have the potential for more attractive returns. Management
believes that its existing national field organization provides it with a
competitive advantage in identifying opportunities for the
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acquisition of existing towers. The Company regularly evaluates acquisition
opportunities and engages in negotiations with respect to acquisitions of
individual towers, groups of towers and entities that own or manage towers and
related businesses. However, except as otherwise contemplated herein, as of
the date hereof, there are currently no agreements with respect to any pending
acquisitions.
MAINTAIN AND CAPITALIZE ON STRONG RELATIONSHIPS WITH MAJOR WIRELESS SERVICE
PROVIDERS. Management believes that it is well-positioned to be a preferred
partner in build-to-suit programs because of its strong relationships with
wireless service providers and proven operating experience. The Company
believes that it will be able to build upon its existing relationships with
wireless service providers to source further opportunities for build-to-suit
programs and lease antennae space on its owned towers. In many cases, the
personnel awarding site development projects for wireless service providers
are the same personnel who make decisions with respect to build-to-suit
programs. The Company is continually marketing its build-to-suit programs to
its site development service customers. The Company's build-to-suit customers
include AT&T Wireless, BellSouth Mobility, Nextel, PrimeCo PCS, Sprint PCS and
Western Wireless.
INCREASE USE OF COMPANY-OWNED TOWERS. The Company's strategy for its owned,
leased and managed towers is to maximize the number of tenants on each tower,
thereby increasing its leasing revenues per tower. Because most tower costs
are fixed, leasing available space on an existing tower results in minimal
additional ongoing expenses and therefore generates a disproportionately large
increase in operating cash flow. The Company believes that many of its towers
have or will have significant capacity available for antennae space leasing
and that increased use of its owned towers can be achieved at low incremental
cost. The Company generally constructs build-to-suit towers to accommodate
multiple tenants in addition to the anchor tenant. The Company actively
markets space on its owned towers through its internal sales force. Once the
Company has identified a site for acquisition or construction, the sales force
immediately commences marketing that site to potential tenants.
CONTINUE PROVISION OF SITE DEVELOPMENT SERVICES. The Company has performed
an array of site development services for over 35 wireless service providers
across the United States, including Sprint PCS, Pacific Bell Mobile Services,
AT&T Wireless, Nextel, PrimeCo PCS, PageNet and BellSouth Mobility. Management
believes the Company is historically the largest provider of site development
services in the United States. The Company has a broad national field
organization that allows it to identify and participate in site development
projects across the country. Knowledge of local markets and strong customer
relationships with wireless service providers are competitive strengths that
position the Company to further capitalize on the site development needs of
the wireless communications industry. In 1997, the Company acquired CSSI,
which is a tower construction company operating primarily in the southeastern
United States. This acquisition increased the Company's expertise in managing
the construction component of its business which enabled the Company to
directly provide construction services to third parties and, on a selective
basis, for its own build-to-suit programs. The Company believes that CSSI will
enable the Company to capture more of the wireless service providers' total
site development business and build-to-suit programs and to enhance its end-
to-end approach to service.
COMPETITIVE STRENGTHS
Management believes that the Company has several important competitive
strengths that have contributed to its leadership position in the site
development business. Management believes that these strengths will enable it
to successfully expand its site leasing business. Key strengths include:
PROVEN OPERATING EXPERIENCE. The Company has been operating in the site
development business since 1989 and believes that it is historically the
largest provider of such services in the United States. The Company has
successfully participated in one or more aspects of the development of more
than 9,000 antennae sites (including over 3,500 in 1997). As a result,
management believes that the Company has built a strong national reputation
with wireless service providers as a leading provider of site development
services. Operating its site development business has enabled the Company and
management to gain experience executing all stages of site development, and
these same skills are utilized in the course of constructing a build-to-suit
tower. Management
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believes that this operating history and proven track record give the Company
a competitive advantage in the build-to-suit tower construction business. In
addition, as of June 30, 1998, the Company administered approximately 1,065
antennae sites whereby it leases the sites from site owners and subleases such
sites to wireless service providers at a profit. The Company has developed and
will continue to improve the systems and software to manage and oversee
multiple sites and lease contracts. Management believes that these systems and
software capabilities, together with the Company's operating expertise, will
be critical to it in building a successful national site leasing business.
MARKET EXPERIENCE. The Company believes that its national field organization
and site development experience in 49 of the 51 MTAs provide the Company with
a significant competitive advantage. Because of such experience, the Company
has its own knowledge base of many areas within most MTAs and, more
importantly, has the ability to more effectively analyze local requirements
with respect to a particular site development project or a build-to-suit
mandate. The Company also believes that its substantial field experience
provides it with an advantage in selecting and constructing new towers.
INTEGRATED PROVIDER OF SITE DEVELOPMENT SERVICES. Management believes that
the Company benefits from its integrated, end-to-end service capabilities, as
wireless service providers prefer the flexibility of a vendor who can perform,
directly or through subcontractors, any or all of the functions related to
site acquisition, development, construction and on-going operation.
CAPABILITY TO MANAGE MULTIPLE PROJECTS. The Company has been able to
successfully manage multiple site development projects in various locations
across the country at the same time. Management believes that the ability to
undertake concurrent build-to-suit programs in multiple markets will be
attractive to wireless service providers.
COMPANY SERVICES
General The Company is a leading independent provider of communication site
services, offering a broad array of site development services to the wireless
communications industry. The Company is a provider with end-to-end design,
construction and operating expertise, offering its customers the flexibility
of choosing between the provision of a full ready-to-operate site or any of
the component services involved therein. The site development services
provided by the Company, directly or through subcontractors, include all
activities associated with the selection, acquisition and construction of
communication sites for wireless service providers. The site leasing services
provided by the Company directly or through subcontractors include owning,
leasing or managing communication sites and leasing antennae space on
communication sites to wireless service providers. The full range of services
of the site development business typically occur in five phases: (i) network
pre-design; (ii) communication site selection; (iii) communication site
acquisition; (iv) local zoning and permitting; and (v) site construction and
antennae installation. The Company utilizes its experience and expertise in
the site development business to provide additional services in its site
leasing business, providing for (i) the ownership or management of
communication sites by the Company pursuant to build-to-suit programs and
through acquisitions; (ii) the leasing or subleasing of antennae space on
communication sites to wireless service providers and (iii) the maintenance
and management of communication sites by the Company. Where appropriate, the
Company contracts out certain of the site development services.
Site Development Business
The Company offers each phase of its site development services to its
customers. During Phase I, network pre-design, the Company performs pre-design
analysis by investigating those areas of the MTA or basic trading area
("BTA"), as each term has been adopted by the FCC, that are designated as a
priority by the customer. The Company will then identify, to the extent
possible, all sites which meet the customer's RF requirements. Geographic
Information Systems ("GIS") specialists create maps of the sites, analyzing
for a number of factors, including which areas may have the most favorable
zoning regulations and availability of colocation opportunities. A preliminary
zoning analysis is typically conducted, and the Company will determine those
areas of the MTA or BTA where zoning approval is likely, along with a possible
time frame for approval. Phase I
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services are intended to eliminate costly redesigns once a project is
commenced which can result in significant savings of both time and money.
In Phase II, site selection, the Company determines (i) which sites most
closely meet the RF engineering requirements of the customer; (ii) are
leasable or can be purchased; (iii) have the potential to be zoned for site
construction or colocation based on the then current zoning requirements; and
(iv) are suitable for the construction of a site. GIS specialists select the
most suitable sites based on demographics, traffic patterns and signal
characteristics. Typically, the Company will identify two or three potential
sites for each location in the RF engineering plan, with the intent of
colocating on an existing site or constructing a new site on the location most
advantageous to the customer. FAA approval, when necessary, is also typically
sought at this time.
In Phase III, site acquisition, the Company secures the right from the
property owner to construct a tower or colocate on the site. Depending on the
type of interest in the property that the Company believes will best suit the
needs of the customer, the Company will negotiate and enter into on behalf of
the customer (i) a contract of sale pursuant to which the customer acquires
fee title to the property; (ii) a long-term ground or rooftop lease pursuant
to which the customer acquires a leasehold interest in the property (typically
a five-year lease with four or five renewal periods of five years each); (iii)
an easement agreement pursuant to which the customer acquires an easement over
the property; or (iv) an option to purchase or lease the property pursuant to
which the customer has a future right to acquire fee title to the property or
acquire a leasehold interest. It is during this phase of the site development
services that the Company generally obtains a title report on the site,
conducts a survey of the site, performs soil analysis of the site and obtains
an environmental survey of the site.
Phase IV, local zoning and permitting, includes preparing all appropriate
zoning applications and providing representation at any zoning hearings that
may be conducted. The Company also obtains all necessary entitlement land use
permits necessary to commence construction on the site or install equipment on
the site.
Phase V, construction and installation, involves the construction management
of the tower on a selected site, whether by the third party or directly by the
Company. Phase V includes preparing a construction budget, installing or
monitoring the installation of equipment and antennae, hiring sub-contractors
to perform the actual construction of the tower or equipment installation when
not performed by the Company, preparing a construction schedule, monitoring
all vendors' delivery and installation of equipment and monitoring the
completion of all construction and landscaping of the site.
The CSSI Acquisition provided the Company with in-house tower construction
and antennae installation capability. CSSI had extensive experience in the
development and construction of tower sites and the installation of antennae,
microwave dishes and electrical and telecommunications lines. CSSI's site
development and construction services include clearing sites, laying
foundations and electrical and telecommunications lines, and constructing
equipment shelters and towers. CSSI has designed and built tower sites for a
number of its customers and will continue to provide construction services for
third parties. In addition, CSSI has constructed and is expected to construct
a portion of the Company's towers in the future. Through CSSI, the Company can
provide cost-effective and timely completion of construction projects in part
because its site development personnel are cross-trained in all areas of site
development, construction and antennae installation. CSSI maintains a varied
inventory of heavy construction equipment and materials at its five-acre
equipment storage and handling facility in Florida, which is used as a staging
area for projects in the southeastern region of the United States.
The Company's site development business is headquartered in Boca Raton,
Florida. Once the Company is hired on a site development project, a site
development team is dispatched from headquarters to the project site. A
temporary field office is established for the duration of the project. The
site development team is typically composed of permanent Company employees and
supplemented with local hires employed only for that particular project. A
team leader is assigned to each phase of the site development project and
reports to a project manager who oversees all team leaders. Upon the
completion of a site development project, the field office is typically closed
and all permanent Company employees are either relocated to another project or
directed to return to headquarters.
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The Company generally sets prices for each site development service
separately. Customers are billed for these services on a fixed price or time
and materials basis and the Company may negotiate fees on individual sites or
for groups of sites.
Site Leasing Business
The site leasing business consists of (i) the ownership of communication
sites pursuant to build-to-suit programs and acquisitions; (ii) the leasing or
subleasing of antennae space on communication sites to wireless service
providers; and (iii) the maintenance and management of communication sites.
The Company leases and subleases antennae space on communication sites to a
variety of wireless service providers. The Company owns or leases such
communication sites from third parties, and in the future may manage
communication sites for third parties in exchange for a percentage of the
revenues or tower-level cash flow. All of the Company's owned towers are the
result of build-to-suit programs or acquisitions. In its build-to-suit
programs, the Company utilizes some or all of the five phases of its site
development business as it would when providing site development services to a
third party. After a tower has been constructed, the Company leases antennae
space on the tower. The Company generally receives monthly lease payments from
customers payable under written antennae site leases. The majority of the
Company's outstanding customer leases, and the new leases typically entered
into by the Company, have original terms of five years (with four or five
renewal periods of five years each) and usually provide for annual or periodic
price increases. Monthly lease pricing varies with the number and type of
antennae installed on a communication site. Broadband customers such as PCS,
cellular or ESMR generally pay substantially more monthly rent than paging or
other narrowband customers. The Company also provides a lease/sublease service
as part of its site leasing business whereby the Company leases space on a
communication site and subleases the space to a wireless service provider.
Management believes that the site leasing portion of the Company's business
has significant potential for growth and the Company intends to expand its
site leasing business through (i) increasing activity from its build-to-suit
programs and (ii) selective acquisitions.
As of June 30, 1998, the following table indicates the total number of
build-to-suit and acquired towers of the Company.
<TABLE>
<CAPTION>
LOCATION OF TOWERS NUMBER OF TOWERS BUILD- TO- SUIT ACQUIRED % OF TOTAL
- ------------------ ---------------- --------------- -------- ----------
<S> <C> <C> <C> <C>
Alabama.................... 1 -- 1 *
Connecticut................ 4 3 1 2
Delaware................... 3 3 -- 1
Florida.................... 14 3 11 7
Georgia.................... 38 38 -- 18
Illinois................... 2 -- 2 1
Indiana.................... 1 1 -- *
Kentucky................... 3 3 -- 1
Michigan................... 1 1 -- *
Minnesota.................. 1 -- 1 *
Missouri................... 5 5 -- 2
New Mexico................. 5 -- 5 2
New York................... 35 5 30 17
Ohio....................... 1 1 -- *
Pennsylvania............... 17 -- 17 8
South Carolina............. 24 24 -- 11
Tennessee.................. 16 5 11 8
Texas...................... 29 29 -- 14
Virginia................... 2 -- 2 1
Washington, DC............. 1 1 -- *
Wisconsin.................. 9 3 6 4
--- --- --- ---
Total.................... 212 125 87 100
=== === === ===
</TABLE>
- --------
* less than 1%
Build-to-Suit Programs
Under its build-to-suit programs, the Company generally constructs towers
only after having signed an antennae site lease agreement with an anchor
tenant and having made the determination that the initial or planned capital
investment for such tower would not exceed a targeted multiple of tower cash
flow after a certain period of time. In selling its build-to-suit programs,
the Company's sales representatives utilize their existing relationships in
the wireless communications industry to target wireless service providers
interested in outsourcing their network buildout. Proposals for build-to-suit
towers are made by the Company's sales
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representatives in response to competitive bids or specific requests and in
circumstances where the Company believes the provider would have interest in
build-to-suit towers. Although the terms vary from proposal to proposal, the
Company typically offers a five-year lease agreement with four additional
five-year renewal periods. While the proposed monthly rent also varies,
broadband customers such as PCS, cellular or ESMR generally pay more than the
aggregate monthly rent paid by paging or other narrowband customers. In
addition, anchor tenants will typically pay lower monthly rents than
subsequent tenants of a similar type service. In certain cases, an anchor
tenant may also enjoy an introductory lease rate for a period of time.
If a wireless provider accepts the terms of the proposal submitted by the
Company, the provider will award the Company a non-binding mandate to pursue
(i) specific sites; (ii) search rings; or (iii) general areas. Based on the
status of the site the Company has been given a mandate to pursue, the Company
will perform due diligence investigations for a designated period (typically
not to exceed 30 days) during which time the Company will analyze the site
based on a number of factors, including colocation opportunities, zoning and
permitting issues, economic potential of the site, difficulty of constructing
a multi-tenant tower and remoteness of the site. These mandates are non-
binding agreements and either party may terminate the mandate at any time.
If, after the Company's due diligence investigation during the mandate, the
Company concludes that it is economically feasible to construct the tower, the
Company will enter into an antennae site lease agreement with the provider.
The antennae site lease agreements provide, among other terms, that all
obligations are conditioned on the Company receiving all necessary zoning
approvals where zoning remains to be obtained. Certain of the antennae site
lease agreements contain penalty or forfeiture provisions in the event the
tower is not completed within specified time periods. The Company has
negotiated several master build-to-suit agreements, including antennae site
lease terms, with providers in specific markets that the Company believes will
facilitate its obtaining build-to-suit programs from such providers in those
markets.
Acquisitions
The Company actively pursues acquisitions of revenue-producing communication
sites. The Company's acquisition strategy, like its build-to-suit strategy, is
financially-oriented as opposed to geographically or customer-oriented. The
Company's goal is to acquire towers that have an initial or planned capital
investment not exceeding a targeted multiple of tower cash flow after a
certain period of time. Tower cash flow is determined by subtracting from
gross tenant revenues the direct expenses associated with operating the
communication site, such as ground lease payments, real estate taxes,
utilities, insurance and maintenance. As of June 30, 1998, the Company had
acquired 87 existing towers. As of December 31, 1997, total capital
expenditures associated with the acquisition and construction of 51 towers
were approximately $14.2 million. In connection with the CSSI Acquisition, the
Company expects to invest up to $4.8 million by September 1998 to complete
construction of the towers acquired and as a contingent payment to the
sellers, provided that certain tenant revenue goals are realized. As of March
31, 1998, the Company has invested approximately $2.2 million to complete
construction of the towers and has paid approximately $2.5 million of
contingent consideration to the sellers. In January 1998, the Company also
acquired 17 towers in Pennsylvania at an initial cost of $3.3 million with an
additional contingent payment of $2.0 million if certain target revenues are
met. Further, the Company anticipates that it will cost an additional $0.7
million to upgrade and rebuild such towers. As of December 31, 1997, there
were 230 tenant leases on such towers, ranging from one tenant to 13 tenants
per tower and generating gross revenues per tower ranging from $9,600 per year
to $98,105 per year.
The Company's acquisition activities are directed by dedicated mergers and
acquisitions personnel who are responsible for identification, negotiation,
documentation and consummation of acquisition opportunities, as well as the
coordination and management of independent advisors and consultants retained
by the Company from time to time in connection with acquisitions. In addition
to its mergers and acquisitions personnel, the Company relies on its national
field representatives to identify potential acquisitions. Acquisition
prospects identified by the Company's field representatives are generally
smaller, involving one to five towers, and often provide the Company with the
exclusive opportunity to structure and consummate a transaction with the
potential seller. The Company believes that its field representatives and
knowledge of potential acquisition candidates gained through its substantial
site development business experience provide it with a competitive advantage,
and will permit the
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Company to identify and consummate acquisitions on more favorable terms than
would be available to the Company through competitively-bid or brokered
acquisition prospects. As is the case with its build-to-suit programs, the
Company's focus is to acquire multi-tenant communication sites with
underutilized capacity in locations that the Company believes will be
attractive to wireless service providers which have not yet built out their
service in such locations.
Lease/Sublease
Under its lease/sublease program, the Company leases antennae space on a
communication site and then subleases such space to wireless service
providers. These providers prefer the financial benefits associated with the
lease/sublease program, which include reduced capital expenditures, as
compared to paying for site development services on a fee basis. Wireless
paging providers comprise a significant majority of customers who sublease
antennae sites from the Company. The subleases generally have original terms
of five years (with four or five renewal periods of five years each) and
usually provide for annual or periodic price increases.
Maintenance and Management
Once acquired or constructed, the Company maintains and manages its
communication sites through a combination of in-house personnel and
independent contractors. In-house personnel are responsible for oversight and
supervision of all aspects of site maintenance and management, and are
particularly responsible for monitoring security access and lighting, RF
emission and interference issues, signage, structural engineering and tower
capacity, tenant relations and supervision of independent contractors.
Independent contractors are hired locally by the Company to perform routine
maintenance functions such as landscaping, pest control, snow removal,
vehicular access, site access and equipment installation oversight.
Independent contractors are engaged by the Company on a fixed fee or time and
materials basis or, in a few limited circumstances where such contractors were
sellers of towers to the Company, for a percentage of tower cash flow.
The Company is in the process of developing its network operations center in
Boca Raton, Florida where it will centralize monitoring of security access and
lighting, as well as other functions. These tasks are currently outsourced by
the Company to independent contractors or to the PCS or cellular tenants on
the Company's towers. It is anticipated that the network operations center
will be operational in the third quarter of 1998. As the number of
communication sites owned and managed by the Company increases, the Company
anticipates increased expenditures to expand its maintenance infrastructure,
including expenditures for personnel and computer hardware and software, and
such expenditures may be material.
CUSTOMERS
The Company has performed site development and site leasing services for
several of the largest wireless service providers over the past eight years.
The majority of the Company's contracts have been for PCS broadband, cellular
and paging customers. The Company also serves PCS narrowband, ESMR, SMR and
MDS wireless providers. In both its site development and site leasing
businesses, the Company works with both large national providers and smaller
local, regional or private operators. In the twelve-month period ended
December 31, 1997, the Company's largest customers were Sprint PCS and Pacific
Bell Mobile Services, representing 53.6% and 14.0%, respectively, of site
development revenues and PageNet and A+ Network, representing 60.0% and 12.5%,
respectively, of site leasing revenues. No other customer represented more
than 10.0% of the Company's revenues. See "Risk Factors--Customer
Concentration."
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Customers for whom the Company has provided site development services in
1996 or 1997 include:
A+ Network Pacific Bell Mobile Services
Aerial Communications PageNet
AT&T Wireless Services Paging Network, Inc.
Bell Atlantic NYNEX Mobile Systems Powertel
BellSouth Mobility PrimeCo PCS
CellNet Data Systems Spectrum Resources, Inc.
Centennial Communications Sprint PCS
Commnet Cellular, Inc. 360(degrees)Communications Company
Nextel US West Communication
Omnipoint WinStar
SALES AND MARKETING
The Company's sales and marketing goals are (i) to further cultivate
existing customers to maximize sales of site development services, as well as
to obtain mandates for build-to-suit programs; (ii) to sustain its market
leadership position in the site development business; (iii) to position the
Company to become a market leader in the site leasing business; (iv) to use
existing relationships and develop new relationships with wireless service
providers to lease antennae space on Company owned or managed communication
sites; and (v) to form affiliations with select communications systems vendors
who utilize end-to-end services, including those provided by the Company,
which will enable the Company to market its services and product offerings
through additional channels of distribution. Historically, the Company has
capitalized on the strength of its experience, performance and relationships
with wireless service providers to position itself for additional site
development business. The Company has leveraged these attributes to obtain
build-to-suit mandates, and expects to continue to enhance and leverage these
attributes to sell site development services, build-to-suit programs and
antennae space on Company owned or managed communications sites.
The Company has a dedicated sales force supplemented by members of the
Company's executive management team. Maintaining and cultivating relationships
with wireless service providers is a main focus of senior management. The
Company's strategy is to delegate sales efforts to those Company employees who
have the best relationships with the wireless service providers. The
representatives are assigned specific accounts based on historical experience
with a provider and the quality of the relationship between the Company
representative and such provider. Most wireless service providers have
national corporate headquarters with regional offices. The Company believes
that most decisions for site development and site leasing services are made by
providers at the regional level with input from their corporate headquarters.
The Company's sales representatives work with provider representatives at the
local level and at the national level when appropriate. The Company's sales
staff compensation is heavily weighted to incentive-based goals and
measurements. In addition to its marketing and sales staff, the Company relies
upon its executive and operations personnel on the national and field office
levels to identify sales opportunities within existing customer accounts, as
well as acquisition opportunities.
The Company's primary marketing and sales support is centralized and
directed from its headquarters office in Boca Raton, Florida. The Company has
a full-time staff dedicated to its marketing efforts. The marketing and sales
support staff are charged with implementing the Company's marketing
strategies, prospecting and producing sales presentation materials and
proposals. The Company believes that its centralized marketing and sales
support provides process efficiencies, quality control and economies of scale.
Its headquarters office is equipped with the requisite computer hardware and
software (including a national database of sales and marketing information).
COMPETITION
The Company competes with (i) other independent tower owners, some of which
also provide site leasing and site development services; (ii) providers, which
own and operate their own tower networks; (iii) service
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companies that provide engineering and site development services; and (iv)
other potential competitors, such as utilities, outdoor advertisers and
broadcasters, some of which have already entered the tower industry. Wireless
service providers that own and operate their own tower networks generally are
substantially larger and have greater financial resources than the Company.
The Company believes that tower location, capacity, price, quality of service
and density within a geographic market historically have been and will
continue to be the most significant competitive factors affecting tower
leasing companies. The Company also competes for development and new tower
construction opportunities with wireless service providers, site developers
and other independent tower operating companies and believes that competition
for site development will increase and that additional competitors will enter
the tower market, some of which may have greater financial resources than the
Company.
The following is a list of certain of the tower companies that compete with
the Company: American Tower Corporation, Crown Castle International Corp.,
Lodestar Communications, Microcell, Motorola, OmniAmerica Wireless (an
affiliate of Hicks, Muse, Tate and Furst), Pinnacle Tower, SpectraSite,
TeleCom Towers (an affiliate of Cox Enterprises) and Unisite.
The following companies are primarily competitors for the Company's site
management activities: AAT, APEX, Comsite International, JJS Leasing, Inc.,
Motorola, Signal One, Subcarrier Communications and Tower Resources
Management.
The Company believes that the majority of its competitors in the site
development business operate within local market areas exclusively, while some
firms appear to offer their services nationally, including Whalen & Company,
Gearon & Company (a subsidiary of American Tower Corporation) and SpectraSite.
The market includes participants from a variety of market segments offering
individual, or combinations of, competing services. The field of competitors
includes site development consultants, zoning consultants, real estate firms,
right-of-way consulting firms, construction companies, tower owners/managers,
radio frequency engineering consultants, telecommunications equipment vendors
(which provide end-to-end site development services through multiple
subcontractors) and providers' internal staff. The Company believes that
providers base their decisions on site development services on certain
criteria, including a company's experience, track record, local reputation,
price and time for completion of a project. The Company believes that it
competes favorably in these areas.
EMPLOYEES
As of June 30, 1998, the Company had 390 employees, none of whom are
represented by a collective bargaining agreement. The Company considers its
employee relations to be good. Due to the nature of the business of the
Company, it experiences a "run-up" and "run-down" in employees as contracts
are completed in one area of the country and are commenced in a different
area.
PROPERTIES
The Company is headquartered in Boca Raton, Florida, where it currently
leases approximately 32,000 square feet of space. Due to the need for
additional space resulting from its growth, in February 1998 the Company
increased and consolidated its headquarters space in a single location in Boca
Raton. The aggregate annual lease expense for the headquarters space is
anticipated to increase by approximately $500,000 as a result of the
relocation. The Company opens and closes project offices from time to time in
connection with its site development business, which offices are generally
leased for periods not to exceed 18 months.
LEGAL PROCEEDINGS
From time to time, the Company is involved in various legal proceedings
relating to claims arising in the ordinary course of business. The Company is
not a party to any such legal proceeding, the adverse outcome of which,
individually or in the aggregate, is expected to have a material adverse
effect on the Company's financial prospects, condition or results of
operations.
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INTERNATIONAL
The Company's primary focus is on its domestic operations. From time to
time, however, the Company may evaluate international opportunities and take
advantage of those that it feels may be profitable for the Company. Currently,
the Company is not considering any significant international projects.
REGULATORY AND ENVIRONMENTAL MATTERS
Federal Regulations. Both the FCC and FAA regulate towers used for wireless
communications transmitters and receivers. Such regulations control the siting
and marking of towers and may, depending on the characteristics of particular
towers, require registration of tower facilities. Wireless communications
devices operating on towers are separately regulated and independently
licensed based upon the particular frequency used.
Pursuant to the requirements of the Communications Act of 1934, as amended,
the FCC, in conjunction with the FAA, has developed standards to consider
proposals for new or modified antennae. These standards mandate that the FCC
and the FAA consider the height of proposed antennae, the relationship of the
structure to existing natural or man-made obstructions and the proximity of
the antennae to runways and airports. Proposals to construct or to modify
existing antennae above certain heights are reviewed by the FAA to ensure the
structure will not present a hazard to aviation. The FAA may condition its
issuance of a no-hazard determination upon compliance with specified lighting
and/or marking requirements. The FCC will not license the operation of
wireless telecommunications devices on towers unless the tower has been
registered with the FCC or a determination has been made that such
registration is not necessary. The FCC will not register a tower unless it has
been cleared by the FAA. The FCC may also enforce special lighting and
painting requirements. Owners of wireless transmissions towers may have an
obligation to maintain painting and lighting to conform to FCC standards.
Tower owners may also bear the responsibility of notifying the FAA of any
tower lighting outage. The Company generally indemnifies its customers against
any failure to comply with applicable regulatory standards. Failure to comply
with the applicable requirements may lead to civil penalties.
The 1996 Telecom Act amended the Communications Act of 1934 by giving state
and local zoning authorities jurisdiction over the construction, modification
and placement of towers. The new law preserves local zoning authority by
prohibiting any action that would (i) discriminate between different providers
of personal wireless services or (ii) ban altogether the construction,
modification or placement of radio communication towers. Finally, the 1996
Telecom Act requires the federal government to help licensees for wireless
communications services gain access to preferred sites for their facilities.
This may require that federal agencies and departments work directly with
licensees to make federal property available for tower facilities.
Owners and operators of antennae may be subject to, and therefore must
comply with, Environmental Laws. The FCC's decision to license a proposed
tower may be subject to environmental review pursuant to the National
Environmental Policy Act of 1969 ("NEPA"), which requires federal agencies to
evaluate the environmental impacts of their decisions under certain
circumstances. The FCC has issued regulations implementing NEPA. Such
regulations place responsibility on each applicant to investigate any
potential environmental effects of operations and to disclose any significant
effects on the environment in an environmental assessment prior to
constructing a tower. In the event the FCC determines the proposed tower would
have a significant environmental impact based on the standards the FCC has
developed, the FCC would be required to prepare an environmental impact
statement. This process could significantly delay the registration of a
particular tower.
As an owner and operator of real property, the Company is subject to certain
Environmental Laws which may impose strict, joint and several liability for
the cleanup of on-site or off-site contamination and related personal or
property damages. The Company is also subject to certain Environmental Laws
that govern tower placement, including pre-construction environmental studies.
Operators of towers must also take into consideration certain RF emissions
regulations that impose a variety of procedural and operating requirements.
The potential connection between RF emissions and certain negative health
effects, including some forms of
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cancer, has been the subject of substantial study by the scientific community
in recent years. To date, the results of these studies have been inconclusive.
The Company believes that it is in substantial compliance with and has no
material liability under all applicable Environmental Laws. Nevertheless,
there can be no assurance that the costs of compliance with existing or future
Environmental Laws and liability related thereto will not have a material
adverse effect on the Company's prospects, financial condition or results of
operations.
State and Local Regulations. Most states regulate certain aspects of real
estate acquisition and leasing activities. Where required, the Company
conducts the site acquisition portions of its site development services
business through licensed real estate brokers or agents, who may be employees
of the Company or hired as independent contractors. Local regulations include
city and other local ordinances, zoning restrictions and restrictive covenants
imposed by community developers. These regulations vary greatly, but typically
require tower owners to obtain approval from local officials or community
standards organizations prior to tower construction. Local zoning authorities
generally have been hostile to construction of new transmission towers in
their communities because of the height and visibility of the towers.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Steven E. Bernstein..... 37 Chairman of the Board, President and Chief Executive Officer
Ronald G. Bizick, II.... 30 Executive Vice President--Sales and Marketing
Robert M. Grobstein..... 39 Chief Financial Officer
Michael N. Simkin....... 45 Chief Operating Officer
Jeffrey A. Stoops....... 40 Senior Vice President--Corporate Development and General Counsel
Donald B. Hebb, Jr...... 55 Director
C. Kevin Landry......... 53 Director
Richard W. Miller....... 57 Director
</TABLE>
Steven E. Bernstein, founder of the Company, has been President and Chief
Executive Officer of the Company since its inception in 1989. From 1986 to
1989, Mr. Bernstein was employed by McCaw Cellular Communications ("McCaw").
While at McCaw, Mr. Bernstein was responsible for the development of the
initial Pittsburgh non-wireline cellular system and the start-up of the
Pittsburgh sales network. Mr. Bernstein is a graduate of the University of
Florida, where he majored in Real Estate and earned a Bachelor of Science
degree in Business Administration. He was PCIA's 1996 Entrepreneur of the
Year.
Ronald G. Bizick, II has been an executive officer since 1993. He is
responsible for sales and marketing of the Company's site development and site
leasing services. Prior to joining the Company in 1990, Mr. Bizick was
employed by a private land planning and development firm specializing in
commercial and residential wetland and zoning approvals. Mr. Bizick is a cum
laude graduate of the University of Pittsburgh, where he earned a Bachelor of
Arts degree in Business and Communications.
Robert M. Grobstein, CPA, has been the Chief Financial Officer of the
Company since December 1993. He is responsible for risk management, financial
reporting, site administration and accounting. From January 1990 to December
1993, Mr. Grobstein served as Controller for Turnberry Isle Resort and Country
Club, where he supervised a 28-person accounting staff. Mr. Grobstein is a
graduate of Robert Morris College, where he majored in Accounting and earned a
Bachelor of Science degree in Business Administration. He is a member of both
the American Institute of C.P.A.'s and the Florida Institute of C.P.A.'s.
Michael N. Simkin, Chief Operating Officer, joined the Company on April 13,
1998. From July 1997 to February 1998, he was Chief Executive Officer of
Centennial Communications Corporation, a specialized mobile radio service
provider based in Denver. From April 1995 to April 1997, he was Vice President
and General Manager of PrimeCo Personal Communications for the South Florida
region. From April 1993 to April 1995, Mr. Simkin was Executive Director of
Corporate Strategy for Airtouch Communications. He has an A.B. in Economics
and MBA Degree from the University of California at Berkeley.
Jeffrey A. Stoops, Senior Vice President--Corporate Development and General
Counsel, joined the Company in April 1997. Mr. Stoops is responsible for all
mergers and acquisitions, capital market activities and legal matters for the
Company. Prior to joining the Company, Mr. Stoops was a partner with Gunster,
Yoakley, Valdes-Fauli & Stewart, P.A., a South Florida law firm, where he
practiced for thirteen years in the corporate, securities and mergers and
acquisitions areas. Mr. Stoops received his Bachelor of Science degree and his
JD degree from Florida State University, and is a member of The Florida Bar.
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Donald B. Hebb, Jr. was elected as a director of the Company in February
1997. Mr. Hebb also has been a Managing Member of the general partner of ABS
Capital Partners II, L.P. ("ABS"), a private equity fund, and related
entities, since December 1993. Prior to that time, he was a Managing Director
of Alex. Brown and Sons Incorporated, investing private equity funds. Prior to
that time, Mr. Hebb served as President and Chief Executive Officer of Alex.
Brown Incorporated, and in that capacity, initiated the Alex. Brown Merchant
Banking Group early in 1990. Mr. Hebb was the nominee of ABS for election as
director.
C. Kevin Landry was elected as a director of the Company in March 1997. Mr.
Landry has been a Managing Director and Chief Executive Officer of TA
Associates, Inc. ("TA Associates") since its incorporation in 1994. From 1982
to 1994, he served as a Managing Partner of its predecessor partnership. Mr.
Landry also serves on the Board of Directors of Standex International
Corporation. He has also served as a director of Alex. Brown Incorporated. Mr.
Landry was the nominee of TA Associates for election as director.
Richard W. Miller was elected as a director of the Company in May 1997. From
1993 to 1997, Mr. Miller was a Senior Executive Vice President and Chief
Financial Officer of AT&T. From 1990 to 1993, he was the Chairman and Chief
Executive Officer of Wang Laboratories, Inc. Mr. Miller also serves on the
Board of Directors of Avalon Properties, Inc. and Closure Medical Corporation.
The terms of the Company's Series A Preferred Stock contemplate a five
person Board of Directors. Such terms provide that two of these persons will
be elected by the Series A Preferred Stockholders and the other two (other
than Mr. Bernstein) will be determined by a vote of the stockholders (with one
required to be reasonably acceptable to the Directors elected by the Series A
Preferred Stockholders) of the Company. Messrs. Bernstein and Bizick through
their current ability to vote in excess of 50% of all votes represented by
outstanding capital stock of the Company, effectively control this
determination. Messrs. Hebb and Landry currently serve as the representatives
of the Series A Preferred Stockholders.
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<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the cash and non-cash compensation paid by or
incurred on behalf of the Company to its Chief Executive Officer and three
other executive officers for each of the years ended December 31, 1995, 1996
and 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------
LONG TERM
COMPENSATION
AWARDS
------------
NUMBER OF
SECURITIES ALL
UNDERLYING OTHER
OPTIONS/ COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) SARS (#) SATION($)
--------------------------- ---- ---------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Steven E. Bernstein.........
Chairman of the Board, 1997 354,822 100,000(1) -- 14,669(2)
President and Chief 1996 195,000 3,995,000 -- 22,172(2)
Executive Officer 1995 195,000 1,800,000 -- 19,201(2)
Ronald G. Bizick, II........ 1997 275,000 100,000 773,528(3) --
Executive Vice President- 1996 75,000 1,629,000 -- --
Sales and Marketing 1995 75,000 506,444 -- --
Robert M. Grobstein......... 1997 204,815 100,000 386,764 --
Chief Financial Officer 1996 104,980 560,020 -- --
1995 94,980 85,770 -- --
Jeffrey A. Stoops...........
Senior Vice President-
Corporate 1997 304,798(4) 100,000 100,000(5) --
Development and General 1996 -- -- -- --
Counsel 1995 -- -- -- --
</TABLE>
- --------
(1) Represents 26,810 shares of Class A Common Stock issued to Mr. Bernstein
in the second quarter of 1998.
(2) This represents the provision of a car allowance to Mr. Bernstein for the
years ending December 31, 1997, 1996 and 1995.
(3) These options were exercised by Mr. Bizick in June 1998.
(4) This represents Mr. Stoops' annual compensation. Mr. Stoops began his
employment with the Company on April 1, 1997.
(5) On March 14, 1997, Mr. Bernstein granted Mr. Stoops options to purchase
1,369,863 shares of his Class B Common Stock at an exercise price of $2.19
a share. For a more detailed description of this transaction, see "Certain
Transactions."
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL RATE OF
STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(1)
---------------------------------------------- -----------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE
OPTIONS/SARS EMPLOYEES PRICE EXPIRATION
NAME GRANTED IN 1997 PER SHARE DATE 5% ($) 10% ($)
---- ------------ ------------ --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Steven E. Bernstein..... -- -- -- N/A -- --
Ronald G. Bizick, II.... 773,528(1) 43.0 $ 0.05 12/31/06 3,276,000 5,238,000
Robert M. Grobstein..... 386,764(2) 21.5 $ 0.05 12/31/06 1,638,000 2,619,000
Jeffrey A. Stoops....... 100,000(3) 5.5 $ 2.63 3/17/07 165,000 419,000
</TABLE>
- --------
(1) This represents options issued in partial substitution for Mr. Bizick's
ownership rights in SBA, Inc. prior to the Corporate Reorganization. See
"Certain Transactions." These options were exercised by Mr. Bizick in June
1998.
(2) This represents options issued in partial substitution for Mr. Grobstein's
ownership rights in SBA, Inc. prior to the Corporate Reorganization. See
"Certain Transactions."
(3) See footnote 5 to the Summary Compensation Table above.
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<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS AT
AT DECEMBER 31, 1997 DECEMBER 31, 1997($)
-------------------------- -------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Steven E. Bernstein..... -- -- -- -- -- --
Ronald G. Bizick, II.... -- -- 773,528(1) -- 1,995,702 --
Robert M. Grobstein..... -- -- 386,764 -- 997,851 --
Jeffrey A. Stoops....... -- -- 33,333(2) 66,667(3) -- --
</TABLE>
- --------
(1) These options were exercised by Mr. Bizick in June 1998.
(2) This does not include exercisable options to acquire 456,621 shares of
Class B Common Stock granted to Mr. Stoops by Mr. Bernstein.
(3) This does not include unexercisable options to acquire 913,242 shares of
Class B Common Stock granted to Mr. Stoops by Mr. Bernstein.
EMPLOYMENT AGREEMENTS
Steven E. Bernstein. The Company does not have an employment agreement with
Steven E. Bernstein, its President and Chief Executive Officer. Mr. Bernstein
is, therefore, not subject to non-competition or non-solicitation contractual
restrictions. Mr. Bernstein was paid a base salary of $350,000 for 1997 and an
annual cash bonus based on achievement of performance criteria established by
the Board which did not exceed his base annual salary. Mr. Bernstein's
compensation and other terms of employment are determined by the Company's
Board of Directors.
Ronald G. Bizick, II. Mr. Bizick is party to an employment agreement with
the Company dated as of January 1, 1997. Under his employment agreement, Mr.
Bizick receives an initial base salary of $275,000 per annum and an annual
cash bonus based on achievement of performance criteria established by the
Board of Directors, that is not permitted to exceed Mr. Bizick's base annual
salary. Mr. Bizick's employment agreement is for an initial three-year term,
and automatically renews for an additional one-year term unless either Mr.
Bizick or the Company provides written notice to the other party at least 90
days prior to renewal. Mr. Bizick's employment agreement provides that upon
termination of employment by the Company, other than for cause or retirement,
the Company shall pay an amount equal to the aggregate present value of the
product of the base annual compensation paid to Mr. Bizick by the Company
multiplied by 2.0. The agreement also provides for noncompetition,
nonsolicitation and nondisclosure covenants.
Robert M. Grobstein. Mr. Grobstein is party to an employment agreement with
the Company dated as of January 1, 1997. Under his employment agreement, Mr.
Grobstein received an initial base salary of $200,000 per annum and an annual
cash bonus based on achievement of performance criteria established by the
Board of Directors, which is not permitted to exceed Mr. Grobstein's base
annual salary. Mr. Grobstein's employment agreement is for an initial three-
year term, and automatically renews for an additional one-year term unless
either Mr. Grobstein or the Company provides written notice to the other party
at least 90 days prior to renewal. Mr. Grobstein's employment agreement
provides that upon termination of employment by the Company, other than for
cause or retirement, the Company shall pay an amount equal to the aggregate
present value of the base annual compensation paid to Mr. Grobstein by the
Company, multiplied by 2.0. The agreement also provides for noncompetition,
nonsolicitation and nondisclosure covenants.
Michael N. Simkin. Mr. Simkin is party to an employment agreement with the
Company dated as of June 15, 1998. Under his employment agreement, Mr. Simkin
receives an initial base salary of $250,000 per annum and an annual cash bonus
based on achievement of performance criteria established by the Board of
Directors. This bonus is not permitted to exceed Mr. Simkin's pro-rated base
salary then in effect. For calendar year 1998, Mr. Simkin's pro-rated period
is the period from April 13, 1998 to December 31, 1998. Mr. Simkin's
employment agreement is for an initial 35-month term, and automatically renews
for an additional one-year term, unless either Mr. Simkin or the Company
provides written notice to the other party at least 90 days prior to
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<PAGE>
renewal. Mr. Simkin's employment agreement provides that upon termination of
employment by the Company, other than for cause or retirement, the Company
shall pay an amount equal to one times Mr. Simkin's aggregate annual
compensation. The agreement also provides for noncompetition, nonsolicitation
and nondisclosure covenants.
Jeffrey A. Stoops. Mr. Stoops is party to an employment agreement with the
Company dated as of March 14, 1997. Under his employment agreement, Mr. Stoops
receives an initial base salary of $300,000 per annum and an annual cash bonus
based on achievement of performance criteria established by the Board of
Directors. This bonus is not permitted to exceed $200,000 for calendar year
1997; for the remainder of the employment agreement, the bonus is not
permitted to exceed Mr. Stoops' base annual salary. Mr. Stoops' employment
agreement is for an initial 32-month term, and automatically renews for an
additional one-year term, unless either Mr. Stoops or the Company provides
written notice to the other party at least 90 days prior to renewal. Mr.
Stoops' employment agreement provides that upon termination of employment by
the Company, other than for cause or retirement, the Company shall pay an
amount equal to the aggregate present value of the product of (i) the base
annual compensation paid to Mr. Stoops by the Company, multiplied by (ii) 1.0.
The agreement also provides for noncompetition, nonsolicitation and
nondisclosure covenants.
COMPENSATION OF DIRECTORS
The three outside directors of the Company are reimbursed for expenses
incidental to attendance at meetings of the Board of Directors. In addition,
Richard W. Miller receives compensation for his services as director and a
consultant to the Company. Mr. Miller receives $1,000 per Board meeting for
attendance at such meetings, and $1,000 per day for consulting, plus expenses.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Board of Directors does not currently have a compensation
committee. During 1996, Mr. Bernstein served as a director, Chairman of the
Board, President and Chief Executive Officer of the Company. Mr. Bernstein
participated in deliberations of the Company's Board of Directors concerning
executive compensation.
STOCK OPTION PLAN
The Company has adopted the 1996 Stock Option Plan (the "Option Plan"),
pursuant to which stock options (both Nonqualified Stock Options and Incentive
Stock Options, as defined in the Option Plan), stock appreciation rights and
restricted stock may be granted to directors, key employees and consultants
(the "Plan Participants") at a price per share equal to the greater of fair
market value at the time of grant or $2.63. A total of 1,800,000 shares of
Class A Common Stock are reserved for issuance under the Option Plan. As of
June 30, 1998, options to acquire 1,041,833 shares were issued and
outstanding, each with an exercise price of $2.63 per share. These options
generally vest over three-year periods from the date of grant. As of June 30,
1998, options granted under the Option Plan to purchase 2,333 shares had been
exercised.
With respect to the grant of awards under the Option Plan, the Board of
Directors or a committee thereof will determine persons to be granted stock
options, stock appreciation rights and restricted stock, the amount of stock
or rights to be optioned or granted to each such person, and the terms and
conditions of any stock options, stock appreciation rights and restricted
stock. Both Incentive Stock Options and Nonqualified Stock Options may be
granted under the Option Plan.
Stock appreciation rights may be granted in conjunction with the grant of an
Incentive or Nonqualified Stock Option under the Option Plan or independently
of any such stock option. A stock appreciation right granted in conjunction
with a stock option may be an alternative right. In which event, the exercise
of the stock option terminates the stock appreciation right to the extent of
the shares purchased upon exercise of the stock option and, correspondingly,
the exercise of the stock appreciation right terminates the stock option to
the extent of the shares with respect to which such right is exercised.
Subject to the terms of the Option Plan, the Board of Directors or a committee
thereof may award shares of restricted stock to the Plan Participants.
Generally, a restricted stock award will not require the payment of any option
price by a Plan Participant but will call for the transfer of shares to the
Plan Participant subject to forfeiture, without payment of any consideration
by the Company, if the Plan Participant's employment terminates during a
"restricted" period (which must be at least six months) specified in the award
of the restricted stock.
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<PAGE>
CERTAIN TRANSACTIONS
SBACC was formed in December, 1996 to be the holding company for all of the
Company's various subsidiaries. In March 1997, Steven E. Bernstein, at that
time the sole stockholder of SBA, Inc. and Leasing, as well as the President
and Chief Executive Officer of SBACC, contributed all of the outstanding
shares of capital stock of such companies to SBACC in exchange for 8,075,000
shares of Class B Common Stock. In addition, also at the same time in March
1997, Ronald G. Bizick, II and Robert M. Grobstein, the Company's Executive
Vice President-Sales and Marketing and Chief Financial Officer, respectively,
who held options in SBA, Inc. and Leasing, voluntarily terminated these
options (along with existing employment and incentive agreements) in exchange
for, in the case of Mr. Bizick, 176,472 shares of Class A Common Stock and
immediately exercisable options to purchase an additional 773,528 shares of
Class A Common Stock and, in the case of Mr. Grobstein, 88,236 shares of Class
A Common Stock and immediately exercisable options to purchase an additional
386,764 shares of Class A Common Stock. These options are exercisable at $0.05
per share, and in June 1998 Mr. Bizick exercised all of his options. On March
7, 1997, the Company redeemed the outstanding shares of Class A Common Stock
from Messrs. Bizick and Grobstein for $8.50 per share.
On March 8, 1997, the Company loaned Mr. Bernstein $3.5 million at the
applicable Federal rate (the "AFR") determined by the Internal Revenue Service
(the "IRS"). The loan provides that no payments of principal or interest are
required to be made by Mr. Bernstein until maturity, which is the earlier of
three years or upon consummation by the Company of an initial public offering
of its Common Stock. The loan is non-recourse and is secured by 823,530 shares
of Class B Common Stock owned by Mr. Bernstein. The loan may be paid, at Mr.
Bernstein's option, in shares of Common Stock valued at the initial public
offering price.
On March 14, 1997, Mr. Bernstein granted Jeffrey A. Stoops, the Company's
Senior Vice President-Corporate Development and General Counsel, an option to
purchase 1,369,863 shares of his Class B Common Stock at an exercise price of
$2.19 per share. The options vest in equal one-third increments over three
years, with the first 456,621 shares having become vested on December 31,
1997. Upon exercise by Mr. Stoops, the shares become Class A Common Stock.
THE PREFERRED STOCK OFFERING
The Company's Preferred Stock Offering raised $30.0 million of gross
proceeds and binding commitments to fund an additional $20.0 million in Series
A Preferred Stock, all at $8.50 per share. The Preferred Stock Offering was
closed on the basis of the information set forth in an Prospectus including
projected financial information, which projected 1997 and 1998 site
development revenues in excess of those recognized in 1996. Donald B. Hebb,
Jr. and C. Kevin Landry, directors of the Company, participated in the
Preferred Stock Offering through their positions as executive officers of
certain of the preferred stock investors.
In a Board of Directors meeting held at the end of March 1997, management of
the Company presented projected short-term and interim financial information
which cast in doubt the continued reasonableness of the projections. The
reasons provided by management of the Company for the revised projected short-
term and interim financial information centered around (i) the current and
anticipated near-term market conditions for site development services
including construction and design services and (ii) the belief that the
domestic market for these services would probably not be as favorable in 1997
and possibly in 1998 as it was for the Company in 1996. This was primarily due
to the inability of PCS and C-block licensees to obtain financing necessary to
begin their site development activities and changing industry trends,
particularly the move toward outsourcing tower ownership to independent third
parties.
Management of the Company and representatives of ABS and TA Associates
agreed that the conditions described above were materially different from
those reflected in the interim financial information and from those reflected
in the projections. As a result, management of the Company and the
representatives of ABS and TA Associates agreed to a repricing of the Series A
Preferred Stock (by issuing additional shares for no additional consideration)
and to revise certain terms of the Series A Preferred Stock. Among other terms
that were revised, the obligation of the Series A Preferred Stock purchasers
to fund an additional $20.0 million on a pro rata basis
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<PAGE>
at $4.73 per share became contingent on the Company meeting certain revenue
and/or operating income targets in 1997 and 1998. The Company does not
currently expect these targets to be met. See "Description of Capital Stock--
Preferred Stock" for a description of the revisions to the terms of the Series
A Preferred Stock.
LIMITED LIABILITY AND INDEMNIFICATION
Under the Florida Business Corporation Act (the "FBCA"), a director is not
personally liable for monetary damages to the corporation or any other person
for any statement, vote, decision, or failure to act unless (i) the director
breached or failed to perform his duties as a director and (ii) the director's
breach of, or failure to perform, those duties constitutes: (1) a violation of
the criminal law, unless the director had reasonable cause to believe his
conduct was lawful or had no reasonable cause to believe his conduct was
unlawful, (2) a transaction from which the director derived an improper
personal benefit, either directly or indirectly, (3) a circumstance under
which an unlawful distribution is made, (4) in a proceeding by or in the right
of the corporation to procure a judgment in its favor or by or in the right of
a stockholder, conscious disregard for the best interest of the corporation or
willful misconduct, or (5) in a proceeding by or in the right of someone other
than the corporation or stockholder, recklessness or an act or omission which
was committed in bad faith or with malicious purpose or in a manner exhibiting
wanton and willful disregard of human rights, safety, or property. A
corporation may purchase and maintain insurance on behalf of any director or
officer against any liability asserted against him or her and incurred by him
or her in his or her capacity or arising out of his or her status as such,
whether or not the corporation would have the power to indemnify him or her
against such liability under the FBCA.
The Articles of the Company provide that the Company shall, to the fullest
extent permitted by applicable law, as amended from time to time, indemnify
all officers and directors of the Company.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.
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OWNERSHIP OF CAPITAL STOCK
The table below sets forth, as of June 30, 1998, certain information with
respect to the beneficial ownership of Capital Stock by (i) each person who is
known by the Company to be beneficial owner of more than 5% of any class or
series of Capital Stock of the Company; (ii) each of the directors and
executive officers individually; and (iii) all directors and executive
officers as a group. At June 30, 1998, the Company had outstanding the
following shares of Capital Stock: Class A Common Stock--802,671 shares; Class
B Common Stock--8,075,000 shares; Series A Preferred Stock--8,050,000 shares.
At June 30, 1998 no other classes or series of Capital Stock have any shares
issued and outstanding. Each share of Series A Preferred Stock is currently
convertible into one share of Class A Common Stock and one share of Series B
Preferred Stock upon the occurrence of certain events. See "Description of
Capital Stock." This table does not give effect to shares of Class A Common
Stock that may be acquired pursuant to options outstanding as of June 30,
1998, except as described in footnote 2.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF TOTAL
SHARES VOTING POWER OF
EXECUTIVE OFFICERS BENEFICIALLY CLASS A
AND DIRECTORS(1) TITLE OF CLASS OWNED(2) COMMON STOCK(2)
- ------------------ -------------- ------------ -------------------
<S> <C> <C> <C>
Steven E. Bernstein(3).. Class B Common Stock 8,075,000 49.6%
Class A Common Stock 26,810 --
Ronald G. Bizick, II.... Class A Common Stock 773,528 *
Robert M. Grobstein(4).. Class A Common Stock 386,764 *
Michael N. Simkin(5).... Class A Common Stock -- *
Jeffrey A. Stoops(6).... Class A Common Stock 489,954 *
Donald B. Hebb, Jr.(7).. Series A Preferred Stock 3,220,000 19.9
C. Kevin Landry(8)...... Series A Preferred Stock 2,736,987 16.8
Richard W. Miller(9).... Class A Common Stock 33,333 *
All executive officers
and directors as a
group
(8 persons)............ 15,285,755 86.8
<CAPTION>
BENEFICIAL OWNERS OF 5% OR
MORE OF CAPITAL STOCK
- --------------------------
<S> <C> <C> <C>
ABS Capital Partners,
II, L.P.(10)........... Series A Preferred Stock 3,220,000 19.9%
TA Associates, Inc.(11). Series A Preferred Stock 2,736,987 16.8
The Hillman Company(12). Series A Preferred Stock 1,169,808 7.2
</TABLE>
- --------
*Less than 1%.
(1) Except as otherwise indicated, the address of each executive officer and
director named in this table is c/o SBA Communications Corporation, One
Town Center Road, Third Floor, Boca Raton, Florida 33486.
(2) In determining the number and percentage of shares beneficially owned by
each person, shares that may be acquired by such person pursuant to
options exercisable within 60 days after March 31, 1998 are deemed
outstanding for purposes of determining the total number of outstanding
shares for such person and are not deemed outstanding for such purpose for
all other stockholders. To the Company's actual knowledge, except as
otherwise indicated, beneficial ownership includes sole voting and
dispositive power with respect to all shares. The Company has reserved for
issuance options to purchase 1,800,000 shares of the Class A Common Stock
at exercise prices at or above $2.63 per share, of which options for
1,041,833 shares were issued at June 30, 1998. Of these options, 176,833
will be exercisable within 60 days after June 30, 1998.
(3 Mr. Bernstein has granted Mr. Stoops options to purchase 1,369,863 of his
shares of Class B Common Stock at an exercise price of $2.19 per share,
which options vest over an approximately 33 month period in three equal
installments. On December 31, 1997, options to purchase 456,621 of such
shares became exercisable. Until such time as Mr. Stoops exercises his
options, Mr. Bernstein retains voting control over such shares. Upon
exercise by Mr. Stoops, the shares convert to Class A Common Stock.
(4) All shares are in the form of an immediately exercisable option to
purchase Class A Common Stock at $.05 per share.
(5) Does not include unvested options to purchase 200,000 shares of the Class
A Common Stock of the Company at an exercise price of $2.63 per share.
(6) Includes currently exercisable options granted by Mr. Bernstein to Mr.
Stoops for 456,621 shares at $2.19 per share and options granted under the
Option Plan for 33,333 shares currently exercisable at $2.63 per share.
Until exercised, the shares subject to the options granted by Mr.
Bernstein remain in the voting control of Mr. Bernstein. Does not include
options to purchase an additional 913,242 shares of Common Stock for $2.19
per share granted from Mr. Bernstein to Mr. Stoops, which vest in equal
installments on December 31, 1998 and December 31, 1999. Also does not
include additional options to purchase 66,667 shares of Class A Common
Stock at $2.63 per share granted under the Option Plan, which vest in
equal installments on December 31, 1998 and December 31, 1999.
(7) Includes 3,220,000 shares of Series A Preferred Stock owned by ABS. Mr.
Hebb is Managing Member of ABS Partners II, L.L.C., the general partner of
ABS. Mr. Hebb disclaims beneficial ownership of these shares, except to
the extent of his pecuniary interest therein.
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<PAGE>
(8) Includes 1,102,850 shares owned by Advent Atlantic and Pacific III, L.P.,
of which Mr. Landry is a Managing Director of the General Partner;
1,610,000 shares owned by Advent VII, L.P., of which Mr. Landry is
Managing Director of the General Partner; and 24,147 shares owned by TA
Venture Investors Limited Partnership, of which Mr. Landry is a General
Partner. Mr. Landry disclaims beneficial ownership of these shares, with
the exception of 2,212.93 shares held through TA Venture Investors Limited
Partnership.
(9) Includes options to purchase 33,333 shares of Class A Common Stock, of a
total number of options to purchase 100,000 shares at $2.63 per share,
which vest in three equal annual installments beginning May 22, 1998.
(10) See "Plan of Distribution." The principal business address of ABS Capital
Partners, II, L.P. is One South Street, Baltimore, MD 21202.
(11) Includes 1,102,850 shares owned by Advent Atlantic and Pacific III, L.P.,
of which TA Associates is a General Partner, 1,610,000 shares owned by
Advent VII, L.P., of which TA Associates is a General Partner, and 24,147
shares owned by TA Venture Investors Limited Partnership, of which Mr.
Landry is a General Partner. The principal business address of TA
Associates, Inc. is 125 High Street, Boston, MA 02110.
(12) Includes 233,960 shares held by C.G. Grefenstette and Thomas G. Bigley as
Trustees for Henry Lea Hillman, Jr., Juliet Lea Hillman, Audry Hilliard
Hillman, and William Talbott Hillman, 175,470 shares held by Henry L.
Hillman, Elsie Hilliard Hillman and C.G. Grefenstette as Trustees of the
Henry L. Hillman Trust, 584,908 shares owned by Juliet Challenger, Inc.,
and 175,470 shares owned by Venhill Limited Partnership. The principal
business address of The Hillman Company is Grant Building, Pittsburgh, PA
15219.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following summary of the terms and provisions of the Company's capital
stock does not purport to be complete and is qualified in its entirety by
reference to the actual terms and provisions of, including certain defined
terms used herein, the capital stock contained in the Company's Articles of
Incorporation, as amended.
The Company's Articles of Incorporation authorize 32,000,000 shares of Class
A Common Stock, 8,100,000 shares of Class B Common Stock and 30,000,000 shares
of preferred stock, of which 8,050,000 shares have been designated as Series A
Preferred Stock and 8,050,000 shares have been designated as Series B
Preferred Stock. In addition, the Company has designated 4,472,272 shares of
preferred stock as Series C Preferred Stock and 4,472,272 shares of preferred
stock as Series D Preferred Stock. At June 30, 1998, there were 802,671 shares
of Class A Common Stock issued and outstanding, 8,075,000 shares of Class B
Common Stock issued and outstanding and 8,050,000 shares of Series A Preferred
Stock issued and outstanding. No other shares of any class or series was
issued and outstanding at June 30, 1998. In addition, (i) 1,800,000 shares of
Class A Common Stock were reserved for issuance upon the exercise of stock
options available for future grant under the Option Plan (of which 1,041,833
options have been granted and remained outstanding as of June 30, 1998), (ii)
8,050,000 shares of Series B Preferred Stock are reserved for issuance upon
conversion of the shares of Series A Preferred Stock sold in the Preferred
Stock Offering, (iii) 8,452,500 shares of Class A Common Stock are reserved
for issuance upon conversion of the shares of Series A Preferred Stock sold in
the Preferred Stock Offering, or issuable upon exercise of warrants granted to
BT Alex. Brown in connection with the Preferred Stock Offering, and (iv)
386,764 shares of Class A Common Stock are reserved for issuance upon the
exercise of stock options held by Mr. Grobstein.
COMMON STOCK
The Company has two classes of authorized Common Stock; Class A Common Stock
and Class B Common Stock. The Class A Common Stock has one vote per share. The
Class B Common Stock has ten votes per share. All outstanding shares of Class
A Common Stock and Class B Common Stock are, and will be upon conversion of
the Series A Preferred Stock, validly issued, fully paid and nonassessable.
At June 30, 1998 Messrs. Bernstein and Bizick controlled 50.3% of all votes
on a primary basis and 50.0% of all votes on a fully diluted basis. As a
result, Messrs. Bernstein and Bizick have the ability to elect three out of
five of the Company's directors. See "Risk Factors--Control of the Company by
Executive Management." Except as otherwise required by law, owners of the
Class A Common Stock, Class B Common Stock and Series A Preferred Stock vote
together on all matters, including the election of directors.
Each outstanding share of Class B Common Stock may, at the option of the
holder thereof, at any time, be converted into one share of Class A Common
Stock. Each share of outstanding Class B Common Stock shall convert into one
share of Class A Common Stock immediately upon transfer to any holder other
than the following (an "Eligible Class B Stockholder"): any one or more of
Steven E. Bernstein, other members of the immediate family of Steven E.
Bernstein, or their lineal descendants, spouses of lineal descendants or
lineal descendants of spouses, or any trusts for the benefit of any of the
foregoing, or any estate or tax planning vehicles on the part of Mr.
Bernstein. If the shares of Class B Common Stock held by Eligible Class B
Stockholders in the aggregate constitute 10% or less of the outstanding shares
of Common Stock, each share of Class B Common Stock shall immediately convert
into one share of Class A Common Stock. Each share of outstanding Class B
Common Stock which is held by any Eligible Class B Stockholder shall
immediately convert into one share of Class A Common Stock (i) at such time as
such holder is no longer an Eligible Class B Stockholder, or (ii) upon the
death or mental incapacity of Mr. Bernstein.
Other than the rights described above, the holders of Common Stock have no
cumulative rights and no preemptive, subscription, redemption, sinking fund or
conversion rights and have equal rights and preferences. Subject to
preferences that may be applicable to the Series A Preferred Stock, the Series
B Preferred Stock or any preferred stock which the Company may issue in the
future, holders of the Common Stock will be entitled to receive such dividends
as may be declared by the board of directors out of funds legally available
therefor.
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<PAGE>
The rights and preferences of holders of Common Stock are subject to the
rights of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock, and will be subject to the
rights of any series of preferred stock which the Company may issue in the
future.
PREFERRED STOCK
All shares of Series A Preferred Stock are, and Series B Preferred Stock
upon conversion of the Series A Preferred Stock will be, fully paid and
nonassessable. The Company's board of directors will be authorized by the
Articles of Incorporation to provide for the issuance of shares of preferred
stock, other than the Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock, in one or more series,
to establish from time to time the number of shares to be included in each
such series, to fix the designation, rights, preferences, privileges and
restrictions of the shares of each such series and to increase or decrease the
number of shares of any series of preferred stock (including the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series
D Preferred Stock,) all without any further vote or action by the Company's
shareholders other than the vote of the holders of the Series A Preferred
Stock to the extent required under the terms of the Series A Preferred Stock.
See "--Restrictive Covenants."
In connection with the Private Offering, certain terms of the Series A,
Series B, Series C and Series D Preferred Stock were amended. The description
of the Series A, Series B, Series C and Series D Preferred Stock contained in
this Prospectus gives effect to such amendments.
The Company has designated the Series C Preferred Stock and Series D
Preferred Stock to be issued, at its option upon the payment of $4.47 per
share, to holders of the Series A Preferred Stock if certain target operating
results have been met prior to June 30, 1998. Management of the Company does
not believe at this time that such shares of Series C Preferred Stock or
Series D Preferred Stock will be issued.
In March 1997, the Company sold 3,529,412 shares of 2% Series A Preferred
Stock, convertible initially into one share of the Company's Class A Common
Stock and one share of the Company's 4% Series B Redeemable Preferred Stock,
to a syndicate of institutional investors including ABS and TA Associates (the
"Private Investors"). The Series A Preferred Stock had an initial conversion
price of $8.50.
In May 1997, in response to the acknowledgment by the Company that certain
of the financial projections originally provided to the Private Investors
prior to the consummation of the Preferred Stock Offering were substantially
different from revised financial information provided shortly after the
Preferred Stock Offering, casting in doubt the continued reasonableness of the
original projections, the Company issued an additional 4,520,588 shares of the
Series A Preferred Stock, increased by 200 basis points the rate per annum of
cumulative dividends and amended the initial conversion price to $3.73. Each
of the Private Investors executed a release exonerating the Company from any
liability that it may have had in connection with the offering of Series A
Preferred Stock. An affiliate of BT Alex. Brown Incorporated, one of the
Initial Purchasers, is a limited partner in ABS and certain employees of BT
Alex. Brown Incorporated are investors in another Private Investor. In
addition, certain officers of BT Alex. Brown Incorporated are holders of
Series A Preferred Stock.
The Series A Preferred Stock has the following rights and preferences:
Conversion. Each holder of Series A Preferred Stock has the right to convert
his or her shares at any time. Each share of Series A Preferred Stock is
currently convertible into one share of Class A Common Stock, subject to
certain antidilution protection provisions, and one share of Series B
Preferred Stock. The number of shares of Class A Common Stock into which a
share of Series A Preferred Stock is convertible is equal to the ratio of
$3.73 divided by the conversion price, which is currently $3.73. Under the
antidilution provisions, the conversion price of the Series A Preferred Stock
is subject to adjustment in the event of any subdivision, combination or
reclassification of the Company's outstanding Common Stock or stock dividend
to holders of Common Stock payable in Common Stock. In the event of any
distribution by the Company payable other than in Common Stock, debt or assets
(other than cash dividends), holders of Series A Preferred Stock are entitled
to their
78
<PAGE>
proportionate share (on an as-if-converted basis) of such distribution. The
conversion price of Series A Preferred Stock will also be adjusted, on a "full
ratchet" basis for the first 18 months following the Preferred Stock Offering
and on a weighted average basis thereafter, upon the Company's issuance of
additional shares of Common Stock or warrants or rights to purchase Common
Stock or securities convertible into Common Stock for a consideration per
share which is less than the then applicable per share conversion price of the
Series A Preferred Stock. The conversion price of the Series A Preferred Stock
will not be adjusted for issuances of Common Stock upon the exercise or
conversion of options, warrants or other rights to purchase Common Stock
outstanding as of the date, or issued as a result, of the Corporate
Reorganization, or upon the future issuance of Common Stock, or options,
warrants or other rights to purchase Common Stock to employees, directors,
consultants or vendors of the Company directly or pursuant to a stock option
plan or restricted stock plan approved by the Board of Directors, or in
connection with certain acquisitions determined by the Company's Board of
Directors to be in the best interests of the Company and its stockholders, so
long as such shares or options are issued at fair market value.
The Series A Preferred Stock will automatically convert into Class A Common
Stock and Series B Preferred Stock upon the earlier of (i) completion by the
Company of a public offering raising gross proceeds of at least $20.0 million
and have either an (a) offering price per share greater than or equal to 150%
of the then applicable conversion price of the Series A Preferred Stock if
such public offering occurs before June 30, 1998 or (b) an offering price per
share greater than or equal to 200% of the then applicable conversion price of
the Series A Preferred Stock if such public offering occurs after June 30,
1998 (a "Qualified Public Offering") or (ii) the written consent of the
holders of at least 66 2/3% of the Series A Preferred Stock then outstanding.
Dividends. Subject to the terms of the Indenture or any documents relating
to any refinancing of the Notes, as each may be in effect from time to time,
the holders of outstanding shares of Series A Preferred Stock are entitled, in
preference to the holders of any and all other classes of capital stock of the
Company (other than the Series B Preferred Stock, the Series C Preferred Stock
and the Series D Preferred Stock which will rank equally with the Series A
Preferred Stock as to dividends), to receive, out of funds legally available
therefore, cumulative dividends on the Series A Preferred Stock in cash, at a
rate per annum of 4% of the Series A base liquidation amount (the "Series A
Base Liquidation Amount") subject to proration for partial years. The Series A
Base Liquidation Amount equals the sum of $3.73 and any accumulated but unpaid
dividends on the Series A Preferred Stock. No dividends will be paid on the
Common Stock until all accumulated but unpaid dividends have been paid on the
Series A Preferred Stock. Accrued but unpaid dividends on the Series A
Preferred Stock will be payable upon conversion of the Series A Preferred
Stock into Class A Common Stock and Series B Preferred Stock. At March 7,
2002, the dividend rate of the Series A Preferred Stock will increase to 8% of
the Series A Base Liquidation Amount per annum. On March 7, 2003, the dividend
rate on the Series A Preferred Stock shall increase to 14% of the Series A
Base Liquidation Amount per annum.
Liquidation Preference. In the event of any liquidation or winding up of the
Company, including a merger, sale of all of its outstanding shares of capital
stock, consolidation or sale of all or substantially all of the assets of the
Company, the funds available for distribution will be paid out first to the
holders of the Series A Preferred Stock, the Series B Preferred Stock, the
Series C Preferred Stock and the Series D Preferred Stock, which shall rank
equally in the event of a liquidation. The holders of Series A Preferred Stock
will be entitled to receive the greater of: (a) the Series A Base Liquidation
Amount and (b) the amount per share which such holders would have received if
all such shares had been converted to Class A Common Stock and Series B
Preferred Stock immediately prior to such liquidation distribution.
Thereafter, the remaining assets will be distributed to the holders of any
other stock ranking on liquidation junior to the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock and the Series D
Preferred Stock.
Redemption Rights. Subject to the terms of the Indenture or any documents
relating to any refinancing of the Notes, on the fifth anniversary date of the
Preferred Stock Offering, the Company will, to the extent it may do so under
applicable law, redeem all of the outstanding shares of Series A Preferred
Stock over a two year period, one half in each year, at an aggregate price
equal to the Series A Base Liquidation Amount.
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Voting. The holders of Series A Preferred Stock have ten votes for each
share until converted to Class A Common Stock and Series B Preferred Stock and
vote with holders of shares of Class A Common Stock and Class B Common Stock
and Series C Preferred Stock as a single voting group on all matters brought
before the shareholders, except as otherwise required by law and except to the
extent described under "--Restrictive Covenants." The Series B Preferred Stock
does not have voting rights.
Preemptive Rights. The holders of the shares of Series A Preferred Stock are
entitled to participate on a pro rata basis in certain issuances of equity
securities by the Company. These preemptive rights do not apply where shares
are issued in connection with: (i) a merger, consolidation, combination, share
exchange or sale or lease of all or substantially all the assets of the
Company or another corporation; (ii) conversion of Series A Preferred Stock
into Class A Common Stock and Series B Preferred Stock; (iii) exercise of
outstanding options and the warrant to BT Alex. Brown Incorporated; and (iv)
any stock option or other any employee benefit plans of the Company. All
preemptive rights expire upon a Qualified Public Offering by the Company.
Board Representation. Holders of the Series A Preferred Stock and Series C
Preferred Stock, voting together as a single class, are entitled to elect two
board members of a five member Board of Directors of the Company.
Other than the rights described above, the holders of Series A Preferred
Stock have no subscription, sinking fund or conversion rights.
The Series B Preferred Stock has the following rights and preferences:
Dividends. Subject to the terms of the Indenture, or any documents relating
to any refinancing of the Notes, as each may be in effect from time to time,
the holders of outstanding shares of Series B Preferred Stock are entitled, in
preference to the holders of any and all other classes of capital stock of the
Company (other than the Series A Preferred Stock, Series C Preferred Stock and
Series D Preferred Stock, which will rank equally with the Series B Preferred
Stock as to dividends), to receive, out of funds legally available therefore,
cumulative dividends on the Series B Preferred Stock in cash, at a rate per
annum of 4% of the Series B base liquidation amount (the "Series B Base
Liquidation Amount") subject to proration for partial years. The Series B Base
Liquidation Amount equals the sum of $3.73 and any accumulated but unpaid
dividends on the Series B Preferred Stock. No dividends will be paid on the
Common Stock until all accrued but unpaid dividends have been paid on the
Series B Preferred Stock. At March 7, 2002, the dividend rate of the Series B
Preferred Stock will be increased to 8% of the Series B Base Liquidation
Amount. At March 7, 2003, the dividend rate on the Series B Preferred Stock
shall increase to 14% of the Series B Base Liquidation Amount per annum.
Redemption. Upon a Qualified Public Offering, the Company will redeem all of
the outstanding shares of Series B Preferred Stock at an aggregate price equal
to the Series B Base Liquidation Amount.
Subject to the terms of the Indenture or any documents relating to any
refinancing of the Notes, on the fifth anniversary date of issuance of the
Notes, the Company will, to the extent it may do so under applicable law,
redeem all of the outstanding shares of Series B Preferred Stock over a two
year period, one half in each year, at an aggregate price equal to the Series
B Base Liquidation Amount.
Liquidation. In the event of any liquidation or winding up of the Company,
including a merger, sale of all of its outstanding shares of capital stock,
consolidation or sale of all or substantially all of the assets of the
Company, each holder of outstanding shares of Series B Preferred Stock will be
entitled to receive, before any amount shall be paid or distributed to the
holders of the Common Stock, an amount in cash equal to the sum of $3.73 per
share plus any accumulated but unpaid dividends to which such holder is
entitled.
The terms of the Series C Preferred Stock are substantially similar to the
terms of the Series A Preferred Stock other than the Series C base liquidation
amount, which currently equals the sum of $4.47 and any accumulated but unpaid
dividends on the Series C Preferred Stock. The terms of the Series D Preferred
Stock are substantially similar to the terms of the Series B Preferred Stock
other than the Series D base liquidation amount, which currently equals the
sum of $4.47 and any accumulated but unpaid dividends on the Series D
Preferred Stock. Management at this time does not expect to issue any shares
of Series C Preferred Stock or Series D Preferred Stock.
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RESTRICTIVE COVENANTS
So long as 20% or more of the shares of the Series A Preferred Stock sold in
the Preferred Stock Offering are outstanding, the Company may not, without the
consent of holders of at least 66 2/3% of the outstanding Series A Preferred
Stock: (i) authorize or issue any class or series of equity securities having
equal or superior rights to the Series A Preferred Stock as to payment upon
liquidation, dissolution or a winding up of the Company; (ii) enter into any
agreement that would restrict the Company's ability to perform under the
purchase agreement for the Series A Preferred Stock; (iii) amend its Articles
of Incorporation or Bylaws in any way which adversely affects the rights and
preferences of the holders of Series A Preferred Stock as a class; (iv) sell
or lease 20% or more of its assets, except in the ordinary course of business;
(v) issue additional securities to employees, officers or directors, except
securities issuable upon the exercise of options and warrants outstanding
immediately prior to consummation of the Preferred Stock Offering, or issuable
upon the exercise of options granted in the future at fair market value; (vi)
issue any securities for a price less than fair market value, other than as
may be required by contractual commitments existing prior to consummation of
the Preferred Stock Offering; or (vii) adopt any additional stock option plans
or increase the number of shares available for issuance under existing plans.
REGISTRATION RIGHTS
If at any time after the earlier of (i) six months after the effective date
of an initial public offering of the Company's securities or (ii) June 30,
1998, the holders of not less than 25% of the Class A Common Stock issued or
issuable upon conversion of the Series A Preferred Stock request that the
Company file a registration statement covering Common Stock (with an
anticipated aggregate offering price of $15.0 million or more in the case of a
registration which is an initial public offering and $3.0 million for any
other registration), the Company will use its best efforts to cause such
shares to be registered, subject to certain cut-back provisions; provided,
however, that the Company may delay any such registration for a period of up
to three months for a valid business reason. The Company will not be required
to file more than three registration statements, other than on Form S-3. The
holders of Series A Preferred Stock will have the right to require the Company
to file up to two registration statements per year on Form S-3, provided the
anticipated aggregate offering price in each registration on Form S-3 equals
$1.0 million or more.
Messrs. Bernstein, Bizick, Grobstein and Stoops also have certain rights to
have their shares of Common Stock registered under the Securities Act.
The holders of Series A Preferred Stock are entitled to have the shares of
Class A Common Stock issued upon conversion of the Series A Preferred Stock
included in each registration statement filed on behalf of the Company or
other stockholders, subject to certain cut-back provisions. In the event of an
application of such cut-back provisions, the holders of Series A Preferred
Stock have a priority right to participate in such registration over Messrs.
Bernstein, Bizick, Grobstein or Stoops.
CO-SALE RIGHTS
Until a Qualified Public Offering, if Steven E. Bernstein proposes to sell
any of his shares of Class B Common Stock, he must first give the holders of
Series A Preferred Stock the opportunity to participate in such sale on a
basis proportionate to the amount of securities owned by Mr. Bernstein and
those owned by all holders of Series A Preferred Stock who wish to participate
in such sale (a "Co-Sale Right"). To participate, holders of Series A
Preferred Stock must convert their shares of Series A Preferred Stock into
Series B Preferred Stock and Class A Common Stock. Should Mr. Bernstein elect
to transfer any of his shares of Class B Common Stock to an Eligible Class B
Stockholder, such transfer will not trigger Co-Sale Rights. Any recipient of
shares of Class B Common Stock from Mr. Bernstein, however, will be subject to
these Co-Sale Right provisions.
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DESCRIPTION OF CREDIT FACILITY
A wholly owned subsidiary of SBACC, SBA Telecommunications, Inc.
("Telecommunications" or "the Borrower"), together with six wholly owned
subsidiaries of Telecommunications, SBA, Inc., SBA Leasing, Inc. ("Leasing"),
SBA Towers, Inc. ("Towers"), Communication Site Services, Inc. ("CSSI"), SBA
Communications International, Inc. ("International") and SBA Subsidiary
Holdings, Inc. ("Holdings," and together with SBA, Inc., Leasing, Towers, CSSI
and International, the "Subsidiaries") in June 1998 entered into the Credit
Facility with a group of banks and other financial institutions led by
BankBoston, as agent, and BancBoston Securities, as arranger (collectively,
the "Lenders"). The Credit Facility amended and restated a prior credit
facility entered into by the Company and the Lenders in September 1997. The
following is a summary of certain provisions of the Credit Facility. All
defined terms used herein have the meanings given to them in the Credit
Facility.
The Credit Facility provides for revolving credit loans of $55.0 million and
an additional $55.0 million incremental facility (the "Incremental Facility")
which may be made available within the initial 24 months of the Credit
Facility, each to fund the acquisition and construction of towers, to provide
working capital and for general corporate purposes. There is no availability
under the Credit Facility, other than for the issuance of letters of credit,
until the later of (i) September 30, 1998 or (ii) Telecommunications having on
a consolidated basis minimum adjusted EBITDA (as defined in the Credit
Facility) of $2.5 million. Availability thereafter is limited to $25 million
until such time as the Company owns, leases or manages 400 towers and has
expended all but $10 million of the proceeds from the Notes. Availability is
further limited at all times by certain financial covenants and ratios, and
other conditions. The Incremental Facility will be made on substantially
similar terms and conditions to the Credit Facility provided that Lenders
holding at least 60% of the facility approve the funding of the Incremental
Facility. The Incremental Facility will have a 24 month revolving period after
which any outstanding amounts will convert to a term loan and begin to
amortize.
The Credit Facility matures on June 29, 2005. In addition, the Credit
Facility provides for mandatory reduction of the loan commitment with the net
proceeds of all asset sales. In addition, if the Incremental Facility is
accessed and converted into a term loan, the Credit Facility provides for
mandatory prepayments with (i) 50% of Excess Cash Flow within one hundred
twenty (120) days from the fiscal year end and (ii) proceeds from certain
equity issuances (other than under employee stock option plans) that are not
used to acquire and construct towers.
Availability under the Credit Facility is subject to a reduction schedule
that commences on March 31, 2001. The schedule provides for a quarterly five
percent amortization rate with a balloon payment on June 29, 2005.
The Borrower's obligations under the Credit Facility are guaranteed by each
Subsidiary and secured by (i) substantially all the assets of the
Subsidiaries, (ii) a pledge of capital stock of all of the Subsidiaries and
(iii) perfected mortgages and landlord estoppel agreements for each material
property now and hereafter owned or leased and, in any case, towers
representing a minimum of 80% of total tower revenues. In addition, the Credit
Facility is guaranteed on a limited recourse basis by SBACC, limited in
recourse to the pledged capital stock of Telecommunications, as well as the
intercompany subordinated notes evidencing the contribution of the net
proceeds of the Private Offering from SBACC to Telecommunications as well as
any debt owing from Telecommunications and its subsidiaries. The capital stock
of SBACC is not pledged to secure the Credit Facility.
The loans under the Credit Facility will bear interest, at the Borrower's
option, at either (i) an "alternate base rate" equal to the greater of (A) the
rate of interest announced by BankBoston at the Boston office as the alternate
base rate or (B) the sum of 0.5% plus the federal funds rate or (ii) the
reserve "LIBOR rate," in each case plus an applicable margin ranging from 1.0%
to 3.25% (determined based on a leverage ratio.) Upon any default after the
expiration of any cure period and upon maturity, the applicable margin will
increase by 2.0% per annum.
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The Credit Facility contains a number of covenants that, among other things,
restrict the ability of the Borrower and the Subsidiaries to dispose of
assets, incur additional indebtedness, incur guaranty obligations, pay
dividends or make capital distributions, create liens on assets, make
investments, engage in international activities, make acquisitions, engage in
mergers or consolidations, engage in certain transactions with subsidiaries
and affiliates and otherwise restrict corporate activities. In addition, the
Credit Facility requires compliance with certain financial covenants,
including requiring the Borrower and the Subsidiaries to maintain a maximum
ratio of Total Debt to adjusted EBITDA, a minimum Fixed Charge Coverage Ratio,
a minimum ratio of Consolidated adjusted EBITDA to Pro Forma Interest, a
minimum level of Consolidated adjusted EBITDA and a minimum Pro Forma Fixed
Charge Coverage Ratio. SBACC does not expect that such covenants will
materially impact the ability of the Borrower and the Subsidiaries to operate
their respective businesses.
Pursuant to the terms of the Credit Facility, as long as no mature event of
default exists, the Borrower will be entitled to pay dividends or make
distributions to SBACC in order to permit SBACC to pay its expenses and to pay
cash interest on certain indebtedness of SBACC (including the Notes); provided
that the amount of such dividends or distributions does not exceed $2.5
million in any year ending on or prior to the fifth anniversary of the Private
Offering (such period being the period prior to the date that the Notes begin
to accrue cash interest). The Credit Facility also allows the Borrower to pay
dividends or distribute cash to SBACC to the extent required to pay taxes that
are due and owing and allocable to the Borrower and the Subsidiaries so long
as no payment default then exists.
The Credit Facility contains customary events of default, including the
failure to pay principal when due or any interest or other amount that becomes
due within three business days after the due date thereof, any representation
or warranty being made by the Borrower that is incorrect in any material
respect on or as of the date made, a default in the performance of any
negative covenants or a default in the performance of certain other covenants
or agreements for a period of thirty days, default in certain other
indebtedness, certain insolvency events and certain change of control events.
In addition, a default under the Indenture will result in a default under the
Credit Facility.
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DESCRIPTION OF EXCHANGE NOTES
GENERAL
The Exchange Notes will be issued pursuant to an Indenture (the
"Indenture"), dated as of March 2, 1998 between SBACC and State Street Bank
and Trust Company, as trustee (the "Trustee"). The Exchange Notes will
evidence the same indebtedness as the Private Notes (which they replace) and
will be entitled to the benefits of the Indenture. The form and terms of the
Exchange Notes are the same as the form and terms of the Private Notes except
that (i) the Exchange Notes will have been registered under the Securities
Act, and, therefore, the Exchange Notes will not bear legends restricting the
transfer thereof and (ii) Holders of the Exchange Notes will not be entitled
to certain rights of Holders of Private Notes under the Registration Rights
Agreement, which rights will terminate upon the consummation of the Exchange
Offer. The terms of the Exchange Notes include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act
of 1939 (the "TIA"), as in effect on the date of the Indenture. The following
is a summary of the material provisions of the Indenture. Copies of the
Indenture are available as set forth below under "--Additional Information."
The definitions of certain terms used in the following summary are set forth
below under "--Certain Definitions." As used below in this "Description of
Exchange Notes" section, the term "SBACC" refers only to SBA Communications
Corporation, but not any of its Subsidiaries.
The Notes will be general unsecured obligations of SBACC and will rank pari
passu in right of payment with all future unsecured senior Indebtedness of
SBACC. However, the operations of SBACC are conducted through its Subsidiaries
and, therefore, SBACC is dependent upon the cash flow of its Subsidiaries to
meet its obligations, including its obligations under the Notes. SBACC's
Subsidiaries will not be guarantors of the Notes and are separate entities
with no obligation to make payments on the Notes or to make funds available
therefor. The Notes will be effectively subordinated to all Indebtedness
(including all obligations under the New Credit Facility) and other
liabilities and commitments (including trade payables and lease obligations)
of SBACC's Subsidiaries. Any right of SBACC to receive assets of any of its
Subsidiaries upon such Subsidiary's liquidation or reorganization (and the
consequent right of the Holders of the Notes to participate in those assets)
will be effectively subordinated to the claims of that Subsidiary's creditors,
except to the extent that SBACC is itself recognized as a creditor of such
Subsidiary, in which case the claims of SBACC would still be subordinate to
any security in the assets of such Subsidiary and any indebtedness of such
Subsidiary senior to that held by SBACC. There can be no assurances that, if a
Default or Event of Default occurs, SBACC will have sufficient cash or other
assets available to meet SBACC's obligations, especially after repayment by
its Subsidiaries of their obligations. For other information relating to SBACC
and its Subsidiaries and the structural subordination of the Notes to
indebtedness and other obligations of such Subsidiaries, see "Risk Factors--
Holding Company Structure; Effective Subordination; Restrictions on Access to
Cash Flow of Subsidiaries."
As of the date of the Indenture, all of SBACC's Subsidiaries were Restricted
Subsidiaries. However, under certain circumstances, SBACC is able to designate
current or future Subsidiaries as Unrestricted Subsidiaries. See "--Certain
Definitions--Unrestricted Subsidiary." Unrestricted Subsidiaries will not be
subject to many of the restrictive covenants set forth in the Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Notes will be limited in aggregate principal amount at maturity to
$350.0 million and are scheduled to mature on March 1, 2008. The Indenture
permits additional issues of Notes in one or more series from time to time,
subject to the limitations set forth under "Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock." The Notes are being offered at
a substantial discount from their principal amount at maturity. Until March 1,
2003, no interest will accrue, but the Accreted Value will accrete
(representing the amortization of original issue discount) between the date of
original issuance and March 1, 2003, on a semiannual bond equivalent basis
using a 360-day year comprised of twelve 30-day months such that the Accreted
Value shall be equal to the full principal amount of the Notes on March 1,
2003 (the "Full Accretion Date"). The initial Accreted Value per $1,000 in
principal amount of Notes will be $558.50 (representing the original price at
which Notes were offered in the Private Offering).
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Beginning on March 1, 2003, interest on the Notes will accrue at the rate of
12% per annum and will be payable in U.S. dollars semiannually in arrears on
March 1 and September 1, commencing on September 1, 2003, to Holders of record
on the immediately preceding February 15 and August 15. Holders of record on
such record dates will become irrevocably entitled to receive accrued interest
in respect of the interest period during which such record date occurs as of
the close of business on such record date. Interest on the Notes will accrue
from the most recent date to which interest has been paid or, if no interest
has been paid, from the date of original issuance. Interest will be computed
on the basis of a 360-day year comprised of twelve 30-day months. Principal,
premium, if any, and interest, on the Notes will be payable at the office or
agency of SBACC maintained for such purpose within the City and State of New
York or, at the option of SBACC, payment of interest may be made by check
mailed to the Holders of the Notes at their respective addresses set forth in
the register of Holders of Notes; provided that all payments of principal,
premium and interest with respect to Notes the Holders of which have given
wire transfer instructions to SBACC will be required to be made by wire
transfer of immediately available funds to the accounts in the United States
specified by the Holders thereof. Until otherwise designated by SBACC, SBACC's
office or agency in New York will be the office of the Trustee maintained for
such purpose. The Notes will be issued in denominations of $1,000 and integral
multiples thereof.
OPTIONAL REDEMPTION
Except as described below, the Notes will not be redeemable at SBACC's
option prior to March 1, 2004. Thereafter, the Notes will be subject to
redemption at any time at the option of SBACC, in whole or in part, upon not
less than 30 nor more than 60 days' notice, at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued
and unpaid interest thereon, if any, to the applicable redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date), if redeemed
during the twelve-month period beginning on March 1 of the years indicated
below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2004.............................................................. 107.500%
2005.............................................................. 105.000
2006.............................................................. 102.500
2007 and thereafter............................................... 100.000
</TABLE>
At any time prior to March 1, 2001, SBACC may on any one or more occasions
redeem up to 20% of the aggregate principal amount at maturity of Notes issued
under the Indenture at a redemption price of 112% of the Accreted Value
thereof on the redemption date with the net cash proceeds of one or more
Public Equity Offerings and/or Strategic Equity Investments; provided that at
least 80% of the aggregate principal amount at maturity of Notes issued under
the Indenture remains outstanding immediately after the occurrence of such
redemption (excluding Notes held by SBACC or any of its Subsidiaries), and
provided, further, that such redemption shall occur within 60 days of the date
of the closing of such Public Equity Offering and/or Strategic Equity
Investment.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which
the Notes are listed, or, if the Notes are not so listed on a pro rata basis,
by lot or by such method as the Trustee shall deem fair and appropriate,
provided that no Notes of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than
60 days before the redemption date to each Holder of Notes to be redeemed at
its registered address. Notices of redemption may not be conditional. If any
Note is to be redeemed in part only, the notice of redemption that relates to
such Note shall state the portion of the principal amount thereof to be
redeemed. A new Note in principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note. Notes called for redemption become due on the date fixed
for redemption. On and after the redemption date, interest
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ceases to accrue on Notes or portions of them called for redemption so long as
SBACC has deposited with the Paying Agent funds in satisfaction at the
applicable redemption price pursuant to the Indenture.
MANDATORY REDEMPTION
SBACC is not required to make mandatory redemption or sinking fund payments
with respect to the Notes.
PURCHASE AT THE OPTION OF HOLDERS
Change of Control
Upon the occurrence of a Change of Control, each Holder of Notes will have
the right to require SBACC to purchase all or any part (equal to $1,000 or an
integral multiple thereof) of such Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest thereon, if any (subject to the right of Holders of record on
the relevant record date to receive interest due on the relevant interest
payment date), to the date of purchase or, in the case of purchases of Notes
prior to the Full Accretion Date, at a purchase price equal to 101% of the
Accreted Value thereof on the date of purchase (the "Change of Control
Payment"). Within 30 days following any Change of Control, SBACC will mail a
notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to purchase Notes on the date
specified in such notice, which date shall be no earlier than 30 days and no
later than 60 days from the date such notice is mailed (the "Change of Control
Payment Date"), pursuant to the procedures required by the Indenture and
described in such notice.
On the Change of Control Payment Date, SBACC will, to the extent lawful, (1)
accept for payment all Notes or portions thereof properly tendered pursuant to
the Change of Control Offer, (2) deposit with the Paying Agent an amount equal
to the Change of Control Payment in respect of all Notes or portions thereof
so tendered and (3) deliver or cause to be delivered to the Trustee the Notes
so accepted together with an Officers' Certificate stating the aggregate
principal amount of Notes or portions thereof being purchased by SBACC. The
Paying Agent will promptly mail to each Holder of Notes so tendered the Change
of Control Payment for such Notes, and the Trustee will promptly authenticate
and mail (or cause to be transferred by book entry) to each Holder a new Note
equal in principal amount to any unpurchased portion of the Notes surrendered,
if any; provided that each such new Note will be in a principal amount of
$1,000 or an integral multiple thereof.
SBACC will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
applicable to any Change of Control Offer. To the extent that the provisions
of any such securities laws or securities regulations conflict with the
provisions of the covenant described above, SBACC will comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations under the covenant described above by virtue thereof.
The Change of Control purchase feature is a result of negotiations between
SBACC and the Initial Purchasers. Management has no present intention to
engage in a transaction involving a Change of Control, although it is possible
that SBACC would decide to do so in the future. Subject to the limitations
discussed below, SBACC could, in the future, enter into certain transactions,
including acquisitions, refinancings or other recapitalizations, that would
not constitute a Change of Control under the Indenture, but that could
increase the amount of Indebtedness outstanding at such time or otherwise
affect SBACC's capital structure. Restrictions on the ability of SBACC to
incur additional Indebtedness are contained in the covenants described under
"--Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred
Stock," "--Certain Covenants--Liens" and "--Certain Covenants--Sale and
Leaseback Transactions." Such restrictions can be waived only with the consent
of the Holders of a majority in principal amount of the Notes then
outstanding. Except for the limitations contained in such covenants, however,
the Indenture does not contain any covenants or provisions that may afford
holders of the Notes protection in the event of certain highly leveraged
transactions.
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The New Credit Facility is expected to limit SBACC's access to the cash flow
of its Subsidiaries and, therefore, restrict SBACC's ability to purchase any
Notes. The New Credit Facility is also expected to provide that the occurrence
of certain change of control events with respect to SBACC will constitute a
default thereunder. In the event that a Change of Control occurs at a time
when SBACC's Subsidiaries are prohibited from making distributions to SBACC to
purchase Notes, SBACC could cause its Subsidiaries to seek the consent of the
lenders under the New Credit Facility to allow such distributions or could
attempt to refinance the borrowings that contain such prohibition. If SBACC
does not obtain such a consent or repay such borrowings, SBACC will remain
prohibited from purchasing Notes. In such case, SBACC's failure to purchase
tendered Notes would constitute an Event of Default under the Indenture which
would, in turn, constitute a default under the New Credit Facility. Future
indebtedness of SBACC and its Subsidiaries may contain prohibitions on the
occurrence of certain events that would constitute a Change of Control or
require such indebtedness to be purchased upon a Change of Control. Moreover,
the exercise by the Holders of their right to require SBACC to purchase the
Notes could cause a default under such indebtedness, even if the Change of
Control itself does not, due to the financial effect of such purchase on
SBACC. Finally, SBACC's ability to pay cash to the Holders of Notes following
the occurrence of a Change of Control may be limited by SBACC's then existing
financial resources, including its ability to access the cash flow of its
Subsidiaries. See "Risk Factors--Repurchase of the Notes upon a Change of
Control" and "Risk Factors--Holding Company Structure; Effective
Subordination; Restrictions on Access to Cash Flow of Subsidiaries." There can
be no assurance that sufficient funds will be available when necessary to make
any required purchases.
SBACC is not required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in the
Indenture applicable to a Change of Control Offer made by SBACC and purchases
all Notes validly tendered and not withdrawn under such Change of Control
Offer. The provisions under the Indenture relative to SBACC's obligation to
make an offer to repurchase the Notes as a result of a Change of Control may
be waived or modified with the written consent of the Holders of a majority in
principal amount of the Notes then outstanding.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of SBACC and its Restricted Subsidiaries taken as a whole.
Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a Holder of Notes to require
SBACC to purchase such Notes as a result of a sale, lease, transfer,
conveyance or other disposition of less than all of the assets of SBACC and
its Subsidiaries taken as a whole to another Person or group may be uncertain.
Asset Sales
The Indenture provides that SBACC will not, and will not permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless (i) SBACC (or the
Restricted Subsidiary, as the case may be) receives consideration at the time
of such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by SBACC or such Restricted Subsidiary is in the form of (a) cash or
Cash Equivalents, (b) Tower Assets or (c) any combination of the foregoing;
provided that the amount of (x) any liabilities (as shown on SBACC's or such
Restricted Subsidiary's most recent balance sheet) of SBACC or any Restricted
Subsidiary (other than contingent liabilities and liabilities that are by
their terms subordinated to the Notes or any guarantee thereof) that are
assumed by the transferee of any such assets pursuant to a customary novation
agreement that releases SBACC or such Restricted Subsidiary from further
liability and (y) any securities, notes or other obligations received by SBACC
or any such Restricted Subsidiary from such transferee that are converted by
SBACC or such Restricted Subsidiary into cash within 20 days of the applicable
Asset Sale (to the extent of the cash received) shall be deemed to be cash for
purposes of this provision.
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Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
SBACC or the applicable Restricted Subsidiary may apply such Net Proceeds to:
(a) reduce (which reduction may be temporary) Indebtedness under a Credit
Facility; (b) reduce other Indebtedness of any of SBACC's Restricted
Subsidiaries; (c) acquire all or substantially all the assets of a Permitted
Business; (d) acquire Voting Stock of a Permitted Business from a Person that
is not a Subsidiary of SBACC; provided, that, after giving effect thereto,
SBACC or its Restricted Subsidiary owns a majority of such Voting Stock; or
(e) make a capital expenditure or acquire other long-term assets that are used
or useful in a Permitted Business. Pending the final application of any such
Net Proceeds, SBACC may invest such Net Proceeds in any manner that is not
prohibited by the Indenture. Any Net Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph will
be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $5.0 million, SBACC will be required to make an offer to all
Holders of Notes and all holders of other senior Indebtedness of SBACC
containing provisions similar to those set forth in the Indenture with respect
to offers to purchase or redeem with the proceeds of sales of assets (an
"Asset Sale Offer") to purchase, on a pro rata basis, the maximum principal
amount (or accreted value, as applicable) of Notes and such other senior
Indebtedness of SBACC that may be purchased out of the Excess Proceeds, at an
offer price in cash in an amount equal to 100% of the principal amount (or
accreted value, as applicable) thereof plus accrued and unpaid interest
thereon, if any, to the date of purchase (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date), in accordance with the procedures set forth in the
Indenture and such other senior Indebtedness of SBACC. To the extent that any
Excess Proceeds remain after consummation of an Asset Sale Offer, SBACC may
use such Excess Proceeds for any purpose not otherwise prohibited by the
Indenture. If the aggregate principal amount of Notes and such other senior
Indebtedness of SBACC tendered into such Asset Sale Offer surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall
select the Notes and such other senior Indebtedness to be purchased on a pro
rata basis. Upon completion of such offer to purchase, the amount of Excess
Proceeds shall be reset at zero.
CERTAIN COVENANTS
Restricted Payments
The Indenture provides that SBACC will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any other payment or distribution on account of SBACC's
Equity Interests (including, without limitation, any payment in connection
with any merger or consolidation involving SBACC) or to the direct or indirect
holders of SBACC's Equity Interests in their capacity as such (other than
dividends or distributions payable in Qualified Equity Interests or to SBACC
or a Restricted Subsidiary of SBACC); (ii) purchase, redeem or otherwise
acquire or retire for value (including without limitation, in connection with
any merger or consolidation involving SBACC) any Equity Interests of SBACC;
(iii) designate any Restricted Subsidiary as an Unrestricted Subsidiary; or
(iv) make any Restricted Investment (all such payments and other actions set
forth in clauses (i) through (iv) above being collectively referred to as
"Restricted Payments"), unless, at the time of and after giving effect to such
Restricted Payment:
(a) no Default shall have occurred and be continuing or would occur as a
consequence thereof; and
(b) SBACC would have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Debt to Adjusted Consolidated Cash Flow Ratio
test set forth in the first paragraph of the covenant described below under
the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock";
and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by SBACC and its Restricted Subsidiaries
after the date of the Indenture (excluding Restricted Payments permitted by
clauses (ii) and (iii) of the next succeeding paragraph), is less than the
sum, without duplication, of (i) 50% of the Consolidated Net Income of
SBACC (or, in the event such Consolidated Net Income shall be a deficit,
minus 100% of such deficit) accrued subsequent to the Issue Date to the
most recent date for which financial information is available to SBACC,
taken as one accounting period, plus (ii) 100% of the aggregate net cash
proceeds received by SBACC (from persons other than Subsidiaries) since the
Issue Date as a contribution to its common equity capital or from the issue
and sale of Qualified Equity
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Interests (except to the extent such net cash proceeds are used to incur
new Indebtedness outstanding pursuant to clause (x) of the second paragraph
of the covenant described below under the caption "--Incurrence of
Indebtedness and Issuance of Preferred Stock") or from the issue and sale
(other than to a Subsidiary of SBACC) of Disqualified Stock or debt
securities of SBACC that have been converted into Qualified Equity
Interests (provided that any net cash proceeds that are used pursuant to
the second paragraph under "Optional Redemption" shall not be so included),
plus (iii) to the extent that any Unrestricted Subsidiary of SBACC is
redesignated as a Restricted Subsidiary after the Issue Date, the fair
market value of such Subsidiary as of the date of such redesignation, plus
(iv) to the extent not included in the Adjusted Consolidated Cash Flow
referred to in clause (i), 100% of the net cash proceeds received by SBACC
or a Restricted Subsidiary from (x) the sale or other disposition of
Restricted Investments made by SBACC or any Restricted Subsidiary after the
Issue Date or (y) the sale of the Capital Stock of any Unrestricted
Subsidiary by the Company or any Restricted Subsidiary or the sale of all
or substantially all of the assets of any Unrestricted Subsidiary to the
extent that a liquidating dividend or similar distribution is paid to the
Company or any Restricted Subsidiary from the proceeds of such asset sale.
The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of the
Indenture; or (ii) the making of any Investment or the redemption or
repurchase of any Equity Interests in exchange for, or out of the net cash
proceeds of the substantially concurrent sale (other than to a Subsidiary of
SBACC) of, any Qualified Equity Interests; provided that such net cash
proceeds are not used to incur new Indebtedness pursuant to clause (x) of the
second paragraph of the covenant described below under the caption "--
Incurrence of Indebtedness and Issuance of Preferred Stock" or pursuant to the
second paragraph under "Optional Redemption"; and provided further that, in
each such case, the amount of any such net cash proceeds that are so utilized
shall be excluded from clause (c)(ii) of the preceding paragraph; or (iii) the
repurchase, redemption or other acquisition or retirement for value of Equity
Interests of SBACC held by any member of SBACC's management; provided that the
aggregate amount expended pursuant to this clause (iii) shall not exceed
$500,000 in any twelve-month period.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such Subsidiary, after giving effect to such
designation, would meet the requirements of the definition of "Unrestricted
Subsidiary." SBACC will not, and will not permit any of its Subsidiaries to,
enter into, or suffer to exist, any transaction or arrangement, with a
Subsidiary that is a Restricted Subsidiary that would be inconsistent with or
violate the terms set forth in the definition of "Unrestricted Subsidiary."
The amount of all Restricted Payments (other than cash), including the
amount of the Restricted Payment that will be deemed to occur upon the
designation of a Subsidiary as an Unrestricted Subsidiary, shall be the fair
market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by SBACC or the applicable
Restricted Subsidiary, or of the Company's proportionate interest in the
Subsidiary so to be designated as the case may be, pursuant to the Restricted
Payment.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Indenture provides that SBACC will not, and will not permit any of its
Restricted Subsidiaries to, directly, or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Debt) and that SBACC will not issue any
Disqualified Stock and will not permit any of its Restricted Subsidiaries to
issue any shares of preferred stock; provided, however, that SBACC may incur
Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock
and SBACC's Restricted Subsidiaries may incur Eligible Indebtedness if, in
each case, (i) no Default shall have occurred and be continuing or would occur
as a consequence thereof and (ii) SBACC's Debt to Adjusted Consolidated Cash
Flow Ratio at the time of incurrence of such Indebtedness or the issuance of
such Disqualified Stock, after giving pro forma effect to such incurrence or
issuance as of such date and to the use of proceeds therefrom would have been
no greater than (a) 6.5 to 1.0 if
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such incurrence or issuance is prior to the first anniversary of the Issue
Date; (b) 6.0 to 1.0 if such incurrence or issuance is on or after the first
anniversary of the Issue Date but prior to the second anniversary of the Issue
Date; (c) 5.5 to 1.0 if such incurrence or issuance is on or after the second
anniversary of the Issue Date; and (d) 6.0 to 1.0 if a Public Equity Offering
has occurred and a ratio more restrictive to the Company would otherwise be in
effect.
The provisions of the first paragraph of this covenant will not apply to the
incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt") if no Default shall have occurred and be continuing or would
occur as a consequence thereof:
(i) the incurrence by SBACC or any of its Restricted Subsidiaries of
Indebtedness under one or more Credit Facilities or through the issuance of
Seller Paper in an aggregate principal amount (with letters of credit being
deemed to have an aggregate principal amount equal to the maximum potential
liability of SBACC and its Restricted Subsidiaries thereunder) at any one
time outstanding not to exceed $125.0 million less the aggregate amount of
commitment reductions under Credit Facilities resulting from the
application of proceeds of Asset Sales since the Issue Date; provided,
however, that the aggregate principal amount of Seller Paper at any one
time outstanding under this clause (i) shall not exceed $50.0 million;
(ii) the incurrence by SBACC and its Restricted Subsidiaries of the
Existing Indebtedness;
(iii) the incurrence by SBACC of Indebtedness represented by the Notes
issued on the Issue Date, and the New Notes;
(iv) the incurrence by SBACC or any of its Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings
or purchase money obligations, in each case incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property, plant or equipment used in the business of SBACC
or such Restricted Subsidiary, in an aggregate principal amount, including
all Permitted Refinancing Indebtedness incurred to refund, refinance or
replace any other Indebtedness incurred pursuant to this clause (iv), not
to exceed $5.0 million at any one time outstanding;
(v) the incurrence by SBACC or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund,
Indebtedness (other than intercompany Indebtedness) that was permitted by
the Indenture to be incurred under the first paragraph hereof or clause
(ii) or (iii) or this clause (v) of this paragraph;
(vi) the incurrence by SBACC or any of its Restricted Subsidiaries of
intercompany Indebtedness or intercompany preferred stock between or among
SBACC and any of its Restricted Subsidiaries; provided, however, that (i)
if SBACC is the obligor on such Indebtedness, such Indebtedness is
expressly subordinated to the prior payment in full in cash of all
Obligations with respect to the Notes and (ii)(A) any subsequent issuance
or transfer of Equity Interests that results in any such Indebtedness or
preferred stock being held by a Person other than SBACC or a Restricted
Subsidiary and (B) any sale or other transfer of any such Indebtedness or
preferred stock to a Person that is not either SBACC or a Restricted
Subsidiary shall be deemed, in each case, to constitute an incurrence of
such Indebtedness or preferred stock by SBACC or such Restricted
Subsidiary, as the case may be;
(vii) the incurrence by SBACC or any of its Restricted Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or hedging
interest rate risk with respect to any floating rate Indebtedness that is
permitted by the terms of the Indenture to be outstanding or currency
exchange risk or otherwise entered into for bona fide purposes designed to
protect against interest rate or currency exchange risk and not for
speculative purposes;
(viii) the guarantee by SBACC or any of its Restricted Subsidiaries of
Indebtedness of SBACC or a Restricted Subsidiary of SBACC that was
permitted to be incurred by another provision of the Indenture;
(ix) the incurrence by SBACC or any of its Restricted Subsidiaries of
Acquired Debt in connection with the acquisition of assets or a new
Subsidiary and the incurrence by SBACC's Restricted Subsidiaries
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of Indebtedness as a result of the designation of an Unrestricted
Subsidiary as a Restricted Subsidiary; provided that, in the case of any
such incurrence of Acquired Debt, such Acquired Debt was incurred by the
prior owner of such assets or such Restricted Subsidiary prior to such
acquisition by SBACC or one of its Restricted Subsidiaries and was not
incurred in connection with, or in contemplation of, such acquisition by
SBACC or one of its Restricted Subsidiaries; and provided further that, in
the case of any incurrence pursuant to this clause (ix), SBACC would have
been permitted to incur at least $1.00 of additional Indebtedness (other
than Permitted Debt) immediately after such incurrence pursuant to the Debt
to Adjusted Consolidated Cash Flow Ratio test set forth in the first
paragraph of this covenant, calculated as if such incurrence had occurred
as of the actual date of incurrence and the related acquisition or
designation (as applicable) had occurred at the beginning of the most
recently ended four full fiscal quarter period of SBACC for which internal
financial statements are available;
(x) the incurrence by SBACC of Indebtedness not to exceed, at any one
time outstanding, 2.0 times the aggregate net cash proceeds from the
issuance and sale, other than to a Subsidiary, of Equity Interests (other
than Disqualified Stock) of SBACC since the Issue Date (less the amount of
such proceeds used to make Restricted Payments as provided in clause
(c)(ii) of the first paragraph or clause (ii) of the second paragraph of
the covenant described above under the caption "--Restricted Payments");
provided that such Indebtedness does not mature prior to the Stated
Maturity of the Notes and the Weighted Average Life to Maturity of such
Indebtedness is longer than that of the Notes;
(xi) the issuance by Restricted Subsidiaries of Permitted Subsidiary
Equity Interests; and
(xii) the incurrence by SBACC or any of its Restricted Subsidiaries of
additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding not to exceed $5.0 million.
The Indenture provides that (i) SBACC will not incur any Indebtedness that
is contractually subordinated in right of payment to any other Indebtedness of
SBACC unless such Indebtedness is also contractually subordinated in right of
payment to the Notes on substantially identical terms; provided, however, that
no Indebtedness of SBACC shall be deemed to be contractually subordinated in
right of payment to any other Indebtedness of SBACC solely by virtue of being
unsecured; and (ii) SBACC will not permit any of its Unrestricted Subsidiaries
to incur any Indebtedness other than Non-Recourse Debt; and (iii) Restricted
Subsidiaries may not issue or sell, and the Company may not permit any
Restricted Subsidiary to have outstanding, any Equity Interests (other than
(x) Equity Interests held by the Company or its Restricted Subsidiaries or (y)
Permitted Subsidiary Equity Interests).
For purposes of determining compliance with this covenant, in the event that
an item of Indebtedness or preferred stock meets the criteria of more than one
of the categories of Permitted Debt described in clauses (i) through (xii) in
the second paragraph of this covenant or is entitled to be incurred pursuant
to the first paragraph of this covenant, SBACC shall, in its sole discretion,
classify such item of Indebtedness in any manner that complies with this
covenant. Accrual of interest, accretion or amortization of original issue
discount and the payment of interest in the form of additional Indebtedness
will not be deemed to be an incurrence of Indebtedness for purposes of this
covenant.
Liens
The Indenture provides that SBACC will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien securing Indebtedness or trade payables on any asset
now owned or hereafter acquired, or any income or profits therefrom or assign
or convey any right to receive income therefrom, except Permitted Liens.
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Indenture provides that SBACC will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause
or suffer to exist or become effective any consensual
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encumbrance or restriction on the ability of any Restricted Subsidiary to
(i)(a) pay dividends or make any other distributions to SBACC or any of its
Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any
other interest or participation in, or measured by, its profits, or (b) pay
any indebtedness owed to SBACC or any of its Restricted Subsidiaries, (ii)
make loans or advances to SBACC or any of its Restricted Subsidiaries or (iii)
transfer any of its properties or assets to SBACC or any of its Restricted
Subsidiaries. However, the foregoing restrictions will not apply to
encumbrances or restrictions existing under or by reason of (a) any agreement
or instrument governing Existing Indebtedness as in effect on the Issue Date
or as amended, modified, restated or renewed in any manner not materially more
restrictive, taken as a whole, (b) the Indenture, the Notes or the New Credit
Facility or any other Credit Facility (so long as such other Credit Facility
contains restrictions that are not materially more restrictive, taken as a
whole, than those described in the Commitment Letter), (c) applicable law, (d)
any instrument governing Indebtedness or Capital Stock of a Person acquired by
SBACC or any of its Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness was incurred in connection
with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of
any Person, other than the Person, or the property or assets of the Person, so
acquired, provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of the Indenture to be incurred, (e) by reason of
customary non-assignment provisions in leases or licenses or other contracts
entered into in the ordinary course of business, (f) purchase money
obligations for property acquired in the ordinary course of business that
impose restrictions of the nature described in clause (iii) above on the
property so acquired, (g) the provisions of agreements governing Indebtedness
incurred pursuant to clause (iv) of the second paragraph of the covenant
described above under the caption "--Incurrence of Indebtedness and Issuance
of Preferred Stock," (h) any agreement for the sale of a Restricted Subsidiary
that restricts that Restricted Subsidiary pending its sale, (i) Permitted
Refinancing Indebtedness, provided that the restrictions contained in the
agreements governing such Permitted Refinancing Indebtedness are not
materially more restrictive, taken as a whole, than those contained in the
agreements governing the Indebtedness being refinanced, (j) Liens permitted to
be incurred pursuant to the provisions of the covenant described under the
caption "--Liens" that limit the right of the debtor to transfer the assets
subject to such Liens, (k) provisions with respect to the disposition or
distribution of assets or property in joint venture agreements and other
similar agreements and (l) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the ordinary course of
business.
Merger, Consolidation or Sale of Assets
The Indenture provides that SBACC may not consolidate or merge with or into
(whether or not SBACC is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of
its properties or assets in one or more related transactions, to another
corporation, Person or entity unless (i) SBACC is the surviving corporation or
the entity or the Person formed by or surviving any such consolidation or
merger (if other than SBACC) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made is a corporation
organized or existing under the laws of the United States, any state thereof
or the District of Columbia; (ii) the entity or Person formed by or surviving
any such consolidation or merger (if other than SBACC) or the entity or Person
to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made assumes all the obligations of SBACC under
the Notes and the Indenture pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustee; and (iii) immediately after such
transaction no Default exists.
Transactions with Affiliates
The Indenture provides that SBACC will not, and will not permit any of its
Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or Guarantee with, or for
the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless (i) such Affiliate Transaction is on terms that are no
less favorable to SBACC or the relevant Restricted Subsidiary than those that
would have been obtained in a comparable transaction by SBACC or such
Restricted Subsidiary with an unrelated Person and (ii) SBACC delivers to the
Trustee (a) with respect to any Affiliate
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Transaction or series of related Affiliate Transactions involving aggregate
consideration in excess of $1.0 million, a resolution of the Board of
Directors set forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with clause (i) above and that such Affiliate Transaction
has been approved by a majority of the disinterested members of the Board of
Directors and (b) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in excess of
$5.0 million, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal
or investment banking firm of national standing. Notwithstanding the
foregoing, the following items shall not be deemed to be Affiliate
Transactions: (i) any employment arrangements with any executive officer of
SBACC or a Restricted Subsidiary that is entered into by SBACC or any of its
Restricted Subsidiaries in the ordinary course of business and consistent with
compensation arrangements of similarly situated executive officers at
comparable companies engaged in Permitted Businesses, (ii) transactions
between or among SBACC and/or its Restricted Subsidiaries, (iii) payment of
directors' fees in an aggregate annual amount not to exceed $25,000 per
Person, (iv) Restricted Payments and Permitted Investments that are permitted
by the provisions of the Indenture described above under the caption "--
Restricted Payments" and (v) the issuance or sale of Equity Interests (other
than Disqualified Stock) of SBACC.
Sale and Leaseback Transactions
The Indenture provides that SBACC will not, and will not permit any of its
Restricted Subsidiaries to, enter into any sale and leaseback transaction (as
seller); provided that SBACC or any of its Restricted Subsidiaries may enter
into a sale and leaseback transaction if (i) SBACC or such Restricted
Subsidiary, as applicable, could have (a) incurred Indebtedness in an amount
equal to the Attributable Debt relating to such sale and leaseback transaction
pursuant to the Debt to Adjusted Consolidated Cash Flow Ratio test set forth
in the first paragraph of the covenant described above under the caption "--
Incurrence of Indebtedness and Issuance of Preferred Stock" and (b) incurred a
Lien to secure such Indebtedness pursuant to the covenant described above
under the caption "--Liens," (ii) the gross cash proceeds of such sale and
leaseback transaction are at least equal to the fair market value (as
determined in good faith by the Board of Directors) of the property that is
the subject of such sale and leaseback transaction and (iii) the transfer of
assets in such sale and leaseback transaction is permitted by, and SBACC
applies the proceeds of such transaction in compliance with, the covenant
described above under the caption "--Repurchase at the Option of Holders--
Asset Sales."
Limitations on Issuances of Guarantees of Indebtedness
The Indenture provides that SBACC will not permit any Restricted Subsidiary,
directly or indirectly, to Guarantee or pledge any assets to secure the
payment of any Indebtedness of SBACC (except Indebtedness of SBACC under a
guarantee of Indebtedness of one or more of its Restricted Subsidiaries)
unless such Restricted Subsidiary simultaneously executes and delivers a
supplemental indenture to the Indenture providing for the Guarantee of the
payment of the Notes by such Restricted Subsidiary, which Guarantee shall be
senior to or pari passu with such Restricted Subsidiary's Guarantee of or
pledge to secure such other Indebtedness. Notwithstanding the foregoing, any
such Guarantee by a Restricted Subsidiary of the Notes shall provide by its
terms that it shall be automatically and unconditionally released and
discharged upon any sale, exchange or transfer, to any Person other than a
Restricted Subsidiary of SBACC, of all of SBACC's stock in, or all or
substantially all the assets of, such Restricted Subsidiary, which sale,
exchange or transfer is made in compliance with the applicable provisions of
the Indenture. The form of such Guarantee will be attached as an exhibit to
the Indenture. The Indenture allows the Company to designate current or future
subsidiaries as Unrestricted Subsidiaries. See "--Certain Definitions--
Unrestricted Subsidiary."
Business Activities
The Indenture provides that SBACC will not, and will not permit any
Restricted Subsidiary to, engage in any business other than Permitted
Businesses, except to such extent as would not be material to SBACC and its
Restricted Subsidiaries taken as a whole.
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Reports
The Indenture provides that, whether or not required by the rules and
regulations of the Securities and Exchange Commission (the "Commission"), so
long as any Notes are outstanding, SBACC will furnish to the Holders of Notes
(i) all quarterly and annual financial information that would be required to
be contained in a filing with the Commission on Forms 10-Q and 10-K if SBACC
were required to file such Forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" that describes the
financial condition and results of operations of SBACC and its consolidated
Subsidiaries (showing in reasonable detail, in the footnotes to the financial
statements and in "Management's Discussion and Analysis of Financial Condition
and Results of Operations" (in each case to the extent not prohibited by the
Commission's rules and regulations), (a) the financial condition and results
of operations of SBACC and its Restricted Subsidiaries separate from the
financial condition and results of operations of the Unrestricted Subsidiaries
of SBACC and (b) the Tower Cash Flow for the most recently completed fiscal
quarter and the Adjusted Consolidated Cash Flow for the most recently
completed four-quarter period) and, with respect to the annual information
only, a report thereon by SBACC's certified independent accountants, and (ii)
all current reports that would be required to be filed with the Commission on
Form 8-K if SBACC were required to file such reports, in each case within the
time periods specified in the Commission's rules and regulations; provided
that the report for the period ended December 31, 1997 need not be furnished
until April 15, 1998. In addition, following the consummation of the exchange
offer contemplated by the Registration Rights Agreement, whether or not
required by the rules and regulations of the Commission, SBACC will file a
copy of all such information and reports with the Commission for public
availability within the time periods specified in the Commission's rules and
regulations (unless the Commission will not accept such a filing) and make
such information available to securities analysts and prospective investors
upon request. In addition, SBACC will, for so long as any Notes remain
outstanding, furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered
pursuant to Rule 144A(d)(4) under the Securities Act.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on the
Notes; (ii) default in payment when due of the principal of or premium, if
any, on the Notes; (iii) failure by SBACC or any of its Subsidiaries to comply
with the provisions described under the caption "--Certain Covenants--Merger,
Consolidation or Sale of Assets" or failure by SBACC to consummate a Change of
Control Offer or Asset Sale Offer in accordance with the provisions of the
Indenture applicable thereto; (iv) failure by SBACC or any of its Subsidiaries
for 30 days after notice to comply with any of its other agreements in the
Indenture or the Notes; (v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by SBACC or any of its
Significant Subsidiaries (or the payment of which is guaranteed by SBACC or
any of its Significant Subsidiaries) whether such Indebtedness or guarantee
now exists, or is created after the date of the Indenture, which default (a)
is caused by a failure to pay principal of or premium, if any, or interest on
such Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default") or (b) results
in the acceleration of such Indebtedness prior to its express maturity and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$5.0 million or more; (vi) failure by SBACC or any of its Significant
Subsidiaries to pay final judgments aggregating in excess of $5.0 million,
which judgments are not paid, discharged or stayed for a period of 60 days; or
(vii) certain events of bankruptcy or insolvency with respect to SBACC or any
of its Restricted Subsidiaries that is a Significant Subsidiary.
If any Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount at maturity of the then outstanding Notes
may declare all of the Notes to be due and payable immediately. Upon any such
declaration, the principal of (or, if prior to the Full Accretion Date, the
Accreted Value of) and accrued and unpaid interest, if any, shall become due
and payable immediately. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency, with
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respect to SBACC, all outstanding Notes will become due and payable without
further action or notice. Holders of the Notes may not enforce the Indenture
or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount at maturity of the then
outstanding Notes may direct the Trustee in its exercise of any trust or
power.
The Holders of a majority in aggregate principal amount at maturity of the
Notes then outstanding by notice to the Trustee may on behalf of the Holders
of all of the Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of
Default in the payment of interest on, or the principal of, the Notes.
The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each holder of the Notes notice
of the Default within 90 days after it occurs. Except in the case of a Default
in the payment of principal of or interest on any Note, the Trustee may
withhold notice if and so long as a committee of its trust officers determines
that withholding notice is not opposed to the interest of the holders of the
Notes. In addition, SBACC is required to deliver to the Trustee, within 90
days after the end of each fiscal year, a certificate indicating whether the
signers thereof know of any Default that occurred during the previous year.
SBACC is also required to deliver to the Trustee, forthwith after the
occurrence thereof, written notice of any event that would constitute a
Default, the status thereof and what action SBACC is taking or proposes to
take in respect thereof.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of SBACC, as
such, shall have any liability for any obligations of SBACC under the Notes,
the Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SBACC may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Notes ("Legal
Defeasance") except for (i) the rights of Holders of outstanding Notes to
receive payments in respect of the principal of, premium, if any, and interest
on such Notes when such payments are due from the trust referred to below,
(ii) SBACC's obligations with respect to the Notes concerning issuing
temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen
Notes and the maintenance of an office or agency for payment and money for
security payments held in trust, (iii) the rights, powers, trusts, duties and
immunities of the Trustee, and SBACC's obligations in connection therewith and
(iv) the Legal Defeasance provisions of the Indenture. In addition, SBACC may,
at its option and at any time, elect to have the obligations of SBACC released
with respect to certain covenants that are described in the Indenture
("Covenant Defeasance") and thereafter any omission to comply with such
obligations shall not constitute a Default or Event of Default with respect to
the Notes. In the event Covenant Defeasance occurs, certain events (not
including non-payment and bankruptcy, receivership, rehabilitation and
insolvency events with respect to SBACC) described under "--Events of Default
and Remedies" will no longer constitute an Event of Default with respect to
the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
SBACC must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders of the Notes, cash in United States dollars, noncallable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest on
the outstanding Notes on the stated maturity or on the applicable redemption
date, as the case may be, and SBACC must specify whether the Notes are being
defeased to maturity or to a particular redemption date; (ii) in the case of
Legal Defeasance, SBACC shall have delivered to the Trustee an opinion of
counsel in the United States reasonably acceptable to the Trustee confirming
that (A) SBACC has received from, or there
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has been published by, the Internal Revenue Service a ruling or (B) since the
date of the Indenture, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
opinion of counsel shall confirm that, the Holders of the outstanding Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Legal Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred; (iii) in the case of
Covenant Defeasance, SBACC shall have delivered to the Trustee an opinion of
counsel in the United States reasonably acceptable to the Trustee confirming
that the Holders of the outstanding Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such Covenant Defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred; (iv) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit (other than a Default
or Event of Default resulting from the borrowing of funds to be applied to
such deposit) or insofar as Events of Default from bankruptcy or insolvency
events with respect to SBACC are concerned, at any time in the period ending
on the 91st day after the date of deposit; (v) such Legal Defeasance or
Covenant Defeasance will not result in a breach or violation of, or constitute
a default under any material agreement or instrument (other than the
Indenture) to which SBACC or any of its Restricted Subsidiaries is a party or
by which SBACC or any of its Restricted Subsidiaries is bound; (vi) SBACC must
have delivered to the Trustee an opinion of counsel to the effect that after
the 91st day following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally; (vii) SBACC must deliver to the
Trustee an Officers' Certificate stating that the deposit was not made by
SBACC with the intent of preferring the Holders of Notes over the other
creditors of SBACC with the intent of defeating, hindering, delaying or
defrauding creditors of SBACC or others; and (viii) SBACC must deliver to the
Trustee an Officers' Certificate and an opinion of counsel, each stating that
all conditions precedent provided for relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and SBACC may require
a Holder to pay any taxes and fees required by law. SBACC is not required to
transfer or exchange any Note selected for redemption. Also, SBACC is not
required to transfer or exchange any Note for a period of 15 days before a
selection of Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture or
the Notes may be amended or supplemented with the consent of the Holders of at
least 66 2/3 of the aggregate principal amount at maturity of the Notes then
outstanding (including, without limitation, consents obtained in connection
with a purchase of, or tender offer or exchange offer for, Notes), and any
existing default or compliance with any provision of the Indenture or the
Notes may be waived with the consent of the Holders of a majority in principal
amount at maturity of the then outstanding Notes (including consents obtained
in connection with a tender offer or exchange offer for Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder): (i) reduce the
principal amount of Notes whose Holders must consent to an amendment,
supplement or waiver, (ii) reduce the principal of or change the fixed
maturity of any Note or alter the provisions with respect to the redemption of
the Notes (specifically excluding the provisions relating to the covenants
described above under the caption "Repurchase at the Option of Holders"),
(iii) reduce the rate of or change the time for payment of interest on any
Note, (iv) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the Notes and a waiver of the payment default
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that resulted from such acceleration), (v) make any Note payable in money
other than that stated in the Notes, (vi) make any change in the provisions of
the Indenture relating to waivers of past Defaults or the rights of Holders of
Notes to receive payments of principal of or premium, if any, or interest on
the Notes, (vii) waive a redemption payment with respect to any Note
(specifically excluding the payment required by one of the covenants described
above under the caption "Repurchase at the Option of Holders"), (viii) except
as provided under the caption "Legal Defeasance and Covenant Defeasance" or in
accordance with the terms of any Subsidiary Guarantee, release a Subsidiary
Guarantor from its obligations under its Subsidiary Guarantee or make any
change in a Subsidiary Guarantee that would adversely affect the Holders of
the Notes, (ix) provide for contractual subordination of the Notes or (x) make
any change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of Notes,
SBACC and the Trustee may amend or supplement the Indenture or the Notes to
cure any ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to provide for the
assumption of SBACC's obligations to Holders of Notes in the case of a merger
or consolidation, to make any change that would provide any additional rights
or benefits to the Holders of Notes or that does not adversely affect the
legal rights under the Indenture of any such Holder, or to comply with
requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of SBACC, to obtain payment of claims in certain
cases, or to realize on certain property received in respect of any such claim
as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the Commission for permission
to continue or resign.
The Holders of a majority in principal amount at maturity of the then
outstanding Notes will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee,
subject to certain exceptions. The Indenture provides that in case an Event of
Default shall occur (which shall not be cured), the Trustee will be required,
in the exercise of its power, to use the decree of care of a prudent man in
the conduct of his own affairs. Subject to such provisions, the Trustee will
be under no obligation to exercise any of its rights or powers under the
Indenture at the request of any Holder of Notes, unless such Holder shall have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
"Accreted Value" means, as of any date of determination the sum of (a) the
initial Accreted Value (which is $558.50 per $1,000 in principal amount at
maturity of Notes) and (b) the portion of the excess of the principal amount
at maturity of each Note over such initial Accreted Value which shall have
been amortized through such date, such amount to be so amortized on a daily
basis and compounded semiannually on each March 1 and September 1 at the rate
of 12% per annum from the date of original issuance of the Notes through the
date of determination computed on the basis of a 360-day year of twelve 30-day
months. The Accreted Value of any Note on or after the Full Accretion Date
shall be equal to 100% of its stated principal amount.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
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"Adjusted Consolidated Cash Flow" has the meaning given to such term in the
definition of "Debt to Adjusted Consolidated Cash Flow Ratio."
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled
by" and "under common control with"), as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise,
provided that beneficial ownership of 10% or more of the Voting Stock of a
Person shall be deemed to be control.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback, as seller), in any case, outside of the ordinary course of business
provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of SBACC and its Subsidiaries taken as a whole
will be governed by the provisions of the Indenture described above under the
caption "--Purchase at the Option of Holders--Change of Control" and/or the
provisions described above under the caption "Purchase at the Option of
Holders--Merger, Consolidation or Sale of Assets" and not by the provisions of
the Asset Sale covenant and (ii) the issue or sale by SBACC or any of its
Restricted Subsidiaries of Equity Interests of any of SBACC's Subsidiaries
(other than (x) directors' qualifying shares or shares required by applicable
law to be held by a Person other than SBACC or a Restricted Subsidiary or (y)
Permitted Subsidiary Equity Interests), in the case of either clause (i) or
(ii), whether in a single transaction or a series of related transactions (a)
that have a fair market value in excess of $2.0 million or (b) for net
proceeds in excess of $2.0 million. Notwithstanding the foregoing, the
following items shall not be deemed to be Asset Sales: (i) a transfer of
assets by SBACC to a Restricted Subsidiary or by a Restricted Subsidiary to
SBACC or to another Restricted Subsidiary, (ii) an issuance of Equity
Interests by a Subsidiary to SBACC or to another Restricted Subsidiary, (iii)
a Restricted Payment or Permitted Investment that is permitted by the covenant
described above under the caption "Certain Covenants--Restricted Payments,"
(iv) grants of leases or licenses in the ordinary course of business and (v)
disposals of Cash Equivalents.
"Attributable Debt" in respect of a sale and leaseback transaction means, at
the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Broker-Dealer" means any broker or dealer registered under the Exchange
Act.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of,
the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof (provided that the full faith and credit
of the United States is pledged in support thereof) having maturities of not
more than 12 months from the date of acquisition, (iii) certificates of
deposit and eurodollar time deposits with maturities of 12 months or less from
the date of acquisition, bankers' acceptances with maturities not exceeding 12
months and overnight
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bank deposits, in each case with any lender party to the New Credit Facility
or with any domestic commercial bank having capital and surplus in excess of
$500.0 million and a Thompson Bank Watch Rating of "B" or better, (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (ii) and (iii) above entered into
with any financial institution meeting the qualifications specified in clause
(iii) above, (v) commercial paper having the highest rating obtainable from
Moody's Investors Service, Inc. or Standard & Poor's Ratings Group and in each
case maturing within 12 months after the date of acquisition and (vi) money
market funds at least 95% of the assets of which constitute Cash Equivalents
of the kinds described in clauses (i)-(v) of this definition.
"Change of Control" means the occurrence of any of the following; (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all
or substantially all of the assets of SBACC and its Restricted Subsidiaries,
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act) other than a Principal or a Related Party of a Principal;
(ii) the adoption of a plan relating to the liquidation or dissolution of
SBACC; (iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above) other than the Principals and their Related
Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that a person shall be deemed to
have "beneficial ownership" of all securities that such person has the right
to acquire, whether such right is currently exercisable or is exercisable only
upon the occurrence of a subsequent condition), directly or indirectly, of
more than 50% of the Voting Stock of SBACC (measured by voting power rather
than number of shares); (iv) the first day on which a majority of the members
of the Board of Directors of SBACC are not Continuing Directors; or (v) SBACC
consolidates with, or merges with or into, any Person, or any Person
consolidates with, or merges with or into, SBACC, in any such event pursuant
to a transaction in which any of the outstanding Voting Stock of SBACC is
converted into or exchanged for cash, securities or other property, other than
any such transaction where (x) the Voting, Stock of SBACC outstanding
immediately prior to such transaction is converted into or exchanged for
Voting Stock (other than Disqualified Stock) of the surviving, or transferee
Person constituting a majority of the outstanding, shares of such Voting Stock
of such surviving, or transferee Person (immediately after giving effect to
such issuance) or (y) the Principals and their Related Parties own a majority
of such outstanding, shares after such transaction.
"Commitment Letter" means that certain Commitment Letter and related Term
Sheet dated as of February 3, 1998 by and among BankBoston, N.A. as agent,
BancBoston Securities Inc. as arranger and SBA Communications Corporation.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus, (i) provision
for taxes based on income or profits of such Person and its Restricted
Subsidiaries for such period to the extent that such provision for taxes was
included in computing, such Consolidated Net Income, plus (ii) consolidated
interest expense ("Consolidated Interest Expense") of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued and whether
or not capitalized (including, without limitation, amortization of debt
issuance costs and original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, imputed interest
with respect to Attributable Debt, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations), to the
extent that any such expense was deducted in computing such Consolidated Net
Income, plus (iii) depreciation, amortization (including amortization of
goodwill and other intangibles and other non-cash expenses (excluding any such
non-cash expense to the extent that it represents an accrual of or reserve for
cash expenses in any future period)) of such Person and its Restricted
Subsidiaries for such period to the extent that such depreciation,
amortization and other non-cash expenses were deducted in computing such
Consolidated Net Income, minus (iv) non-cash items increasing such
Consolidated Net Income for such period (excluding any items that were accrued
in the ordinary course of business), in each case on a consolidated basis and
determined in accordance with GAAP.
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"Consolidated Indebtedness" means, with respect to any Person as of any date
of determination, the sum, without duplication, of (i) the total amount of
Indebtedness of such Person and its Restricted Subsidiaries, plus (ii) the
total amount of Indebtedness of any other Person, to the extent that such
Indebtedness has been Guaranteed by the referent Person or one or more of its
Restricted Subsidiaries, plus (iii) the aggregate liquidation value of all
Disqualified Stock of such Person and all preferred stock of Restricted
Subsidiaries of such Person (other than Permitted Subsidiary Equity
Interests), in each case, determined on a consolidated basis in accordance
with GAAP.
"Consolidated Assets" means, with respect to SBACC, the total consolidated
assets of SBACC and its Restricted Subsidiaries, as shown on the most recent
internal consolidated balance sheet of SBACC and such Restricted Subsidiaries
calculated on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" has the meaning given to such term in the
definition of Consolidated Cash Flow.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person (other than
SBACC) that is not a Restricted Subsidiary of SBACC or that is accounted for
by the equity method of accounting shall be excluded, except that for purposes
of determining compliance with the covenant described unless "Certain
Covenants--Restricted Payments" above, such Net Income shall be included but
only to the extent of the amount of dividends or distributions paid in cash to
the referent Person or a Restricted Subsidiary thereof, (ii) the Net Income of
any Person acquired in a pooling of interests transaction for any period prior
to the date of such acquisition shall be excluded, (iii) the cumulative effect
of a change in accounting principles shall be excluded, (iv) the Net Income
(but not loss) of any Unrestricted Subsidiary shall be excluded whether or not
distributed to SBACC or one of its Restricted Subsidiaries or whether or not
otherwise included pursuant to clause (i) and (v) any deferred financing costs
written off in connection with the early extinguishment of any Indebtedness
shall be added back to Consolidated Net income to the extent otherwise
deducted therefrom.
"Continuing Directors" means, as of any date of determination, any member of
the Board of Directors of SBACC who (i) was a member of such Board of
Directors on the date of the Indenture, (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election or (iii) is a designee of a Principal or was nominated
by a Principal.
"Credit Facility" means one or more senior debt facilities (including,
without limitation, the New Credit Facility) or commercial paper facilities
with banks or other institutional lenders providing for revolving credit
loans, term loans or letters of credit, in each case, as amended, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to
time (including subsequent refinancings); provided, however, that the terms
and conditions in any such facility (including the New Credit Facility)
relating to the ability of Subsidiaries of SBACC to pay dividends or make
distributions to SBACC shall not, taken as a whole, be materially more
restrictive than those described in the Commitment Letter.
"Debt to Adjusted Consolidated Cash Flow Ratio" means, as of any date of
determination, the ratio of (a) the Consolidated Indebtedness of SBACC as of
such date to (b) the sum of (1) the Consolidated Cash Flow of SBACC for the
four most recent full fiscal quarters ending immediately prior to such date
for which internal financial statements are available, less SBACC's Tower Cash
Flow for such four-quarter period, plus (2) the product of four times SBACC's
Tower Cash Flow for the most recent quarterly period (such sum being, referred
to as "Adjusted Consolidated Cash Flow"), in each case determined on a pro
forma basis after giving effect to all acquisitions or dispositions of assets
made by SBACC and its Subsidiaries from the beginning of such four-quarter
period through and including such date of determination (including any related
financing transactions) as if such acquisitions and dispositions had occurred
at the beginning of such four-quarter period. For purposes of
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making the computation referred to above, (i) acquisitions that have been made
by SBACC or any of its Restricted Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during the
reference period or subsequent to such reference period and on or prior to the
Calculation Date shall be deemed to have occurred on the first day of the
reference period and Consolidated Cash Flow for such reference period shall be
calculated without giving effect to clause (ii) of the proviso set forth in
the definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow
attributable to discontinued operations, as determined in accordance with
GAAP, and operations or businesses disposed of prior to Calculation Date,
shall be excluded.
"Default" means any event that is, or with the passage of time or the giving
of notice or both would be, an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable, in each case, at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the
Holder thereof, in whole or in part, on or prior to the date that is 91 days
after the date on which the Notes mature; provided, however, that any Capital
Stock that would constitute Disqualified Stock solely because the holders
thereof have the right to require SBACC to repurchase such Capital Stock upon
the occurrence of a Change of Control or an Asset Sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that SBACC may
not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with the covenant described
under the caption "Certain Covenants--Restricted Payments."
"Eligible Indebtedness" means any Indebtedness for money borrowed incurred
by one or more Restricted Subsidiaries of SBACC, provided that such
Indebtedness for money borrowed is contractually pari passu with and secured
equally and ratably with all other Indebtedness for money borrowed of such
Restricted Subsidiaries, including, without limitation, Indebtedness
outstanding under the New Credit Facility.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock) (it being understood
that Permitted Subsidiary Equity Interests shall not be deemed Equity
Interests of SBACC until they have been converted into Equity Interests of
SBACC in accordance with the terms thereof).
"Exchange Offer" means exchange and issuance by SBACC of a principal amount
of New Notes (which shall be registered pursuant to the Exchange Offer
Registration Statement) equal to the outstanding principal amount of Notes
that are tendered by such Holders in connection with such exchange and
issuance.
"Exchange Offer Registration Statement" means the Registration Statement
relating to the Exchange Offer, including the related Prospectus.
"Existing Indebtedness" means Indebtedness of SBACC and its Subsidiaries
(other than Indebtedness under the Credit Facility) in existence on the
original issuance of the Notes, until such amounts are repaid.
"fair market value" means the price which could be negotiated in an arm's
length, free market transaction, for cash, between a willing and able seller
and a willing and able buyer, neither of whom is under undue pressure, or
compulsion to complete the transaction. Fair market value shall be determined
by the Board of Directors of SBACC acting reasonably and in good faith,
evidenced by a resolution of the Company's Board of Directors delivered to the
Trustee; provided, however, that fair market value shall be determined by a
nationally recognized independent investment banking, accounting or appraisal
firm for any transaction which is reasonably likely to exceed $10 million in
value.
"Full Accretion Date" means March 1, 2003.
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"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements relating to or based upon fluctuations in interest rates or
currency exchange rates.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced
by bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable,
if and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP, as well as all
Indebtedness of others secured by a Lien on any asset of such Person whether
or not such Indebtedness is assumed by such Person (the amount of such
Indebtedness as of any date being deemed to be the lesser of the value of such
property or assets as of such date or the principal amount of such
Indebtedness of such other Person so secured) and, to the extent not otherwise
included, the Guarantee by such Person of any Indebtedness of any other
Person. The amount of any Indebtedness outstanding as of any date shall be (i)
the accreted value thereof, in the case of any Indebtedness issued with
original issue discount, and (ii) the principal amount thereof, together with
any interest thereon that is more than 30 days past due, in the case of any
other Indebtedness. In calculating the amount of Indebtedness outstanding,
letters of credit supporting obligations otherwise included as Indebtedness
(and reimbursement obligations with respect to such letters of credit to the
extent supporting obligations otherwise included in Indebtedness) shall not be
included.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If SBACC or any Restricted Subsidiary of SBACC sells or otherwise disposes of
all Equity Interests of any direct or indirect Subsidiary of SBACC or a
Restricted Subsidiary of SBACC issues any of its Equity Interests such that,
in each case, after giving effect to any such sale or disposition, such Person
is no longer a Restricted Subsidiary of SBACC, SBACC shall be deemed to have
made an Investment on the date of any such sale or disposition equal to the
fair market value of the Equity Interests of such Subsidiary not sold or
disposed of in an amount determined as provided in the final paragraph of the
covenant described above under the caption "--Certain Covenants--Restricted
Payments."
"Issue Date" means March 2, 1998, the date of original issuance of the
Notes.
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the
nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
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"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain or
loss, together with any related provision for taxes on such gain or loss,
realized in connection with (a) any asset sale outside the ordinary course of
business (including, without limitation, dispositions pursuant to sale and
leaseback transactions) or (b) the disposition of any securities by such
Person or any of its Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted Subsidiaries and (ii) any
extraordinary gain or loss, together with any related provision for taxes on
such extraordinary gain or loss.
"Net Proceeds" means the aggregate cash proceeds received by SBACC or any of
its Restricted Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any non-
cash consideration received in any Asset Sale), net of (i) the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation
expenses incurred as a result thereof, (ii) taxes paid or payable as a result
thereof (after taking into account any available tax credits or deductions and
any tax sharing arrangements), (iii) amounts required to be applied to the
repayment of Indebtedness (other than Indebtedness under a Credit Facility)
secured by a Lien on the asset or assets that were the subject of such Asset
Sale, (iv) all distributions and other payments required to be made to
minority interest holders in Restricted Subsidiaries as a result of such Asset
Sale, (v) the deduction of appropriate amounts provided by the seller as a
reserve in accordance with GAAP against any liabilities associated with the
assets disposed of in such Asset Sale and retained by SBACC or any Restricted
Subsidiary after such Asset Sale and (vi) without duplication, any reserves
that SBACC's Board of Directors determines in good faith should be made in
respect of the sale price of such asset or assets for post closing
adjustments; provided that in the case of any reversal of any reserve referred
to in clause (v) or (vi) above, the amount so reserved shall be deemed to be
Net Proceeds from an Asset Sale as of the date of such reversal.
"New Credit Facility" means that certain loan agreement to be entered into
by SBA Telecommunications, Inc., on terms substantially equivalent to those
described in the Commitment Letter, and including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed,
refunded, replaced or refinanced in whole or in part from time to time
(including subsequent refinancings).
"New Notes" means SBACC's 12% Senior Discount Notes due 2008 to be issued
pursuant to the Indenture (i) in the Exchange Offer or (ii) as contemplated by
the Registration Rights Agreement.
"Non-Recourse Debt" means Indebtedness (i) as to which neither SBACC nor any
of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of SBACC
or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior
to its stated maturity; and (iii) as to which the lenders have been notified
in writing that they will not have any recourse to the stock or assets of
SBACC or any of its Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Payment Restriction" means, with respect to a subsidiary of any Person, any
encumbrance, restriction or limitation, whether by operation of the terms of
its charter or by reason of any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation, on the ability of (i) such
subsidiary to (a) pay dividends or make other distributions on its Capital
Stock or make payments on any obligation, liability or Indebtedness owed to
such Person or any other subsidiary of such Person, (b) make loans or advances
to such
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Person or any other subsidiary of such Person, or (ii) such Person or any
other subsidiary of such Person to receive or retain any such (a) dividends,
distributions or payments, (b) loans or advances or (c) transfer of properties
or assets.
"Permitted Business" means any business conducted by SBACC and its
Restricted Subsidiaries on the date of the Indenture and any other business
related, ancillary or complementary to any such business.
"Permitted Investments" means (a) any Investment in SBACC or in a Restricted
Subsidiary of SBACC; (b) any Investment in Cash Equivalents; (c) any
Investment by SBACC or any Restricted Subsidiary of SBACC in a Person, if as a
result of such Investment (i) such Person becomes a Restricted Subsidiary of
SBACC or (ii) such Person is merged, consolidated or amalgamated with or into,
or transfers or conveys substantially all of its assets to, or is liquidated
into, SBACC or a Restricted Subsidiary of SBACC; (d) any Restricted Investment
made as a result of the receipt of non-cash consideration from an Asset Sale
that was made pursuant to and in compliance with the covenant described above
under the caption "Repurchase at the Option of Holders--Asset Sales," (e) any
acquisition of assets solely in exchange for the issuance of Equity Interests
(other than Disqualified Stock) of SBACC; (f) receivables created in the
ordinary course of business; (g) loans or advances to employees made in the
ordinary course of business not to exceed $5.0 million at any one time
outstanding; (h) securities and other assets received in settlement of trade
debts or other claims arising in the ordinary course of business; and (i)
other Investments in Permitted Businesses not to exceed 5% of SBACC's
Consolidated Assets at any one time outstanding (each such Investment being
measured as of the date made and without giving effect to subsequent changes
in value).
"Permitted Liens" means (i) Liens securing Eligible Indebtedness of SBACC
under one or more Credit Facilities that was permitted by the terms of the
Indenture to be incurred; (ii) Liens securing any Indebtedness of any of
SBACC's Restricted Subsidiaries that was permitted by the terms of the
Indenture to be incurred; (iii) Liens in favor of SBACC; (iv) Liens existing
on the Issue Date; (v) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good faith
by appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as shall be required
in conformity with GAAP shall have been made therefor; (vi) Liens securing
Indebtedness permitted to be incurred under clause (iv) of the second
paragraph of the covenant described above under the caption "Certain
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock;" and
(vii) Liens incurred in the ordinary course of business of SBACC or any
Restricted Subsidiary of SBACC with respect to obligations that do not exceed
$10 million at any one time outstanding and that (a) are not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(other than trade credit in the ordinary course of business) and (b) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by SBACC or such
Restricted Subsidiary.
"Permitted Refinancing Indebtedness" means any Indebtedness of SBACC or any
of its Restricted Subsidiaries issued in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of SBACC or any of its Restricted Subsidiaries (other than
intercompany Indebtedness); provided that: (i) the principal amount (or
initial accreted value, if applicable) of such Permitted Refinancing
Indebtedness does not exceed the principal amount of (or accreted value, if
applicable), plus accrued interest on, the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
expenses and prepayment premiums incurred in connection therewith), (ii) such
Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has a Weighted Average Life to Maturity equal to
or greater than the Weighted Average Life to Maturity of, the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded, (iii) if
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded is subordinated in right of payment to the Notes, such Permitted
Refinancing Indebtedness is subordinated in right of payment to, the Notes on
terms at least as favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded, and (iv) such Indebtedness is incurred either
by SBACC or by the Restricted Subsidiary who is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
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"Permitted Subsidiary Equity Interests" means Equity Interests of Restricted
Subsidiaries of SBACC that (i) will automatically convert into common stock of
SBACC in the event of a Public Equity Offering of SBACC or the occurrence of
an Event of Default under the Indenture, (ii) does not entitle the holder to
any registration rights, (iii) is issued as consideration in a Tower Asset
Acquisition and (iv) does not provide for any dividends other than in
additional shares of such Equity Interests.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any
subdivision or ongoing business of any such entity or substantially all of the
assets of any such entity, subdivision or business).
"Principal" means Steven E. Bernstein.
"Prospectus" means the prospectus included in a Registration Statement at
the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by
reference into such Prospectus.
"Public Equity Offering" means an underwritten primary public offering of
common stock of SBACC pursuant to an effective registration statement under
the Securities Act.
"Qualified Equity Interests" means Equity Interests of SBACC other than
Disqualified Stock.
"Registration Statement" means any registration statement of SBACC relating
to (a) an offering of New Notes pursuant to an Exchange Offer or (b) the
registration for resale of Transfer Restricted Securities pursuant to the
Shelf Registration Statement, in each case, (i) that is filed pursuant to the
provisions of the Registration Rights Agreement and (ii) including the
Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
"Related Party" with respect to any Principal means (A) any controlling
stockholder, 80% (or more) owned Subsidiary of such Principal or (B) any
trust, corporation, partnership or other entity, the beneficiaries,
stockholders, members, partners, owners or Persons beneficially holding an 80%
or more controlling interest of which consist of such Principal and/or such
other Persons referred to in the immediately preceding clause (A).
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the relevant
Person that is not an Unrestricted Subsidiary.
"Seller Paper" means Indebtedness incurred by SBACC or any of its Restricted
Subsidiaries as consideration in a Tower Asset Acquisition.
"Shelf Registration Statement" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
"Significant Subsidiary" means, with respect to any Person, any Restricted
Subsidiary of such Person that would be a "significant subsidiary" of such
Person as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof,
except that all references to "10 percent" in Rule 1-02(w)(1), (2) and (3)
shall mean "5 percent."
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the
date originally scheduled for the payment thereof.
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"Strategic Equity Investment" means a cash contribution to the common equity
capital of SBACC or a purchase from SBACC of common Equity Interests (other
than Disqualified Stock), in either case by or from a Strategic Equity
Investor and for aggregate cash consideration of at least $10.0 million.
"Strategic Equity Investor" means a Person engaged in a Permitted Business
whose Total Equity Market Capitalization exceeds $1 billion.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total
voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or of one or more Subsidiaries of such Person (or any combination
thereof).
"Total Equity Market Capitalization" of any Person means, as of any day of
determination, the sum of (i) the product of (A) the aggregate number of
outstanding primary shares of common stock of such Person on such day (which
shall not include any options or warrants on, or securities convertible or
exchangeable into, shares of common stock of such person) multiplied by (B)
the average closing price of such common stock listed on a national securities
exchange or the Nasdaq National Market System over the 20 consecutive business
days immediately preceding such day, plus (ii) the liquidation value of any
outstanding shares of preferred stock of such Person on such day.
"Tower Asset Acquisition" means an acquisition of Tower Assets or a business
substantially all of the assets of which are Tower Assets.
"Tower Assets" means wireless transmission towers and related assets that
are located on the site of a transmission tower.
"Tower Cash Flow" means, for any period, the Consolidated Cash Flow of SBACC
and its Restricted Subsidiaries for such period that is directly attributable
to site rental revenue, license or management fees paid to manage, lease or
sublease space on communication sites owned, leased or managed by SBACC
(collectively, "site leasing revenues"), all determined on a consolidated
basis and in accordance with GAAP. Tower Cash Flow will not include revenue
derived from the sale of assets. In allocating corporate general,
administrative and other operating expenses that are not, in the financial
statements of SBACC allocated to any particular line of business, such
expenses shall be allocated to the Company's site leasing business in
proportion to the percentage of the Company's total revenues for the
applicable period that were site leasing revenues.
"Transfer Restricted Securities" means each Note, until the earliest to
occur of (a) the date on which such Note is exchanged in the Exchange Offer
and entitled to be resold to the public by the Holder thereof without
complying with the prospectus delivery requirements of the Act, (b) the date
on which such Note has been disposed of in accordance with a Shelf
Registration Statement, (c) the date on which such Note is disposed of by a
Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the
Exchange Offer Registration Statement (including delivery of the Prospectus
contained therein) or (d) the date on which such Note is distributable to the
public pursuant to Rule 144 under the Act.
"Unrestricted Subsidiary" means any Subsidiary of SBACC that is designated
by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution; but only to the extent that such Subsidiary: (a) has no
Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with SBACC or any Restricted Subsidiary
of SBACC unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to SBACC or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not
Affiliates of SBACC; (c) is a Person with respect to which neither SBACC nor
any of its Restricted Subsidiaries has any direct or indirect obligation (x)
to subscribe
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for additional Equity Interests or (y) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results; (d) has not guaranteed or otherwise directly or indirectly
provided credit support for any Indebtedness of SBACC or any of its Restricted
Subsidiaries; and (e) has at least one director on its board of directors that
is not a director or executive officer of SBACC or any of its Restricted
Subsidiaries and has at least one executive officer that is not a director or
executive officer of SBACC or any of its Restricted Subsidiaries. Any such
designation by the Board of Directors shall be evidenced to the Trustee by
filing with the Trustee a certified copy of the Board Resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions and was permitted by the
covenant described above under the caption "Certain Covenants--Restricted
Payments." If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter
cease to be an Unrestricted Subsidiary for purposes of the Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of SBACC as of such date (and, if such Indebtedness is not
permitted to be incurred as of such date under the covenant described above
under the caption "Certain Covenants--Incurrence of Indebtedness and Issuance
of Preferred Stock," SBACC shall be in default of such covenant). The Board of
Directors of SBACC may at any time designate any Unrestricted Subsidiary to be
a Restricted Subsidiary; provided that such designation shall be deemed to be
an incurrence of Indebtedness by a Restricted Subsidiary of SBACC of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if (i) such Indebtedness is permitted under the
covenant described above under the caption "Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock," calculated on a pro forma basis
as if such designation had occurred at the beginning of the four-quarter
reference period, and (ii) no Default would occur or be in existence following
such designation.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall
at the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following general discussion summarizes certain of the material U.S.
federal income tax aspects of the Exchange Offer to holders of the Private
Notes. This discussion is summary for general information only and does not
consider all aspects of the Private Notes in light of such holder's personal
circumstances. This discussion also does not address the U.S. federal income
tax consequences to holders subject to special treatment under the U.S.
federal income tax laws, such as dealers in securities, or foreign currency,
tax-exempt entities, banks, thrifts, insurance companies, persons that hold
the Notes as part of a "straddle", a "hedge" against currency risk or a
"conversion transaction"; persons that have a "functional currency" other than
the U.S. dollar, and investors in pass-through entities. In addition, this
discussion does not prescribe any tax consequences arising out of the tax laws
of any state, local or foreign jurisdiction.
This discussion is based upon the Code, existing and proposed regulations
thereunder, Internal Revenue Service ("IRS") rulings and pronouncements and
judicial decisions now in effect, all of which are subject to change (possibly
on a retroactive basis). The Company has not and will not seek any rulings or
opinions from the IRS or counsel with respect to the matters discussed below.
There can be no assurance that the IRS will not take positions concerning the
tax consequences of the Exchange Offer which are different from those
discussed herein.
HOLDERS OF THE PRIVATE NOTES SHOULD CONSULT THEIR OWN ADVISORS CONCERNING
THE APPLICATION OF U.S. FEDERAL INCOME TAX LAWS, AS WELL AS THE LAWS OF ANY
STATE, LOCAL OR FOREIGN TAXING JURISDICTION, TO THE EXCHANGE OFFER IN LIGHT OF
THEIR PARTICULAR SITUATIONS.
The exchange of Private Notes for Exchange Notes pursuant to the Exchange
Offer will not constitute a taxable exchange. As a result, a holder (i) will
not recognize taxable gain or loss as a result of exchanging Private Notes for
Exchange Notes pursuant to the Exchange Offer; (ii) the holding period of the
Exchange Notes will include the holding period of the Private Notes exchanged
therefor and (iii) the adjusted tax basis of the Exchange Notes will be the
same as the adjusted tax basis of the Private Notes exchanged therefor
immediately before the exchange.
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BOOK ENTRY; DELIVERY AND FORM
Except as described in the next paragraph, the Notes initially will be
represented by one or more permanent global certificates in definitive, fully
registered form (the "Global Notes"). The Global Notes will be deposited with,
or on behalf of, DTC, New York, New York, and registered in the name of a
nominee of DTC. The Global Notes will be subject to certain restrictions on
transfer set forth therein and will bear the legend regarding such
restrictions set forth under the heading "Transfer Restrictions" herein.
The Global Notes. The Company expects that pursuant to procedures
established by DTC (i) upon the issuance of the Global Notes, DTC or its
custodian will credit, on its internal system, the principal amount of the
individual beneficial interests represented by such Global Notes to the
respective accounts of persons who have accounts with such depositary and (ii)
ownership of beneficial interests in the Global Notes will be shown on, and
the transfer of such ownership will be effected only through, records
maintained by DTC or its nominee (with respect to interests of participants)
and the records of participants (with respect to interests of persons other
than participants). Such accounts initially will be designated by or on behalf
of the Initial Purchasers and ownership of beneficial interests in the Global
Notes will be limited to persons who have accounts with DTC ("participants")
or persons who hold interests through participants. QIBs may hold their
interests in the Global Note directly through DTC if they are participants in
such system, or indirectly through organizations which are participants in
such system.
So long as DTC, or its nominee, is the registered owner or holder of the
Notes, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Notes represented by such Global Notes for all purposes
under the Indenture. No beneficial owner of an interest in any of the Global
Notes will be able to transfer that interest except in accordance with DTC's
procedures, in addition to those provided for under the Indenture with respect
to the Notes. Interests in the Global Notes will also be subject to certain
restrictions on transfers as set forth under the heading "Transfer
Restrictions."
Payments of the principal of, premium (if any) and interest (including
Additional Interest) on the Global Notes will be made to DTC or its nominee,
as the case may be, as the registered owner thereof. None of the Company, the
Trustee or any Paying Agent will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Notes or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interest.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, or interest (including Additional Interest) in
respect of the Global Notes, will credit participants' accounts with payments
in amounts proportionate to their respective beneficial interests in the
principal amount of the Global Notes as shown on the records of DTC or its
nominee. The Company also expects that payments by participants to owners of
beneficial interests in the Global Notes held through such participants will
be governed by standing instructions and customary practice, as is now the
case with securities held for the accounts of customers registered in the
names of nominees for such customers. Such payments will be the responsibility
of such participants.
Transfers between participants in DTC will be effected in the ordinary way
through DTC's same-day funds system in accordance with DTC rules and will be
settled in same day funds. If a holder requires physical delivery of a
Certificated Note ("Certificated Note") for any reason, including to sell
Notes to persons in states which require physical delivery of the Notes, or to
pledge such securities, such holder must transfer its interest in a Global
Note, in accordance with the normal procedures of DTC and with the procedures
set forth in the Indenture.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes (including the presentation of Notes for exchange
as described below) only at the direction of one or more participants to whose
account the DTC interests in the Global Notes are credited and only in respect
of such portion of the aggregate principal amount of Notes as to which such
participant or participants has or have given
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such direction. However, if there is an Event of Default under the Indenture,
DTC will exchange the Global Notes for Certificated Notes, which it will
distribute to its participants and which will be legended as set forth under
the heading "Transfer Restrictions."
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and certain other
organizations. Indirect access to the DTC system is available to others such
as banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a participant, either directly or indirectly
("indirect participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Notes among participants of DTC, it is
under no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
Certificated Notes. If DTC is at any time unwilling or unable to continue as
a depositary for the Global Notes and a successor depositary is not appointed
by the Company within 90 days, Certificated Notes will be issued in exchange
for the Global Notes.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account in
connection with the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Notes received
in exchange for Private Notes if such Private Notes were acquired as a result
of market-making activities or other trading activities. The Company has
agreed that for a period of 180 days after the Expiration Date, it will make
this Prospectus, as amended or supplemented, available to any broker-dealer
that requests such documents in the Letter of Transmittal, for use in
connection with any such resale. In addition, until (90 days after the date
of this Prospectus), all dealers effecting transactions in the Exchange Notes
may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of Exchange Notes by
broker-dealers. Exchange Notes received by broker-dealers for their own
account in connection with the Exchange Offer may be sold from time to time in
one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such release may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions of
concessions from any such broker-dealer and/or the purchasers of any such
Exchange Notes. Any broker-dealer that resells Exchange Notes that were
received by it for its own account in connection with the Exchange Offer and
any broker or dealer that participates in a distribution of such Exchange
Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
An affiliate of BT Alex. Brown Incorporated, one of the Initial Purchasers,
is a limited partner in ABS and certain employees of BT Alex. Brown
Incorporated are investors in another Private Investor. In addition, certain
officers of BT Alex. Brown Incorporated are holders of Series A Preferred
Stock. Further, in connection with the Preferred Stock Offering, the Company
granted BT Alex. Brown Incorporated a five-year warrant to purchase up to
402,500 shares of Class A Common Stock, subject to certain anti-dilution
rights, with an exercise price of $3.73 per share of Class A Common Stock. See
"Ownership of Capital Stock" and "Certain Transactions."
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LEGAL MATTERS
The validity of the Exchange Notes offered hereby will be passed upon for
the Company by Latham & Watkins, New York, New York and Gunster, Yoakley,
Valdes-Fauli & Stewart, P.A., West Palm Beach, Florida.
INDEPENDENT ACCOUNTANTS
The audited financial statements and schedules of SBA Communications
Corporation included in this registration statement have been audited by
Arthur Anderson LLP, independent certified public accountants, as indicated in
their reports with respect thereto, and are included herein in reliance upon
the authority of said firm as experts in giving said reports.
The financial statements of Communication Site Services, Inc. and Segars
Communication Group, Inc. as of December 31, 1996 and 1995 and for the years
then ended, included in this Prospectus, have been audited by Robson, Scribner
& Stewart, P.A., Certified Public Accountants, as stated in their reports
appearing herein.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 under the Securities Act with respect to the Exchange Notes offered
hereby. As permitted by the rules and regulations of the Commission, this
Prospectus omits certain information, exhibits and undertakings contained in
the Registration Statement. For further information with respect to the
Company and the Exchange Notes offered hereby, reference is made to the
Registration Statement, including the exhibits thereto and the financial
statements, notes and schedules filed as a part thereof. As a result of the
Exchange Offer, the Company will become subject to the informational
requirements of the Exchange Act. The Registration Statement (and the exhibits
and schedules thereto), as well as the periodic reports and other information
filed by the Company with the Commission, may be inspected and copied at the
Public Reference Section of the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of the
Commission located at Room 1400, 75 Park Place, New York, New York 10007 and
Suite 1400, Northwestern Atrium Center, 500 West Madison Street, Chicago,
Illinois 6061-2511. Copies of such materials may be obtained from the Public
Reference Section of the Commission, Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and its public reference facilities in
New York, New York and Chicago, Illinois at the prescribed rates. The
Commission maintains a web site (http://www.sec.gov), that contains periodic
reports, proxy and information statements and other information regarding
registrants that file documents electronically with the Commission. Statements
contained in this Prospectus as to the contents of any contract or other
document are not necessarily complete, and in each instance reference is made
to the copy of such contract or document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference.
Pursuant to the Indenture, the Company has agreed to furnish to the Trustee
and to registered holders of the Exchange Notes, without cost to the Trustee
or such registered holders, copies of all reports and other information that
would be required to be filed by the Company with the Commission under the
Exchange Act, whether or not the Company is then required to file reports with
the Commission. As a result of this Exchange Offer, the Company will become
subject to the periodic reporting and other informational requirements of the
Exchange Act. In the event that the Company ceases to be subject to the
informational requirements of the Exchange Act, the Company has agreed that,
so long as any Notes remain outstanding, it will file with the Commission (but
only if the Commission at such time is accepting such voluntary filings) and
distribute to holders of the Private Notes or the Exchange Notes, as
applicable, copies of the financial information that would have been contained
in such annual reports and quarterly reports, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
that would have been required to be filed with the Commission pursuant to the
Exchange Act. The Company will also furnish such other reports as it may
determine or as may be required by law.
112
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
UNAUDITED FINANCIAL STATEMENTS:
Consolidated Balance Sheets as of March 31, 1998 and December 31, 1997.. F-3
Consolidated Statements of Operations for the three months ended March
31, 1998 and March 31, 1997............................................ F-4
Consolidated Statements of Stockholders' Deficit for the three months
ended March 31, 1998................................................... F-5
Consolidated Statements of Cash Flows for the three months ended March
31, 1998 and March 31, 1997............................................ F-6
Notes to Consolidated Financial Statements.............................. F-7
AUDITED FINANCIAL STATEMENTS:
Report of Independent Certified Public Accountants...................... F-12
Consolidated Balance Sheets as of December 31, 1997 and December 31,
1996................................................................... F-13
Consolidated Statements of Operations for the years ended December 31,
1997, 1996 and 1995.................................................... F-14
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1997, 1996
and 1995............................................................... F-15
Consolidated Statements of Cash Flows for the years ended December 31,
1997, 1996 and 1995.................................................... F-16
Notes to Consolidated Financial Statements ............................. F-17
COMMUNICATION SITE SERVICES, INC.
UNAUDITED FINANCIAL STATEMENTS:
Statement of Income for the nine months ended September 18, 1997 and
September 30, 1996..................................................... F-28
Statements of Retained Earnings for the nine months ended September 18,
1997 and
September 30, 1996..................................................... F-29
Statements of Cash Flows for the nine months ended September 18, 1997
and September 30, 1996................................................. F-30
Notes to Financial Statements for the nine months ended September 18,
1997, September 30, 1996 and December 31, 1996......................... F-31
AUDITED FINANCIAL STATEMENTS:
Independent Auditors' Report............................................ F-36
Balance Sheet as of December 31, 1996................................... F-37
Statement of Income for the year ended December 31, 1996................ F-38
Statement of Retained Earnings for the year ended December 31, 1996..... F-39
Statement of Cash Flows for the year ended December 31, 1996............ F-40
Notes to Financial Statements for the year ended December 31, 1996...... F-41
Independent Accountants' Report......................................... F-48
Balance Sheet as of December 31, 1995................................... F-49
Statement of Income for the year ended December 31, 1995................ F-50
Statement of Retained Earnings for the year ended December 31, 1995..... F-51
Statement of Cash Flows for the year ended December 31, 1995............ F-52
Notes to Financial Statements for the year ended December 31, 1995...... F-53
SEGARS COMMUNICATION GROUP, INC.
UNAUDITED FINANCIAL STATEMENTS:
Statements of Operations for the nine months ended September 18, 1997
and September 18, 1996................................................. F-59
Statements of Retained Earnings for the periods ended September 18, 1997
and September 30, 1996 F-60
Statements of Cash Flows for the nine months ended September 18, 1997
and September 30, 1996................................................. F-61
Condensed Notes to Financial Statements for the nine months ended
September 18, 1997 and September 30, 1996.............................. F-62
</TABLE>
F-1
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AUDITED FINANCIAL STATEMENTS:
Independent Auditors' Report............................................. F-65
Balance Sheet as of December 31, 1996.................................... F-66
Statement of Income for the year ended December 31, 1996................. F-67
Statement of Retained Earnings for the year ended December 31, 1996...... F-68
Statement of Cash Flows for the year ended December 31, 1996............. F-69
Notes to Financial Statements for the year ended December 31, 1996....... F-70
Independent Accountants' Report.......................................... F-73
Balance Sheet as of December 31, 1995.................................... F-74
Statement of Income for the year ended December 31, 1995................. F-75
Statement of Retained Earnings for the year ended December 31, 1995...... F-76
Statement of Cash Flows for the year ended December 31, 1995............. F-77
Notes to Financial Statements for the year ended December 31, 1995....... F-78
</TABLE>
F-2
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, 1998 DECEMBER 31, 1997
-------------- -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents, includes interest
bearing amounts of $123,349,323 and
$1,397,047 in 1998 and 1997................ $123,609,968 $ 6,109,418
Accounts receivable, net of allowances of
$610,996 and $508,268 in 1998 and 1997..... 13,593,775 10,931,038
Prepaid and other current assets............ 1,586,572 982,722
Costs and estimated earnings in excess of
billings on uncompleted contracts.......... 91,016 118,235
------------ -----------
Total current assets...................... 138,881,331 18,141,413
Property and equipment, net................... 27,096,631 16,445,008
Note receivable-stockholder................... 3,617,772 3,561,306
Intangible assets, net........................ 5,075,111 3,499,992
Deferred financing fees....................... 6,092,940 740,338
Deferred tax asset............................ 2,193,718 2,257,462
Other assets.................................. 324,282 151,885
------------ -----------
Total assets.............................. $183,281,785 $44,797,404
============ ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable............................ $ 1,818,083 $ 2,182,447
Accrued expenses............................ 610,940 919,563
Accrued salaries and payroll taxes.......... 1,006,053 1,729,273
Notes payable............................... 1,000 10,184,054
Current deferred tax liability.............. 1,128,631 1,621,714
Billings in excess of costs and estimated
earnings on uncompleted contracts.......... 800,914 956,688
Other liabilities........................... 576,157 530,964
------------ -----------
Total current liabilities................. 5,941,778 18,124,703
Other liabilities
Bonds payable............................... 151,738,865 --
Other long-term liabilities................. 420,189 33,635
------------ -----------
Total long-term liabilities............... 152,159,054 33,635
Commitments and contingencies (see Note 10)
Series A Preferred stock (8,050,000 shares
authorized and outstanding stated at
redemption and aggregate liquidation value).. 31,420,833 30,983,333
Stockholders' deficit:
Common stock (40,100,000 shares authorized,
8,075,000 issued and outstanding).......... 80,750 80,750
Accumulated deficit......................... (6,320,630) (4,425,017)
------------ -----------
Total stockholders' deficit............... (6,239,880) (4,344,267)
------------ -----------
Total liabilities and stockholders'
deficit.................................. $183,281,785 $44,797,404
============ ===========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated balance sheets.
F-3
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
----------------------------
1998 1997
------------- -------------
(UNAUDITED)
<S> <C> <C>
Revenues:
Site development revenue...................... $ 12,531,250 $ 12,456,787
Site leasing revenue.......................... 2,158,539 1,557,768
------------- -------------
Total revenues.............................. 14,689,789 14,014,555
------------- -------------
Cost of revenues (exclusive of depreciation
shown below):
Cost of site development revenue.............. 9,002,632 8,093,736
Cost of site leasing revenue.................. 1,506,871 1,271,489
------------- -------------
Total cost of revenues...................... 10,509,503 9,365,225
------------- -------------
Gross profit................................ 4,180,286 4,649,330
Operating expenses:
Sales and marketing........................... 365,061 778,256
General and administrative.................... 3,563,740 1,543,031
Depreciation and Amortization................. 507,245 40,728
------------- -------------
Total operating expenses.................... 4,436,046 2,362,015
------------- -------------
Operating income (loss)..................... (255,760) 2,287,315
Other (income) expense:
Interest income............................... (764,158) (58,722)
Interest expense.............................. 1,879,927 35,772
------------- -------------
Total other................................. 1,115,769 (22,950)
Income (loss) before provision for income
taxes...................................... (1,371,529) 2,310,265
Provision for income taxes...................... 86,584 3,523,202
------------- -------------
Net loss.................................... (1,458,113) (1,212,937)
Dividends on prefered stock..................... (437,500) (83,333)
------------- -------------
Net loss to common stockholders............. $ (1,895,613) $ (1,296,270)
============= =============
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.
F-4
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK
----------------- ACCUMULATED
NUMBER AMOUNT DEFICIT TOTAL
--------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31,
1997..................... 8,075,000 $80,750 $(4,425,017) $(4,344,267)
Net loss................ -- -- (1,458,113) (1,458,113)
Prefered stock
dividends.............. -- -- (437,500) (437,500)
--------- ------- ----------- -----------
BALANCE, March 31, 1998... 8,075,000 $80,750 $(6,320,630) $(6,239,880)
========= ======= =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.
F-5
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
-------------------------
1998 1997
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).................................. $ (1,458,113) $(1,212,937)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities-
Depreciation and amortization...................... 580,298 40,728
Provision for doubtful accounts.................... 41,370 59,693
Changes in operating assets and liabilities:
(Increase) decrease in-
Accounts receivable............................... (2,704,107) 4,888,088
Prepaid and other current assets.................. (603,850) 593,323
Costs and estimated earnings in excess of billings
on uncompleted contracts......................... 27,219 --
Intangible assets................................. (1,663,766) --
Other assets...................................... (172,397) (21,303)
Deferred tax asset................................ 63,744 (2,283,000)
Increase (decrease) in-
Accounts payable.................................. (364,364) (418,056)
Accrued expenses.................................. (308,623) 139,283
Accrued salaries and payroll taxes................ (723,220) 134,951
Other liabilities................................. 45,193 (66,177)
Deferred tax liabilities.......................... (493,083) 3,371,000
Other long-term liabilities....................... 386,554 2,406,243
Billings in excess of costs and estimated earn-
ings............................................. (155,774) --
------------ -----------
Total adjustments................................. (6,044,806) 8,844,773
------------ -----------
Net cash provided by (used in) operating activi-
ties............................................. (7,502,919) 7,631,836
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Tower and other capital expenditures............... (11,070,221) (91,971)
------------ -----------
Net cash used in investing activities.............. (11,070,221) (91,971)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds on bonds payable...................... 151,738,865 7,941,818
Proceeds from notes payable........................ 12,486,767 (12,862,168)
Repayments on notes payable........................ (22,669,821) (4,920,350)
Advances to stockholders........................... (56,466) (3,500,000)
Due to stockholder................................. -- (10,665,788)
Financing fees..................................... (5,425,655) --
Proceeds from Series A redeemable preferred stock
offering.......................................... -- 30,000,000
Stock option redemption in connection with corpo-
rate reorganization............................... -- (2,236,782)
Costs incurred for Series A redeemable preferred
stock offering.................................... -- (2,427,683)
------------ -----------
Net cash provided by (used in) financing activi-
ties............................................. 136,073,690 6,292,885
------------ -----------
Net increase in cash and cash equivalents......... 117,500,550 13,832,750
CASH AND CASH EQUIVALENTS:
Beginning of period................................ 6,109,418 310,936
------------ -----------
End of period...................................... $123,609,968 $14,143,686
============ ===========
SUPPLEMENTAL DISCLOSURE OF CASH-FLOW INFORMATION:
Cash paid during the period for:
Interest........................................... $ 235,865 $ 35,772
Taxes.............................................. $ 469,385 $ --
NON-CASH ACTIVITIES:
Dividends on prefered stock........................ $ 437,500 $ 83,333
Interest on bonds payable.......................... $ 1,502,365 $ --
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.
F-6
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
The accompanying unaudited condensed consolidated financial statements
include the accounts of SBA Communications Corporation and its subsidiaries
(the "Company"). All significant intercompany accounts and transactions have
been eliminated. Certain information related to the Company's organization,
significant accounting policies and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These unaudited condensed
consolidated financial statements reflect, in the opinion of management, all
materials adjustments (which included only normal recurring adjustments)
necessary to fairly state the financial position and the results of operations
for the periods presented and the disclosures herein are adequate to make the
information presented not misleading. Operating results for interim periods
are not necessarily indicative of the results that can be expected for a full
year. These interim financial statements should be read in conjunction with
the Company's audited consolidated financial statements and notes thereto.
2. CURRENT ACCOUNTING PRONOUNCEMENTS
Comprehensive Income
In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 130, "Reporting Comprehensive Income" which establishes standards for
reporting and display of comprehensive income and its components in a full set
of general-purpose financial statements. This statement requires that an
enterprise classify items of other comprehensive income separately from
accumulated deficit and additional paid-in capital in the equity section of
the balance sheets. Comprehensive income is defined as the change in equity
during the financial reporting period of a business enterprise resulting from
non-owner sources. During the three months ended March 31, 1998 and 1997, the
Company did not have any changes in its equity resulting from such non-owner
sources and accordingly, comprehensive income as set forth by SFAS No. 130 was
equal to the net loss amounts presented for the respective periods in the
accompanying Consolidated Statements of Operations.
Segment Reporting
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information" which is required to be adopted in
fiscal 1998, a public business enterprise must report financial and other
descriptive information about its reportable operating segments. Required
disclosures include, among other things, a measure of segment profit or loss,
certain specific revenue and expense items, and segment assets. The Company
will implement SFAS No. 131 effective with its December 31, 1998 financial
statements.
3. ACQUISITIONS
During the three months ended March 31, 1998 the Company acquired 23 towers
and approximately 30 lease/sublease customers in four separate transactions
for an aggregate initial investment of $5,500,000 plus up to an additional
$2,800,000 in consideration to be paid in 1998 in the event certain tenant
leasing goals are realized. These towers are located in Pennsylvania,
Connecticut, Florida and New York.
F-7
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. PROPERTY AND EQUIPMENT
Property and equipment, net consists of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
----------- ------------
<S> <C> <C>
Land.............................................. $ 414,770 $ 414,770
Buildings and improvements........................ 220,457 107,931
Vehicles.......................................... 369,628 358,569
Furniture and equipment........................... 1,478,595 1,299,341
Towers............................................ 20,092,702 12,141,428
Construction in process........................... 5,667,915 2,840,593
----------- -----------
28,244,067 17,162,632
Less: Depreciation and amortization............... (1,147,436) (717,624)
----------- -----------
Property and equipment, net....................... $27,096,631 $16,445,008
=========== ===========
</TABLE>
5. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
Costs and estimated earnings on uncompleted contracts consist of the
following:
<TABLE>
<CAPTION>
MARCH 31, 1998 DECEMBER 31, 1997
-------------- -----------------
<S> <C> <C>
Costs incurred on uncompleted contracts.... $ 802,381 $ 862,660
Estimated earnings......................... 239,594 280,438
---------- ----------
1,041,975 1,143,098
Billings to date........................... (1,751,873) (1,981,551)
---------- ----------
$ (709,898) $ (838,453)
========== ==========
</TABLE>
This amount is included in the accompanying balance sheets under the
following captions:
<TABLE>
<CAPTION>
MARCH 31, 1998 DECEMBER 31, 1997
-------------- -----------------
<S> <C> <C>
Costs and estimated earnings in excess of
billing................................... $ 91,016 $ 118,235
Billings in excess of costs and estimated
earnings.................................. (800,914) (956,688)
--------- ---------
$(709,898) $(838,453)
========= =========
</TABLE>
6. NOTES PAYABLE
On August 8, 1997, the Company entered into a credit agreement with a
syndicate of banks (the "Credit Agreement"). The Credit Agreement consisted of
a secured revolving line of credit in the amount of $10,000,000 and a term
note in the amount of $65,000,000. Available borrowings under the credit
agreement will generally be used to construct new towers and to finance a
portion of the purchase price for towers and related assets. In addition, up
to $15,000,000 of the term note may be used for letters of credit. Funds are
borrowed at either the Prime rate plus 1/4% or the EURO rate at the time of
borrowing plus 1.25%. As of March 31, 1998, there was $1,000 outstanding at a
rate of 8.75% and $2,405,000 outstanding under letters of credit.
F-8
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In June 1998 the Company amended and restated its existing Credit Agreement.
The amended credit agreement provides for revolving credit loans of $55.0
million and an additional $55.0 million incremental agreement which may be
made available within the initial 24 months of the Credit Agreement. There is
no availability under the Credit Agreement other than for the issuance of
letters of credit until the later of (i) September 30, 1998 or (ii) until a
consolidated minimum financial ratio is met. Availability thereafter is
limited to $25 million until such time as the Company owns, leases or manages
400 towers and has expended all but $10 million of the proceeds from the
Senior Discount Notes. Availability is further limited at all times by certain
financial covenants and ratios, and other conditions. The Credit Agreement
provides for quarterly interest payments commencing as soon as any funds are
borrowed thereunder, and the incremental facility is expected to have a 24-
month revolving period after which any outstanding amounts will convert to a
term loan and begin to amortize. Availability under the Credit Agreement is
subject to a reduction schedule that commences on March 31, 2001. The schedule
provides for a quarterly 5% amortization rate with a balloon payment on June
29, 2005.
The Credit Agreement is secured by substantially all of the Company's tower
assets and assignment of tower leases, requires the Company to maintain
certain financial covenants and places restrictions on the Company's ability
to, among other things, incur debt and liens, dispose of assets, undertake
transactions with affiliates and make investments.
7. BOND OFFERING
On March 2, 1998, the Company issued on $269,000,000 of 12% Senior Discount
Notes (the "Notes") due March 1, 2008. The issuance of the Notes netted
approximately $150,200,000 in proceeds to the Company. The Notes will accrete
in value until March 1, 2003 at which time they will have an aggregate
principle amount of $269,000,000. Thereafter, interest will accrue on the
Notes and will be payable semi-annually in arrears on March 1 and September 1,
commencing September 1, 2003. The Notes are unsecured obligations of the
Company.
The Notes and Credit Agreement contain numerous restrictive covenants,
including but not limited to covenants that restrict the Company's ability to
incur indebtedness, pay dividends; create liens, sell assets and engage in
certain mergers and acquisitions. In addition, the Credit Agreement requires
subsidiaries of the Company to maintain certain financial ratios. The ability
of the Company to comply with the covenants and other terms of the Credit
Agreement and the Notes and to satisfy its respective debt obligations will
depend on the future operating performance of the Company. In the event the
Company fails to comply with the various covenants contained in the Credit
Agreement or the Notes, as applicable, it would be in default thereunder, and
in any such case, the maturity of substantially all of its long-term
indebtedness could be accelerated.
8. REDEEMABLE PREFERRED STOCK
In February 1998, the terms of the Series A Redeemable Preferred Stock of
the Company were amended to defer payment of cash dividends on or redemptions
of the Series A Preferred Stock until permitted by the terms of the Notes due
2008. In connection with the amendment, the dividend rate on the Series A
Preferred Stock was increased to 14% of the Series A Base Liquidation amount
commencing March 7, 2003.
9. INCOME TAXES
Income taxes have been provided for based upon the Company's annual
effective income tax rate.
F-9
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
A reconciliation of the statutory U.S. Federal tax rate (34%) and the
effective income tax rate for the period is as follows:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
-----------------------------
MARCH 31, 1998 MARCH 31, 1997
-------------- --------------
<S> <C> <C>
Federal income tax............................. $(480,035) $ 785,490
State income tax............................... 45,549 138,712
Corporate reorganization....................... 456,743 2,599,000
Non deductible interest........................ 525,828 --
Other.......................................... (461,501) --
--------- ----------
$ 86,584 $3,523,202
========= ==========
</TABLE>
10. COMMITMENTS AND CONTINGENCIES
The Company is involved in various claims, lawsuits and proceedings arising
in the ordinary course of business. While there are uncertainties inherent in
the ultimate outcome of such matters and it is impossible to presently
determine the ultimate costs that may be incurred, management believes the
resolution of such uncertainties and the incurrence of such costs should not
have a material adverse effect on the Company's consolidated financial
position or results of operations.
In February, 1998 the Company moved its corporate headquarters. In
connection with the move the company vacated its previously leased office
space. The Company had entered into several leases related to the vacated
space which will expire at various times through February 2002. The Company
has recorded rental expense of approximately $370,000 in this quarter related
to the vacated space.
11. STOCK OPTIONS AND WARRANTS
A summary of the status of the company's stock option plans and changes
during the three months ended March 31, 1998 is as follows:
<TABLE>
<CAPTION>
NUMBER OF OPTION PRICE
SHARES PER SHARE
--------- ------------
<S> <C> <C>
Outstanding at December 31, 1997..................... 1,797,292 $0.05-$2.63
Granted.............................................. 203,000 2.63
Exercised............................................ -- --
Forfeited/canceled................................... (7,000) 2.63
--------- -----------
Outstanding at March 31, 1998........................ 1,993,292 $0.05-$2.63
========= ===========
Options exercisable at March 31, 1998................ 1,311,125
=========
</TABLE>
F-10
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
12. SEGMENT DATA
The Company operates principally in two areas of the telecommunications
industry: Site development and Site leasing. Revenue, operating income,
identifiable assets, capital expenditures and depreciation and amortization
pertaining to the segments in which the Company operates are presented below:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
----------------------------
1998 1997
------------- -------------
<S> <C> <C>
Revenue:
Site development.......................... $ 12,531,250 $ 12,456,787
Site leasing.............................. 2,158,539 1,557,768
------------- -------------
$ 14,689,789 $ 14,014,555
============= =============
Operating income:
Site development.......................... $ 701,281 $ 2,204,503
Site leasing.............................. (957,041) 82,812
------------- -------------
$ (255,760) $ 2,287,315
============= =============
Capital expenditures:
Site development.......................... $ 5,857,836 $ 91,971
Site leasing.............................. 5,212,385 --
------------- -------------
$ 11,070,221 $ 91,971
============= =============
Depreciation and amortization:
Site development.......................... $ 193,180 $ 40,720
Site leasing.............................. 314,065 --
Unallocated amortization.................. 73,053 --
------------- -------------
$ 580,298 $ 40,720
============= =============
</TABLE>
<TABLE>
<CAPTION>
AS OF
-------------------------
MARCH 31, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
Identifiable assets:
Site development.............................. $ 29,829,909 $26,549,732
Site leasing.................................. 21,457,540 13,195,378
Unallocated Corporate Assets.................. 131,994,336 5,052,294
------------ -----------
$183,281,785 $44,797,404
============ ===========
</TABLE>
F-11
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders of SBA Communications Corporation and Subsidiaries:
We have audited the accompanying consolidated balance sheets of SBA
Communications Corporation (a Florida corporation) and subsidiaries as of
December 31, 1997 and 1996, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of SBA Communications
Corporation and subsidiaries as of December 31, 1997 and 1996, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1997 in conformity with generally accepted
accounting principles.
/s/ Arthur Andersen LLP
West Palm Beach, Florida,
March 10, 1998.
F-12
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(SEE NOTE 2)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents, includes interest bearing
amounts of $1,397,047 and $260,949 in 1997 and 1996... $ 6,109,418 $ 310,936
Accounts receivable, net of allowances of $508,268 and
$1,024,100 in 1997 and 1996........................... 10,931,038 16,093,979
Prepaid and other current assets....................... 982,722 884,394
Costs and estimated earnings in excess of billings on
uncompleted contracts................................. 118,235 --
----------- -----------
Total current assets.................................. 18,141,413 17,289,309
Property and equipment, net............................. 16,445,008 632,110
Note receivable-stockholder............................. 3,561,306 --
Intangible assets, net.................................. 3,499,992 --
Deferred financing fees................................. 740,338 --
Deferred tax asset...................................... 2,257,462 --
Other assets............................................ 151,885 139,027
----------- -----------
Total assets.......................................... $44,797,404 $18,060,446
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable....................................... $ 2,182,447 $ 1,202,973
Accrued expenses....................................... 919,563 682,483
Accrued salaries and payroll taxes..................... 1,729,273 391,101
Notes payable.......................................... 10,184,054 4,921,350
Current deferred tax liability......................... 1,621,714 --
Billings in excess of costs and estimated earnings on
uncompleted contracts................................. 956,688 --
Other liabilities...................................... 530,964 66,177
Due to stockholder..................................... -- 10,665,788
----------- -----------
Total current liabilities............................. 18,124,703 17,929,872
Long-term liabilities................................... 33,635 28,959
Commitments and contingencies (see Note 11).............
Series A Preferred stock--8,050,000 shares authorized
and outstanding at
December 31, 1997; none outstanding at
December 31, 1996 (stated at redemption
and aggregate liquidation value)........................ 30,983,333 --
Stockholders' equity (deficit):
Common stock-Class A (1,615 shares authorized and
outstanding in 1996
32,000,000 shares authorized none
outstanding in 1997)................................... -- 1,615
Class B (8,100,000 shares authorized, 8,075,000
outstanding).......................................... 80,750 --
Retained earnings (deficit)............................ (4,425,017) 100,000
----------- -----------
Total stockholders' equity (deficit).................. (4,344,267) 101,615
----------- -----------
Total liabilities and stockholders' equity............ $44,797,404 $18,060,446
=========== ===========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated balance sheets.
F-13
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(SEE NOTE 2)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Site development revenue............... $48,240,443 $60,276,160 $22,699,812
Site leasing revenue................... 6,759,362 4,530,152 2,758,319
----------- ----------- -----------
Total revenues...................... 54,999,805 64,806,312 25,458,131
----------- ----------- -----------
Cost of revenues (exclusive of
depreciation shown below):
Cost of site development revenue....... 31,470,203 39,821,589 13,992,689
Cost of site leasing revenue........... 5,356,160 3,638,133 2,121,376
----------- ----------- -----------
Total cost of revenues.............. 36,826,363 43,459,722 16,114,065
----------- ----------- -----------
Gross profit........................ 18,173,442 21,346,590 9,344,066
Operating expenses:
Sales and marketing.................... 2,696,229 721,927 236,756
General and administrative............. 8,402,267 17,966,267 5,731,050
Depreciation and amortization.......... 513,949 160,050 73,297
----------- ----------- -----------
Total operating expenses............ 11,612,445 18,848,244 6,041,103
----------- ----------- -----------
Operating income.................... 6,560,997 2,498,346 3,302,963
Interest income (expense), net.......... 236,917 (132,413) (5,335)
----------- ----------- -----------
Income before provision for income
taxes............................... 6,797,914 2,365,933 3,297,628
Provision for income taxes.............. 5,595,998 -- --
----------- ----------- -----------
Net income.......................... 1,201,916 2,365,933 3,297,628
Proforma income tax provision (See note 946,373 1,319,052
10)..................................... ----------- -----------
Proforma net income................. 1,419,560 1,978,576
Dividends on preferred stock............ 983,333 -- --
----------- ----------- -----------
Net income available to common $ 218,583 $ 1,419,560 $ 1,978,576
stockholders........................ =========== =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.
F-14
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(SEE NOTE 2)
<TABLE>
<CAPTION>
COMMON STOCK RETAINED
--------------------------------- EARNINGS
CLASS A CLASS B (DEFICIT) TOTAL
-------------- ----------------- ----------- -----------
NUMBER AMOUNT NUMBER AMOUNT
------ ------ --------- -------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31,
1994................... 200 $ 200 -- $ -- $ 1,744,956 $ 1,745,156
Net income............. -- -- -- -- 3,297,628 3,297,628
Stockholder
distribution.......... -- -- -- -- (250,000) (250,000)
------ ------ --------- ------- ----------- -----------
BALANCE, December 31,
1995................... 200 200 -- -- 4,792,584 4,792,784
Issuance of common
stock................. 1,415 1,415 -- -- -- 1,415
Non-cash compensation
adjustment............ -- -- -- -- 7,945,419 7,945,419
Net income............. -- -- -- -- 2,365,933 2,365,933
Stockholder
distribution.......... -- -- -- -- (15,003,936) (15,003,936)
------ ------ --------- ------- ----------- -----------
BALANCE, December 31,
1996................... 1,615 1,615 -- -- 100,000 101,615
Corporate
reorganization........ (1,615) (1,615) 8,075,000 80,750 (79,135) --
Stock option redemption
in connection with
corporate
reorganization........ -- -- -- -- (2,236,782) (2,236,782)
Costs incurred for
Series A redeemable
preferred stock
offering.............. -- -- -- -- (2,427,683) (2,427,683)
Net income............. -- -- -- -- 1,201,916 1,201,916
Preferred stock
dividends............. -- -- -- -- (983,333) (983,333)
------ ------ --------- ------- ----------- -----------
BALANCE, December 31,
1997................... -- -- 8,075,000 $80,750 $(4,425,017) $(4,344,267)
====== ====== ========= ======= =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.
F-15
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(SEE NOTE 2)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------
1997 1996 1995
----------- ----------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.............................. $ 1,201,916 $ 2,365,933 $3,297,628
Adjustments to reconcile net income to
net cash provided by
(used in) operating activities--
Depreciation and amortization........... 562,653 160,050 73,297
Provision for doubtful accounts......... 163,416 451,349 572,751
Non-cash compensation adjustment........ -- 7,945,419 --
Changes in operating assets and liabili-
ties:
(Increase) decrease in--
Accounts receivable................... 4,999,525 (10,445,316) (4,456,615)
Prepaid and other current assets...... (98,328) (539,713) (194,467)
Costs and estimated earnings in excess
of billings on
uncompleted contracts................ (118,235) -- --
Intangible assets..................... (3,536,920) -- --
Other assets.......................... (12,858) (78,770) (49,085)
Deferred tax asset.................... (2,257,462) -- --
Increase (decrease) in--
Accounts payable...................... 979,474 892,851 (109,681)
Accrued expenses...................... 237,080 398,010 120,375
Accrued salaries and payroll taxes.... 1,338,172 90,617 258,938
Current deferred tax liability........ 1,621,714 -- --
Other liabilities..................... 464,787 (25,442) (45,806)
Other long-term liabilities........... 4,676 -- --
Billings in excess of costs and esti- 956,688 -- --
mated earnings....................... ----------- ----------- ----------
Total adjustments..................... 5,304,382 (1,150,945) (3,830,293)
----------- ----------- ----------
Net cash provided by (used in) operat- 6,506,298 1,214,988 (532,665)
ing activities....................... ----------- ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Tower acquisitions and other capital (16,291,764) (144,942) (660,199)
expenditures......................... ----------- ----------- ----------
Net cash used in investing activities. (16,291,764) (144,942) (660,199)
----------- ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable............. 23,875,872 22,185,291 2,890,412
Repayment of notes payable.............. (18,613,168) (18,763,941) (1,391,790)
Issuance of common stock................ -- 1,415 --
Proceeds from stockholder loans......... -- 11,177,157 106,208
Repayment of stockholder loans.......... (10,665,788) (632,129) (57,181)
Advances to stockholder................. (3,561,306) -- --
Stockholder distribution................ -- (15,003,936) (250,000)
Financing fees.......................... (787,197) -- --
Proceeds from Series A redeemable pre-
ferred stock offering.................. 30,000,000 -- --
Stock option redemption in connection
with corporate reorganization.......... (2,236,782) -- --
Costs incurred for Series A redeemable
preferred stock offering............... (2,427,683) -- --
----------- ----------- ----------
Net cash provided by (used in) financ-
ing activities....................... 15,583,948 (1,036,143) 1,297,649
----------- ----------- ----------
Net increase in cash and cash equiva-
lents................................ 5,798,482 33,903 104,785
CASH AND CASH EQUIVALENTS:
Beginning of year....................... 310,936 277,033 172,248
----------- ----------- ----------
End of year............................. $ 6,109,418 $ 310,936 $ 277,033
=========== =========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH-FLOW IN-
FORMATION:
Cash paid during the year for:
Interest................................ $ 193,269 $ 139,056 $ 10,762
Taxes................................... $ 6,070,423 $ -- $ --
NON-CASH ACTIVITIES:
Liabilities assumed in acquisition of
assets................................. $ 2,559,505 $ -- $ --
Dividends on preferred stock............ $ 983,333 $ -- $ --
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.
F-16
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
SBA Communications Corporation (the "Company") was incorporated in the State
of Florida in March, 1997. The Company was formed to hold all of the
outstanding capital stock of SBA, Inc. ("SBA" ) and SBA Leasing, Inc.
("Leasing"). In addition to SBA and Leasing, the Company also holds all of the
outstanding capital stock of SBA Towers, Inc. ("Towers"), Communication Site
Services, Inc ("CSSI") and SBA Telecomunicacoes do Brasil, LTDA ("Brazil").
SBA provides comprehensive turnkey services for the telecommunications
industry in the areas of site development services for wireless carriers. Site
development services provided by SBA includes site identification and
acquisition, contract and title administration, zoning and land use
permitting, construction management and microwave relocation.
Leasing leases antenna tower sites from owners and then subleases such sites
to wireless telecommunications providers, thereby generating recurring
revenue.
Towers owns and maintains transmission towers in various parts of the
country. Space on these towers is leased primarily to wireless communications
carriers.
CSSI is engaged in the erection and repair of transmission towers, including
hanging of antennae, cabling and associated tower components.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation
of the accompanying consolidated financial statements is as follows:
a. Basis of Consolidation
The consolidated financial statements include the accounts of the Company,
SBA, Leasing, Towers, CSSI, and Brazil. All significant intercompany
transactions have been eliminated in consolidation.
Prior to the formation of the Company, SBA and Leasing were 100% owned by
their founder. The 1996 and 1995 financial statements reflect the combining of
these two companies rather than a consolidation.
b. Use of Accounting Estimates
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
c. Cash and Cash Equivalents
The Company classifies as cash and cash equivalents all interest-bearing
deposits or investments with original maturities of three months or less.
d. Property and Equipment
Property and equipment are recorded at cost. Depreciation is provided using
the straight-line method over their estimated useful lives as follows:
<TABLE>
<S> <C>
Vehicles..................................................... 2-5 years
Furniture and equipment...................................... 2-7 years
Buildings and improvements................................... 5-26 years
Towers....................................................... 15 years
</TABLE>
F-17
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
e. Deferred Financing Fees
Loan financing fees have been deferred and are being amortized using the
straight-line method over the length of the loan. This method approximates the
effective interest rate method. Financing fees are currently being amortized
over 84 months.
f. Intangible Assets
Intangible assets are comprised of costs paid in excess of the fair value of
assets acquired and amounts paid related to covenants not to compete. Goodwill
is being amortized over a 15 year period. The covenants not to compete are
being amortized over the terms of the contracts, which range from 7 to 10
years. Accumulated amortization totaled $36,928 at December 31, 1997.
g. Income Taxes
Effective January 1, 1997, the Company converted to a C Corporation under
Subchapter C of the Internal Revenue Code of 1986, as amended. The proforma
provision for income taxes for the years ended December 31, 1996 and December
31, 1995 represent a pro forma calculation (40%) as if the Company was an C
Corporation.
Effective January 1, 1997, the Company began accounting for income taxes in
accordance with the provisions of Statement of Financial Accounting Standards
No., 109 Accounting for Income Taxes ("SFAS No. 109"). SFAS No. 109 requires a
company to recognize deferred tax liabilities and assets for the expected
future income tax consequences of events that have been recognized in the
Company's consolidated financial statements. Deferred tax liabilities and
assets are determined based on the temporary differences between the
consolidated financial statements carrying amounts and the tax bases of assets
and liabilities, using enacted tax rates in the years in which the temporary
differences are expected to reverse.
h. Revenue Recognition
Site development projects include contracts on a time and materials basis or
on a fixed price basis. Time and materials based contracts are billed as the
services are rendered. For those site development contracts in which the
Company performs work on a fixed price basis, site development billing (and
revenue recognition) is based on the completion of agreed upon phases of the
project. Upon the completion of each phase, the Company recognizes the revenue
related to that phase. Any losses on a particular phase of completion are
recognized in the period in which the loss becomes evident. Site development
projects generally take from 3 to 12 months to complete.
Revenue from leasing services is recorded on a monthly basis. Subleases
generating the lease revenue are entered into for periods of time equivalent
to the original lease. Current lease terms range from one to five years.
Revenue received in advance is recorded in other liabilities.
Revenue from construction projects is recognized on the percentage-of-
completion method of accounting, determined by the percentage of cost incurred
to date compared to management's estimated total anticipated cost for each
contract. This method is used because management considers total cost to be
the best available measure of progress on the contracts. These amounts are
based on estimates, and the uncertainty inherent in the estimates initially is
reduced as work on the contracts nears completion. The asset "Costs and
estimated earnings in excess of billings on uncompleted contracts", represents
revenues recognized in excess of amounts billed. The liability, "Billings in
excess of costs and estimated earnings on complete contracts", represents
billings in excess of revenues recognized.
Costs of site development project revenue and construction revenue include
all direct material costs, salaries and labor costs, including payroll taxes,
subcontract labor, vehicle expense and other costs directly related to the
projects. Provisions for estimated losses on uncompleted contracts are made in
the period in which such losses are determined.
F-18
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
i. Fair Value of Financial Instruments
The carrying value of cash and cash equivalents, accounts receivable,
inventory, prepaid expenses, accounts payable, accrued expenses and long-term
debt approximates fair value.
j. Market Risk
The Company is exposed to market risks, including changes in interest rates
and currency exchange rates. Based on the Company's interest rate and foreign
exchange rate exposure at December 31, 1997, a 10% change in the current
interest rate or historical currency rate movements would not have a material
effect on the company's financial position or results of operations over the
next fiscal year.
k. Impairment of Long-Lived Assets
Statement of Financial Accounting Standards No. 121 ("SFAS 121") Accounting
for the Impairment of Long- Lived Assets and for Long-Lived Assets to be
Disposed of requires that long- lived assets, including certain identifiable
intangibles, and the goodwill related to those assets, be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of the asset in question may not be recoverable. Management
has reviewed the Company's long- lived assets and has determined that there
are no events requiring impairment loss recognition.
l. Reclassifications
Certain reclassifications have been made to the 1996 and 1995 financial
statements to conform to the 1997 presentation.
3. ACQUISITIONS
CSSI Acquisition
On September 18, 1997, the Company consummated the acquisition of CSSI and
certain related tower assets of Segars Communications Group, Inc. ("SCGI," and
together with the acquisition of CSSI, the "CSSI Acquisition"). The CSSI
Acquisition provided the Company with 21 towers in Florida and Georgia in
varying stages of construction, together with a number of parcels of leased
real estate on which towers may be constructed in the future, and gave the
Company the in-house capability to construct towers in the southeastern United
States. The Company paid $7 million at closing, and expects to invest up to an
additional $4.8 million by September 1998 to complete construction of the
towers acquired and as a contingent payment to the sellers, provided that
certain tenant leasing goals are realized. The acquisition was accounted for
under the purchase method of accounting. Accordingly, the excess of the
purchase price over the estimated fair value of the net assets acquired, or
approximately $3.5 million, was recorded as goodwill which is being amortized
on a straight-line basis over a period of 15 years. CSSI's results of
operations have been included in the Company's consolidated financial
statements from the date of acquisition. The following unaudited pro forma
information combines the consolidated results of operations of the Company and
CSSI as if the acquisition had occurred at the beginning of the periods
presented.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1997 1996
---------------- ----------------
<S> <C> <C>
Revenues.............................. $ 60,199,299 $ 71,224,345
================ ================
Net income............................ $ 545,717 $ 1,702,815
================ ================
</TABLE>
F-19
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The unaudited pro forma results have been prepared for comparative purposes
only and include certain adjustments, such as additional amortization expense
as a result of goodwill and pro forma provision for income taxes for the
amortization of goodwill and for each period in which CSSI and the Company
were S Corporations under Subchapter S of the Internal Revenue Code. The pro
forma results do not purport to be indicative of results that would have
occurred had the combination been in effect for the periods presented, nor do
they purport to be indicative of the results that will be obtained in the
future.
Other Acquisitions
The Company has also acquired 30 towers since June 1997 in five separate
transactions for an aggregate initial investment of $5.9 million. These towers
are located in New York, Pennsylvania and Tennessee.
4. CONCENTRATION OF CREDIT RISK
The Company's credit risks consist of accounts receivable in the
telecommunications industry. The Company performs periodic credit evaluations
of its customers' financial condition and provides allowances for doubtful
accounts as required. Following is a list of significant customers:
<TABLE>
<CAPTION>
FOR THE YEARS
ENDED DECEMBER
31,
--------------
1997 1996 1995
---- ---- ----
(% OF REVENUE)
--------------
<S> <C> <C> <C>
Sprint Spectrum............................................ 47.0 50.4 10.0
Pacific Bell Mobile Systems................................ 12.3 18.8 28.2
AT&T Wireless.............................................. 5.3 11.6 --
Nextel..................................................... 7.8 -- --
Page Net................................................... 7.6 9.0 28.7
Bell South................................................. 6.6 .4 --
---- ---- ----
86.6 90.2 66.9
==== ==== ====
</TABLE>
5. PROPERTY AND EQUIPMENT
Property and equipment, net consists of the following:
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
----------------------
1997 1996
----------- ---------
<S> <C> <C>
Land.............................................. $ 414,770 $ --
Buildings and improvements........................ 107,931 --
Vehicles.......................................... 358,569 --
Furniture and equipment........................... 1,299,341 864,668
Towers............................................ 12,141,428 --
Construction in process........................... 2,840,593 --
Leasehold improvements............................ -- 6,200
----------- ---------
17,162,632 870,868
Less: Depreciation and amortization............... (717,624) (238,758)
----------- ---------
Property and equipment, net....................... $16,445,008 $ 632,110
=========== =========
</TABLE>
F-20
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
6. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
Costs and estimated earnings on uncompleted contracts consist of the
following at December 31, 1997:
<TABLE>
<S> <C>
Costs incurred on uncompleted contracts..................... $ 862,660
Estimated earnings.......................................... 280,438
-----------
1,143,098
Billings to date............................................ (1,981,551)
-----------
$ (838,453)
===========
This amount is included in the accompanying balance sheet as of December 31,
1997 under the following captions:
Costs and estimated earnings in excess of billing........... $ 118,235
Billings in excess of costs and estimated earnings.......... (956,688)
-----------
$ (838,453)
===========
</TABLE>
7. NOTES PAYABLE
Bank Credit Agreement
On August 8, 1997, the Company entered into a credit agreement with a
syndicate of banks (the "Credit Agreement"). The Credit Agreement consisted of
a secured revolving line of credit in the amount of $10,000,000 and a term
note in the amount of $65,000,000. Available borrowings under the credit
agreement will generally be used to construct new towers and to finance a
portion of the purchase price for towers and related assets. In addition, up
to $15,000,000 of the term note may be used for letters of credit. Funds are
generally borrowed at the EURO rate at the time of borrowing plus 1.25%. As of
December 31, 1997, there was $8,800,000 outstanding at various rates ranging
from 7.0% to 7.1563%. Additionally, $10,000,000 of the term facility was
available to the Company to be used to secure letters of credit. As of
December 31, 1997, there was $4,750,000 outstanding under letters of credit.
The Credit Agreement is secured by substantially all of the Company's tower
assets and assignment of tower leases, requires the Company to maintain
certain financial covenants and places restrictions on the Company's ability
to, among other things, incur debt and liens, dispose of assets, undertake
transactions with affiliates and make investments.
Installment Note Payable
In connection with the acquisition of CSSI in September 1997, the Company
became contingently liable to the sellers for an amount not to exceed
$4,750,000. This amount is to be paid to the sellers provided certain leasing
revenue targets are met through August 1998 and was reduced by approximately
$2,200,000 for costs incurred in connection with the construction completion
of certain towers. This amount may also be reduced if the certain revenue
targets are not met. The Company is required to calculate the amount due on a
monthly basis. As of December 31, 1997, the Company has calculated its
liability under this agreement to be $1,384,054. This amount was reflected as
an increase to goodwill and was paid in January 1998. The Company remains
contingently liable for the remaining $1,165,946.
8. DUE TO/FROM STOCKHOLDER
The amount due from stockholder as of December 31, 1997, represents a loan
made to one of the stockholders plus accrued interest. The loan was in the
amount of $3.5 million and bears interest at a rate of 6.86%. This loan
matures at the earlier of three years or upon consummation of an initial
public offering of the Company. This loan is secured by 823,530 shares of
Class B Common Stock of the Company owned by the stockholder.
F-21
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The amount due to the stockholder as of December 31, 1996, primarily
represents a distribution payable to the Company's sole stockholder, prior to
reorganization, for previously undistributed earnings of the Company in excess
of $100,000 through December 31, 1996.
9. REDEEMABLE PREFERRED STOCK
In March 1997, the Company sold 3,529,412 shares of 2% Series A Preferred
Stock, convertible initially into one share of the Company's Class A Common
Stock and one share of the Company's 4% Series B Redeemable Preferred Stock,
to a syndicate of institutional investors (the "Private Investors"). The
Series A Preferred Stock had an initial conversion price of $8.50 and net
proceeds received by the Company from the sale of the shares was approximately
$25,300,000 (net of approximately $4,700,000 of issuance costs charged to
retained earnings).
In May 1997, in response to the acknowledgment by the Company that certain
of the financial projections originally provided to the Private Investors
prior to the consummation of the Preferred Stock Offering were substantially
different from revised financial information provided shortly after the
Preferred Stock Offering casting in doubt the continued reasonableness of the
original projections, the Company issued an additional 4,520,588 shares of the
Series A Preferred Stock at no additional consideration, increased by 200
basis points the rate per annum of cumulative dividends and amended the
initial conversion price to $3.73. Each of the Private Investors executed a
release exonerating the Company from any liability that it may have had in
connection with the offering of Series A Preferred Stock.
The Series A Preferred Stock has the following rights and preferences:
Each holder of Series A Preferred Stock has the right to convert his or her
shares at any time into one share of Class A Common Stock, subject to certain
antidilution protection provisions, and one share of Series B Preferred Stock.
The Series A Preferred Stock will automatically convert into Class A Common
Stock and Series B Preferred Stock upon the earlier of (i) completion by the
Company of a public offering raising gross proceeds of at least $20,000,000 at
an offering price per share greater than or equal to 150% of then applicable
conversion price of the Series A Preferred Stock if such public offering
occurs before June 30, 1998 or at a price per share greater than or equal to
200% of the then applicable conversion price of the Series A Preferred Stock
if such public offering occurs after June 30, 1998 or (ii) the written consent
of the holders of at least 66 2/3% of the Series A Preferred Stock then
outstanding.
The holders of outstanding shares of Series A Preferred Stock are entitled,
in preference to the holders of any and all other classes of capital stock of
the Company (other than the Series B Preferred Stock, which will rank equally
with the Series A Preferred Stock as to dividends), to receive, out of funds
legally available therefore, cumulative dividends on the Series A Preferred
Stock in cash, at a rate per annum of 4% of the Series A Base Liquidation
Amount subject to proration for partial years. The Series Base Liquidation
Amount equals the sum of $3.73 and any accumulated and unpaid dividends on the
Series A Preferred Stock. Accrued but unpaid dividends on the Series A
Preferred Stock will be payable upon conversion of the Series A Preferred
Stock into Class A Common Stock and Series B Preferred Stock. At December 31,
1997, such accrued and unpaid dividends amounted to $983,333. At March 7,
2002, the dividend rate of the Series A Preferred Stock will increase to 8% of
the Series A Base Liquidation Amount per annum. On March 7, 2003, the dividend
rate on the Series A Preferred Stock will increase to 14% per year. On March
7, 2002, the Company will, to the extent it may do so under applicable law,
redeem all of the outstanding shares of Series A Preferred Stock over a two
year period, one half in each year, at an aggregate price equal to the Series
A Base Liquidation Amount.
F-22
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In the event of any liquidation or winding up of the Company, including a
merger, sale of all of its outstanding shares of capital stock, consolidation
or sale of all or substantially all of the assets of the Company, each holder
of outstanding Shares of Series B Preferred Stock will be entitled to receive
before any amount shall be paid or distributed to the holders of the Common
Stock, an amount in cash equal to the sum of $3.73 per share plus any
accumulated but unpaid dividends to which such holder is entitled.
The holders of Series A Preferred Stock have ten votes for each share until
converted to Class A Common Stock and Series B Preferred Stock and votes with
holders of shares of Class A Common Stock and Class B Common Stock as a single
voting group on all matters brought before the shareholders, except as
otherwise required by law and other restrictive covenants. The Series B
Preferred Stock does not have voting rights.
The holders of the shares of Series A Preferred Stock are entitled to
participate on a pro rata basis in certain issuances of equity securities by
the Company.
The Series B Preferred Stock generally has the same rights and preferences
as the Series A Preferred Stock plus the following rights and preferences:
Upon a qualified public offering, the Company will redeem all of the
outstanding shares of Series B Preferred Stock at an aggregate price equal to
the Series B Base Liquidation Amount.
The Company's Articles of Incorporation also provide for the issuance of
Series C Preferred Stock and Series D Preferred Stock. The terms of the Series
C Preferred Stock are substantially similar to the terms of the Series A
Preferred Stock other than the Series C Base Liquidation Amount, which is
currently $4.472 per share. The terms of the Series D Preferred Stock is
substantially similar to the terms of the Series B Preferred Stock other than
the Series D Liquidation Amount, which is $4.472.
Management at this time does not expect to issue any shares of Series C
Preferred Stock or Series D Preferred Stock.
10. INCOME TAXES
The provision for income taxes in the consolidated statements of operations
for the year ended December 31, 1997 consists of the following components:
<TABLE>
<S> <C>
Federal income taxes
Current ..................................................... $5,033,333
Deferred..................................................... (556,280)
----------
4,477,053
----------
State income taxes
Current...................................................... 1,198,413
Deferred..................................................... (79,468)
----------
1,118,945
----------
Total........................................................ $5,595,998
==========
A reconciliation of the statutory U.S. Federal tax rate (34%) and the
effective income tax rate for the year ended December 31, 1997 is as follows:
Federal income tax............................................ $2,311,291
State income tax.............................................. 224,311
Corporate reorganization...................................... 2,930,926
Other......................................................... 129,450
----------
$5,595,998
==========
</TABLE>
F-23
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The components of the net deferred income tax asset (liability) accounts for
the year ended December 31, 1997 are as follows:
<TABLE>
<S> <C>
Cash to accrual Section 481(a) adjustment................... $(2,087,966)
Allowance for doubtful accounts............................. 203,307
Deferred revenue............................................ 127,723
Other....................................................... 135,222
-----------
Current deferred tax liability.............................. $(1,621,714)
===========
Employee stock compensation................................. $ 2,278,161
Book vs. tax depreciation................................... (154,143)
Other....................................................... 133,444
-----------
Non-current deferred tax asset.............................. $ 2,257,462
===========
</TABLE>
11. COMMITMENTS AND CONTINGENCIES
a. Leases
The Company is obligated under several noncancelable operating leases for
office space, vehicles and equipment and antennae tower sites that expire over
the next five years. The annual minimum lease payments under noncancelable
operating leases as of December 31, 1997 are as follow:
<TABLE>
<S> <C>
1998........................................................ $ 5,085,563
1999........................................................ 3,588,659
2000........................................................ 2,355,509
2001........................................................ 1,427,713
2002........................................................ 322,935
Thereafter.................................................. 219,506
-----------
Total....................................................... $12,999,885
===========
</TABLE>
The annual minimum sublease income under noncancellable operating leases as
of December 31, 1997 are as follows:
<TABLE>
<S> <C>
1998............................................................. $5,287,669
1999............................................................. 4,176,114
2000............................................................. 2,689,327
2001............................................................. 1,547,536
2002............................................................. 332,885
Thereafter....................................................... 300,990
-----------
$14,334,521
===========
</TABLE>
Rent expense for operating leases was $6,134,045, $5,417,233 and $2,569,119
for the years ended December 31, 1997, 1996, and 1995, respectively. Sublease
income from antennae tower sites was $6,433,644, $4,530,152 and $2,758,319 for
the years ended December 31, 1997, 1996 and 1995, respectively.
F-24
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
b. Employment Agreements
The Company currently has employment contracts with the Chief Operating
Officer, the Chief Financial Officer, the Senior Vice President and General
Counsel and the Senior Vice President of Operations. These employment
contracts are for a three year period and provide for minimum annual
compensation of $900,000. Additionally, these contracts provide for incentive
bonuses of annual amounts up to $900,000.
c. Litigation
The Company is involved in various claims, lawsuits and proceedings arising
in the ordinary course of business. While there are uncertainties inherent in
the ultimate outcome of such matters and it is impossible to presently
determine the ultimate costs that may be incurred, management believes the
resolution of such uncertainties and the incurrence of such costs should not
have a material adverse effect on the Company's consolidated financial
position or results of operations.
12. HEALTH AND RETIREMENTS PLANS
The Company has a defined contribution profit sharing plan under Section 401
(k) of the Internal Revenue Code that provides for voluntary employee
contributions of 1% to 14% of compensation for substantially all employees.
The company makes a matching contribution of 50% of an employee's first $2,000
of contributions. Company contributions and other expenses associated with the
plan were $126,101, $98,052 and $92,038 for the years ended December 31, 1997,
1996 and 1995, respectively.
13. STOCK OPTIONS AND WARRANTS
As of December 31, 1996, certain of the Company's senior executives
terminated existing employment, incentive and option agreements in exchange
for new employment agreements, immediately exercisable options to purchase
264,708 shares of Class A Common Stock, and additional options to purchase
1,160,292 shares of Class A Common Stock. All of the options are exercisable
at $.05 per share. The 264,708 shares of Class A Common Stock were redeemed by
the Company immediately following the consummation of the Series A Preferred
Stock offering. The Company accounted for the grant of options in accordance
with APB No. 25 and, accordingly, recognized a nonrecurring compensation
expense of $7,945,419 in 1996 as a result of the grant of the options. The
expense represents the difference between the exercise price of the options
and the estimated fair value as determined by an independent firm of business
valuation specialists.
The Company also has a stock option plan whereby options (both Non-qualified
and Incentive Stock Options), stock appreciation rights and restricted stock
may be granted to directors, key employees and consultants at a price per
share equal to the greater of fair market value or $2.63. A total of 1,800,000
shares of Class A Common Stock are reserved for issuance under this plan.
These options generally vest over three-year periods from the date of grant.
The Company accounts for this plan under APB Opinion No. 25, under which
compensation cost has only been recognized for these options granted at an
exercise price below fair value. Had compensation cost for all options granted
by the Company been determined based on the fair value at date of grant in
accordance with FASB Statement No. 123, the Company's net income would not
have been materially reduced.
F-25
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
A summary of the activity of the Company's stock option plans is as follows:
<TABLE>
<CAPTION>
NUMBER OF OPTION PRICE
SHARES PER SHARE
--------- ------------
<S> <C> <C>
Outstanding at December 31, 1995.................. -- $ --
Granted........................................... 1,425,000 0.05
Outstanding at December 31, 1996.................. 1,425,000 0.05
Granted........................................... 810,500 2.63
Exercised......................................... (264,708) 0.05
Forfeited/ canceled............................... (173,500) 2.63
--------- -----------
Outstanding at December 31, 1997.................. 1,797,292 $0.05-$2.63
========= ===========
Options exercisable at December 31, 1997.......... 1,193,625
=========
</TABLE>
In connection with the issuance of the redeemable preferred stock the
Company issued a five year warrant enabling the holder to purchase up to
402,500 shares of Class A Common stock with an exercise price of $3.73 per
share. Accordingly, 402,500 shares of Class A Common stock are reserved.
14. SEGMENT DATA
The Company operates principally in two areas of the telecommunications
industry: Site development and Site leasing. Revenue, operating income,
identifiable assets, capital expenditures and depreciation and amortization
pertaining to the segments in which the Company operates are presented below:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Revenue:
Site development......................... $48,240,443 $60,276,160 $22,699,812
Site leasing............................. 6,759,362 4,530,152 2,758,319
----------- ----------- -----------
$54,999,805 $64,806,312 $25,458,131
=========== =========== ===========
Operating income:
Site development......................... $ 6,873,602 $ 2,245,253 $ 2,875,671
Site leasing............................. (312,605) 253,093 427,292
----------- ----------- -----------
$ 6,560,997 $ 2,498,346 $ 3,302,963
=========== =========== ===========
Identifiable assets:
Site development......................... $29,075,879 $17,423,131 $ 7,035,862
Site leasing............................. 15,721,525 637,315 393,339
----------- ----------- -----------
$44,797,404 $18,060,446 $ 7,429,201
=========== =========== ===========
Capital expenditures:
Site development......................... $ 959,453 $ 144,942 $ 660,199
Site leasing............................. 15,332,311 -- --
----------- ----------- -----------
$16,291,764 $ 144,942 $ 660,199
=========== =========== ===========
Depreciation and amortization:
Site development......................... $ 298,900 $ 160,050 $ 73,297
Site leasing............................. 263,753 -- --
----------- ----------- -----------
$ 562,653 $ 160,050 $ 73,297
=========== =========== ===========
</TABLE>
F-26
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
15. SUBSEQUENT EVENTS
a. Preferred Stock Modifications
In February 1998, the terms of the Series A Redeemable Preferred Stock of
the Company were amended to defer payment of cash dividends on or redemptions
of the Series A Preferred Stock until permitted by the terms of the Senior
Discount Notes due 2008. In connection with the amendment, the dividend rate
on the Series A Preferred Stock was increased to 14% of the Series A Base
Liquidation amount commencing March 7, 2003.
b. Rent Expense
In February 1998, the Company moved its corporate headquarters. In
connection with this move the Company vacated its previously leased office
space. The Company had entered into several leases relating to the vacated
space which will expire at various times thru February, 2002. The Company has
recorded rental expense of approximately $500,000 in February, 1998, related
to the vacated space.
c. Bond Offering
On March 2, 1998, the Company closed on $269,000,000 12% Senior Discount
Notes (the "Notes") due March 1, 2008. The issuance of the Notes netted
approximately $150,200,000 in proceeds to the Company. The Notes will accrete
in value until March 1, 2003 at which time they will have an aggregate
principle amount of $269,000,000. Thereafter, interest will accrue on the
Notes and will be payable semi-annually in arrears on March 1 and September 1,
commencing September 1, 2003. The Notes are unsecured obligations of the
Company.
Proceeds from the bond offering will be used to acquire and construct
telecommunications towers as well as for general working capital purposes.
After the issuance of the Notes, the Company will be highly leveraged. The
degree to which the Company will be leveraged following the issuance could
have important consequences to holders of the Notes, including, but not
limited to: (i) making it more difficult for the Company to satisfy its
obligations with respect to the Notes, (ii) increasing the Company's
vulnerability to general adverse economic and industry conditions, (iii)
limiting the Company's ability to obtain additional financing to fund its
growth strategy, future working capital, capital expenditures and other
general corporate requirements, (iv) requiring the dedication of a substantial
portion of the Company's cash flow from operations to the payment of principal
of, and interest on, its indebtedness, thereby reducing the availability of
such cash flow to fund its growth strategy, working capital, capital
expenditures or other general corporate purposes, (v) limiting the Company's
flexibility in planning for, or reacting to, changes in its business and the
industry, and (vi) placing the Company at a competitive disadvantage vis-a-vis
less leveraged competitors. In addition, the degree to which the Company is
leveraged could prevent it from repurchasing any Notes tendered to it upon the
occurrence of a change of control.
There can be no assurance that the Company will generate sufficient cash
flow from operations in the future, that anticipated revenue growth will be
realized or that future borrowings or equity contributions will be available
in amounts sufficient to service its indebtedness and make anticipated capital
expenditures. In addition, there can be no assurance that the Company will be
able to effect any required refinancing of its indebtedness (including the
Notes) on commercially reasonable terms or at all.
The Notes and Credit Agreement contain numerous restrictive covenants,
including but not limited to covenants that restrict the Company's ability to
incur indebtedness, pay dividends; create liens, sell assets and engage in
certain mergers and acquisitions. In addition, the Credit Agreement requires
subsidiaries of the Company to maintain certain financial ratios. The ability
of the Company to comply with the covenants and other terms of the Credit
Agreement and the Notes and to satisfy its respective debt obligations will
depend on the future operating performance of the Company. In the event the
Company fails to comply with the various covenants contained in the Credit
Agreement or the Notes, as applicable, it would be in default thereunder, and
in any such case, the maturity of substantially all of its long-term
indebtedness could be accelerated.
F-27
<PAGE>
COMMUNICATION SITE SERVICES, INC.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
NINE MONTHS
PERIOD ENDED ENDED YEAR ENDED
SEPTEMBER 18, SEPTEMBER 30, DECEMBER 31,
1997 1996 1996
------------- ------------- ------------
UNAUDITED UNAUDITED AUDITED
<S> <C> <C> <C>
Net sales............................. $5,005,290 $4,325,619 $6,055,073
Cost of sales:
Labor and related costs............. 568,206 472,136 677,938
Subcontractors and consultants...... 2,426,717 1,809,010 2,690,003
Equipment and vehicle costs and
rentals............................ 453,738 328,963 434,368
Materials and supplies.............. 329,870 339,623 467,822
Travel and per diem cost............ 77,337 82,706 101,878
Engineering, permits and security... 80,037 283,813 311,151
---------- ---------- ----------
Total cost of sales................. 3,935,905 3,316,251 4,683,160
---------- ---------- ----------
Gross profit...................... 1,069,385 1,009,368 1,371,913
---------- ---------- ----------
Operating expenses:
Advertising......................... 1,732 250 1,127
Conferences......................... 2,270 1,110 --
Consultants......................... 5,258 5,590 6,594
Depreciation........................ 10,556 11,553 15,405
Dues and subscriptions.............. 1,713 550 550
Entertainment....................... 6,646 3,741 5,245
Interest............................ 26,735 28,334 36,827
Insurance, employee health.......... 9,701 4,931 6,441
Insurance, general.................. 77,024 47,165 62,887
Insurance, workers compensation..... 52,253 10,389 13,582
Miscellaneous expenses.............. 2,193 2,467 3,272
Office supplies and expenses........ 23,338 12,868 24,729
Payroll taxes....................... 31,878 15,683 22,244
Postage and shipping................ 4,857 3,775 5,783
Professional fees................... 77,038 7,631 8,456
Repairs and maintenance............. 12,983 9,847 20,396
Salaries............................ 376,291 155,680 294,739
Security............................ 362 767 1,036
SEP retirement contribution......... 14,171 7,929 11,536
Taxes and license................... 4,235 13,132 16,978
Telephone........................... 43,477 49,619 66,673
Travel.............................. 13,550 1,317 2,515
Utilities........................... 4,365 5,162 6,797
---------- ---------- ----------
Total operating expenses.......... 802,626 399,490 633,812
---------- ---------- ----------
Income from operations.......... 266,759 609,878 738,101
Other income (expenses):
Interest and dividend income........ 9,879 357 1,128
Bad debt............................ (6,134) -- --
Contributions....................... (7,050) (1,800) (11,900)
Gain on sale of equipment........... 8,796 (1,869) (2,290)
Miscellaneous income (expense)...... 2,200 195 234
---------- ---------- ----------
Net other income (expenses)....... 7,691 (3,117) (12,828)
---------- ---------- ----------
Net income...................... $ 274,450 $ 606,761 $ 725,273
========== ========== ==========
</TABLE>
See accountants' report.
The accompanying notes are an integral part of these financial statements.
F-28
<PAGE>
COMMUNICATION SITE SERVICES, INC.
STATEMENTS OF RETAINED EARNINGS
<TABLE>
<CAPTION>
PERIOD ENDED NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 18, SEPTEMBER 30, DECEMBER 31,
1997 1996 1996
------------- ----------------- ------------
(UNAUDITED) (UNAUDITED) (AUDITED)
<S> <C> <C> <C>
Retained earnings, beginning of
period........................... $ 747,251 $ 517,146 $ 517,146
Net income...................... 274,450 606,661 725,273
Distributions to stockholders:
Cash distributions............ (411,976) (444,235) (495,168)
--------- --------- ---------
Retained earnings, end of period.. $ 609,725 $ 679,572 $ 747,251
========= ========= =========
</TABLE>
See accountants' report.
The accompanying notes are an integral part of these financial statements.
F-29
<PAGE>
COMMUNICATION SITE SERVICES, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD ENDED NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 18, 1997 SEPTEMBER 30, 1996 DECEMBER 31, 1996
------------------ ------------------ -----------------
(UNAUDITED) (UNAUDITED) (AUDITED)
<S> <C> <C> <C>
Cash flows from
operating activities:
Net income........... $ 274,450 $ 606,761 $ 725,273
Adjustments to
reconcile net income
to net cash provided
by operating
activities
Depreciation....... 92,307 84,097 112,131
(Gain) loss on sale
of equipment...... (8,796) 1,869 2,290
(Increase) decrease
in:
Accounts
receivable,
trade............. (351,287) (351,602) (201,987)
Accounts
receivable, Segars
Communication
Group, Inc. ...... 6,441 (58,852) (94,203)
Prepaid expenses... (31,663) (16,971) --
Inventories........ (24,690) (9,159) (49,328)
Costs in excess of
billings on
uncompleted
contracts......... 969 (24,074) 64,976
Increases (decreases)
in:
Accounts payable... 697,309 190,364 208,016
Accrued expenses... (19,703) 3,002 8,472
Prepaid leases..... 72,000 -- --
Billings in excess
of costs on
uncompleted
contracts......... 163,692 126,546 (21,343)
----------- --------- ---------
Net cash provided
by operating
activities...... 871,029 551,981 754,297
----------- --------- ---------
Cash flows from invest-
ing activities:
Proceeds from sale of
equipment........... 34,500 5,000 7,400
Purchase of equipment
and tower
construction........ (1,580,873) (102,160) (284,311)
(Increase) decrease
in deposits......... (2,413) 1,000 500
(Increase) decrease
in miscellaneous
receivables......... 6,177 (1,200) (6,654)
----------- --------- ---------
Net cash used by
investing
activities...... (1,542,609) (97,360) (283,065)
----------- --------- ---------
Cash flows from financ-
ing activities:
Payments on notes and
leases payable...... (54,500) (491,154) (503,298)
Loan proceeds........ -- 621,110 785,110
Loan proceeds, SBA... 1,000,000 -- --
Stockholder
distributions....... (411,976) (444,235) (495,168)
----------- --------- ---------
Net cash used by
financing
activities...... 533,524 (314,279) (213,356)
----------- --------- ---------
Net increase
(decrease) in
cash............ (138,056) 140,342 257,876
Cash and cash
equivalents, beginning
of period............. 289,255 31,349 31,349
----------- --------- ---------
Cash and cash
equivalents, end of
period................ $ 151,199 $ 171,691 $ 289,225
=========== ========= =========
</TABLE>
See accountants' report.
The accompanying notes are an integral part of these financial statements.
F-30
<PAGE>
COMMUNICATION SITE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 18, 1997, SEPTEMBER 30, 1996, AND DECEMBER 31, 1996
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
A summary of the significant accounting policies applied in the preparation
of the accompanying financial statements is as follows:
Business Activity
The Company's primary business activity is the erection and repair of
transmission towers, including hanging of antennae, cabling, and associated
tower components. During 1997, the Company has expanded its business
activities to include building and maintaining towers for internal use. See
Note 5.
Revenue and Cost Recognition
For financial reporting, the Company recognized revenues from fixed-price
and modified fixed-price construction contracts on the percentage-of-
completion method of accounting, determined by the percentage of cost incurred
to date to management's estimated total anticipated cost for each contract.
That method is used because management considers total cost to be the best
available measure of progress on the contracts. These amounts are based on
estimates, and the uncertainty inherent in the estimates initially is reduced
progressively as work on the contracts nears completion.
Contract costs include all direct material, labor, subcontractor costs and
indirect costs related to direct labor. Selling, general and administrative
costs are charged to expense as incurred. Provisions for estimated losses on
uncompleted contracts are made in the period in which such losses are
determined. Changes in job performance, job conditions and estimated
profitability may result in revisions to costs and income, which are
recognized in the period in which the revisions are determined.
The asset, "Costs & estimated earnings in excess of billings", represents
revenues recognized in excess of amounts billed. The liability, "Billings in
excess of costs & estimated earnings", represents billings in excess of
revenues recognized.
Cash and Cash Equivalents
For the purposes of the statement of cash flows, cash equivalents includes
all highly liquid investments with an original maturity of three months or
less.
Inventory
Inventory is stated at the lower of cost (first-in, first-out method) or
market.
Accounts Receivable
Management believes that all accounts receivable are collectible; therefore,
no allowance for uncollectible accounts has been established. Accounts which
are deemed to be uncollectible are charged to expense when that determination
is made.
F-31
<PAGE>
COMMUNICATION SITE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 18, 1997, SEPTEMBER 30, 1996, AND DECEMBER 31, 1996
Property and Equipment
Property and equipment are carried at cost. Depreciation is provided for on
the accelerated method over the estimated useful lives of the assets as
follows:
<TABLE>
<S> <C> <C> <C>
Office equipment................................ 7 Years Buildings 31 Years
Vehicles........................................ 5 Years Towers 10 Years
Machinery & equipment........................... 5-7 Years
</TABLE>
Certain assets are pledged as security for loan allegations. See Note 4
below. Assets which have not been put into operational use as of the balance
sheet date, are carried at cost as equipment.
Loan Fees
Loan fees are amortized using the straight-line method over the length of
the loan. Loan fees are currently amortized over 120 months.
Income Taxes
The Company, with the consent of its stockholders, has elected under the
Internal Revenue Code to be an S Corporation. In lieu of corporate income
taxes, the stockholders of an S Corporation are taxed on their proportionate
share of the Company's taxable income. Therefore, no provision or liability
for federal income taxes has been included in the financial statements. The
Company reports income on the cash basis for income tax purposes, which
results in timing differences between income reported for financial statements
and income tax purposes.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
As of September 18, 1997, the Company had demand deposits on hand in
financial institutions, which exceeded depositor's insurance provided by the
applicable guaranty agency by $47,464.
NOTE 2--PROPERTY AND EQUIPMENT:
Property and equipment consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 18, SEPTEMBER 30, DECEMBER 31,
1997 1996 1996
------------- ------------- ------------
<S> <C> <C> <C>
Office equipment.................... $ 50,322 $ 37,928 $ 34,714
Vehicles............................ 615,943 344,250 513,090
Machinery and equipment............. 187,954 169,581 173,807
Buildings and improvements.......... 143,446 141,596 141,596
Land................................ 32,000 32,000 32,000
---------- --------- ---------
1,029,665 725,355 895,207
Tower construction in progress...... 1,393,919 -- --
Less: accumulated depreciation.... (394,764) (303,119) (327,674)
---------- --------- ---------
$2,028,820 $ 422,236 $ 567,533
========== ========= =========
</TABLE>
F-32
<PAGE>
COMMUNICATION SITE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 18, 1997, SEPTEMBER 30, 1996, AND DECEMBER 31, 1996
Total depreciation expense is $92,307, $84,097, and $112,131, of which
$81,751, $72,544, and $96,726, are included in the cost of goods sold for the
periods ended September 18, 1997, September 30, 1996, and December 31, 1996.
NOTE 3--COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS:
<TABLE>
<CAPTION>
SEPTEMBER 18, SEPTEMBER 30, DECEMBER 31,
1997 1996 1996
------------- ------------- ------------
<S> <C> <C> <C>
Costs incurred on uncompleted con-
tracts............................ $ 712,296 $ 928,288 $ 1,295,918
Estimated earnings................. 113,602 394,895 223,825
----------- ----------- -----------
825,898 1,323,183 1,519,743
Billings to date................... (1,013,218) (1,406,619) (1,544,340)
----------- ----------- -----------
$ (187,320) $ (83,436) $ (24,597)
=========== =========== ===========
Included in the accompanying balance sheet under the following captions:
<CAPTION>
SEPTEMBER 18, SEPTEMBER 30, DECEMBER 31,
1997 1996 1996
------------- ------------- ------------
<S> <C> <C> <C>
Costs & estimated earnings in ex-
cess
of billings....................... $ 38,585 $ 126,666 $ 37,616
Billings in excess of costs & esti-
mated earnings.................... (225,905) (210,102) (62,213)
----------- ----------- -----------
$ (187,320) $ (83,436) $ (24,597)
=========== =========== ===========
</TABLE>
F-33
<PAGE>
COMMUNICATION SITE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 18, 1997, SEPTEMBER 30, 1996, AND DECEMBER 31, 1996
NOTE 4--NOTES PAYABLE:
Notes payable consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 18, SEPTEMBER 30, DECEMBER 31,
1997 1996 1996
------------- ------------- ------------
<S> <C> <C> <C>
Note payable to bank, payable in
monthly installments of $2,687,
including interest at 8.25
percent through March 2006.
Secured by real estate........... $256,315 $269,596 $263,312
Note payable to bank, payable in
monthly installments of $859,
including interest at 8.04
percent through January 1999.
Secured by a vehicle. ........... 13,765 21,843 19,684
Note payable to bank, payable in
monthly installments of $3,099,
including interest at 8.25
percent through December 1998.
Secured by a vehicle ............ 145,900 -- 162,066
Capital lease payable, payable in
monthly installments of $140
including interest at 12.21
percent through December 1998.
Secured by equipment............. 2,056 3,289 3,010
Note payable to bank, payable in
monthly installments of $2,821,
including interest at 9 percent
through September 1997. Secured
by equipment..................... -- 32,257 24,464
Note payable to bank, credit line
with $250,000 available. Interest
is payable monthly at 1 percent
over the bank prime. Interest is
at 8 percent at year end. Secured
by accounts receivable and
inventory........................ 1 1 1
-------- -------- --------
Total notes payable............. 418,037 326,986 472,537
Less: current portion......... (49,007) (47,147) (70,952)
-------- -------- --------
Long-term debt portion.......... $369,030 $279,839 $401,585
======== ======== ========
</TABLE>
Maturities of long-term debt are as follows:
<TABLE>
<S> <C>
1998............................................................. $ 49,007
1999............................................................. 47,863
2000............................................................. 44,787
2001............................................................. 48,625
2002............................................................. 49,207
Thereafter....................................................... 178,548
--------
$418,037
========
</TABLE>
NOTE 5--BUSINESS SEGMENT AND MAJOR CUSTOMER INFORMATION:
The Company operates in one business segment. The Company is engaged
primarily in the erection and repairs of transmission towers for various
communication companies in the southeast. Accordingly, the risk exists that
the ability to collect amounts due from customers could be affected by
economic fluctuations in the markets for communication towers in the
southeast.
During 1997, the Company has changed some business strategies to include
building and maintaining towers for internal use. This change in strategies,
during the interim process, may cause a decrease in profitability and may
increase demands on cash flows.
F-34
<PAGE>
COMMUNICATION SITE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 18, 1997, SEPTEMBER 30, 1996, AND DECEMBER 31, 1996
NOTE 6--RELATED PARTY TRANSACTIONS:
The Company has common ownership with Segars Communication Group, Inc.
During the periods, certain expenses were paid and revenues were received in
behalf of Segars Communication Group, Inc. The net of these transactions are
reflected in Communication Site Services, Inc.'s books as a net receivable of
$136,934, $108,024, and $143,375 from Segars Communication Group, Inc. at
September 18, 1997, September 30, 1996, and December 31, 1996. Additionally,
the Company has several contracts in progress for a tower construction
projects for Segars Communication Group.
NOTE 7--SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid during the periods ending September 18, 1997, September 30, 1996,
and December 31, 1996 for interest expense amounts to $26,440, $27,986, and
$36,827.
Significant Non-Cash Transactions:
The Company entered into a capital lease, during 1996, for equipment with an
estimated purchase value of $4,200.
The Company refinanced the mortgage on the warehouse and office building.
The total loan amount was $277,000, with $117,626 going directly to pay off
prior mortgage, $30,323 to pay off short-term borrowings, and $8,258 used to
pay off loan costs. The net cash to the Company amounted to $120,793.
NOTE 8--PENSION PLANS
The Company has a SAR-SEP pension plan covering substantially all employees.
The Company may contribute amounts as determined by the Board of Directors.
The Company has accrued and paid contributions totalling $28,342, $19,829, and
$30,357 for the periods ended September 18, 1997, September 30, 1996, and
December 31, 1996.
NOTE 9--SUBSEQUENT EVENTS:
On July 22, 1997, the Company entered into a purchase and sale agreement.
The agreement, if executed, provides for the purchase of all the assets of
Communication Site Services, Inc. and its related organization. Upon execution
of this agreement, the Company (Communication Site Services, Inc.) would
discontinue operations and all activities of the Company would convert to the
purchaser.
NOTE 10--PRIOR PERIOD ADJUSTMENT:
Certain errors, resulting in both the overstatement and understatement of
previously reported assets, liabilities, and expenses of the 1995 year, were
corrected in 1996, resulting in the following changes to retained earnings as
of January 1, 1996.
<TABLE>
<CAPTION>
RETAINED
EARNINGS
--------
<S> <C>
As previously reported......................................... $488,882
Understatement of costs and estimated earnings in excess of
billings on uncompleted contracts............................. 29,992
Understatement of accounts payable............................. (1,728)
--------
As adjusted.................................................. $517,146
========
</TABLE>
F-35
<PAGE>
INDEPENDENT AUDITORS' REPORT
March 5, 1997
To the Stockholders of Communication
Site Services, Inc. Ocala, Florida
We have audited the accompanying balance sheet of Communication Site
Services, Inc. (an S corporation) as of December 31, 1996, and the related
statements of income, retained earnings, and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted out audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Communication Site
Services, Inc. as of December 31, 1996, and the results of operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information contained in
the Schedule of Major Contracts Completed and the Schedule of Contracts in
Progress is presented for purposes of additional analysis and is not required
part of the basic financial statements. Such information has been subject to
the auditing procedures applied in the audit of the basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
/s/ Robson, Scribner & Stewart, P.A.
Robson, Scribner & Stewart, P.A.
Certified Public Accountants
F-36
<PAGE>
COMMUNICATION SITE SERVICES, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996
------------
ASSETS
<S> <C>
Current assets:
Cash and cash equivalents......................................... $ 289,225
Accounts receivable, trade........................................ 666,693
Accounts receivable, miscellaneous................................ 6,654
Accounts receivable, SCGI......................................... 143,375
Inventories....................................................... 78,663
Costs and estimated earnings in excess of billings on uncompleted
contracts........................................................ 37,616
----------
Total current assets.......................................... 1,222,226
Land, property and equipment:
Land, property and equipment.................................... 895,207
Less: accumulated depreciation.................................. 327,674
----------
Property and equipment, net................................... 567,533
Other assets:
Deposit......................................................... 1,000
Loan fees, net.................................................. 7,799
----------
Total other assets............................................ 8,799
----------
Total assets................................................ $1,798,558
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................ $ 496,555
Accrued expenses................................................ 19,902
Billings in excess of costs and estimated earnings on
uncompleted contracts.......................................... 62,213
Current portion of notes payable................................ 70,952
----------
Total current liabilities..................................... 649,622
Long-term debt, net of current portion............................ 401,585
----------
Total liabilities............................................. 1,051,207
Stockholders' equity:
Common stock, $1 par value, 100 shares issued and outstanding... 100
Retained earnings............................................... 747,251
----------
Total stockholders' equity.................................... 747,351
----------
Total liabilities and stockholders' equity.................. $1,798,558
==========
</TABLE>
See independent auditors' report.
The accompanying notes are an integral part of these financial statements.
F-37
<PAGE>
COMMUNICATION SITE SERVICES, INC.
STATEMENT OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996
---------------
<S> <C> <C>
Net sales...................................................... $6,055,073
Cost of sales:
Labor and related costs...................................... 677,938
Subcontractors and consultants............................... 2,690,003
Equipment and vehicle costs and rentals...................... 434,368
Materials and supplies....................................... 467,822
Travel and per diem cost..................................... 101,878
Engineering, permits and security............................ 311,151
----------
Total cost of sales.......................................... 4,683,160
----------
Gross profit............................................... 1,371,913
----------
Operating expenses:
Advertising.................................................. 1,127
Consultants.................................................. 6,594
Depreciation................................................. 15,405
Dues and subscriptions....................................... 550
Entertainment................................................ 5,245
Interest..................................................... 36,827
Insurance, employee health................................... 6,441
Insurance, general........................................... 62,887
Insurance, workers compensation.............................. 13,582
Miscellaneous expenses....................................... 3,272
Office supplies and expenses................................. 24,729
Payroll taxes................................................ 22,244
Postage and shipping......................................... 5,783
Professional fees............................................ 8,456
Radio........................................................ --
Repairs and maintenance...................................... 20,396
Salaries..................................................... 294,739
Security..................................................... 1,036
SEP retirement contribution.................................. 11,536
Taxes and license............................................ 16,978
Telephone.................................................... 66,673
Travel....................................................... 2,515
Utilities.................................................... 6,797
----------
Total operating expenses................................... 633,812
----------
Income from operations................................... 738,101
Other income (expenses):
Interest and dividend income................................. 1,128
Contributions................................................ (11,900)
(Loss) on sale of equipment.................................. (2,290)
Miscellaneous income (expense)............................... 234
----------
Net income................................................. (12,828)
----------
$ 725,273
==========
</TABLE>
See independent auditors' report.
The accompanying notes are an integral part of these financial statements.
F-38
<PAGE>
COMMUNICATION SITE SERVICES, INC.
STATEMENT OF RETAINED EARNINGS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996
------------
<S> <C>
Retained earnings, beginning of year............................ $488,882
Prior period adjustment......................................... 28,264
--------
Retained earnings, beginning of year as restated................ 517,146
Net income...................................................... 725,273
Distributions to stockholders:
Cash distributions............................................ (495,168)
--------
Retained earnings, end of year.................................. $747,251
========
</TABLE>
See independent auditors' report.
The accompanying notes are an integral part of these financial statements.
F-39
<PAGE>
COMMUNICATION SITE SERVICES, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996
-------------
<S> <C>
Cash flows from operating activities:
Net income.................................................. $ 725,273
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation.............................................. 112,131
(Loss) on sale of equipment............................... 2,290
(Increase) decrease in:
Accounts receivable, trade................................ (201,987)
Accounts receivable, Segars Communication Group, Inc. .... (94,203)
Inventories............................................... (49,328)
Costs in excess of billings on uncompleted contracts...... 64,976
Increases (decreases) in:
Accounts payable.......................................... 208,016
Accrued expenses.......................................... 8,472
Billings in excess of costs on uncompleted contracts...... (21,343)
---------
Net cash provided by operating activities..................... 754,297
---------
Cash flows from investing activities:
Proceeds from sale of equipment............................. 7,400
Purchase of equipment....................................... (284,311)
Decrease in deposits........................................ 500
Increase in miscellaneous receivables....................... (6,654)
---------
Net cash used by investing activities......................... (283,065)
---------
Cash flows from financing activities:
Payments on notes and leases payable........................ (503,298)
Loan proceeds............................................... 785,110
Stockholder distributions................................... (495,168)
---------
Net cash used by financing activities......................... (213,356)
---------
Net increase in cash.......................................... 257,876
Cash and cash equivalents, beginning of year.................. 31,349
---------
Cash and cash equivalents, end of year........................ $ 289,225
=========
</TABLE>
See independent auditors' report.
The accompanying notes are an integral part of these financial statements.
F-40
<PAGE>
COMMUNICATION SITE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation
of the accompanying financial statements is as follows:
Business Activity
The Company's primary business activity is the erection and repair of
transmission towers, including hanging of antennae, cabling and associated
tower components.
Revenue and Cost Recognition
For financial reporting, the Company recognized revenues from fixed-price
and modified fixed-price construction contracts on the percentage-of-
completion method of accounting, determined by the percentage of cost incurred
to date to management's estimated total anticipated cost for each contract.
That method is used because management considers total cost to be the best
available measure of progress on the contracts. These amounts are based on
estimates, and the uncertainty inherent in the estimates initially is reduced
progressively as work on the contracts nears completion.
Contract costs include all direct material, labor, subcontractor costs and
indirect costs related to direct labor. Selling, general and administrative
costs are charged to expense as incurred. Provisions for estimated losses on
uncompleted contracts are made in the period in which such losses are
determined. Changes in job performance, job conditions and estimated
profitability may result in revisions to costs and income, which are
recognized in the period in which the revisions are determined.
The asset, "Costs & Estimated Earnings in Excess of Billings", represents
revenues recognized in excess of amounts billed. The liability, "Billings in
Excess of Costs & Estimated Earnings", represents billings in excess of
revenues recognized.
Cash and Cash Equivalents
For the purposes of the statement of cash flows, cash equivalents includes
all highly liquid investments with an original maturity of three months or
less.
Inventory
Inventory is stated at the lower of cost (first-in, first-out method) or
market.
Accounts Receivable
Management believes that all accounts receivable are collectible, therefore,
no allowance for uncollectible accounts has been established. Accounts which
are deemed to be uncollectible are charged to expense when that determination
is made.
Property and Equipment
Property and equipment are carried at cost. Depreciation is provided for on
the accelerated method over the estimated useful lives of the assets as
follows:
<TABLE>
<S> <C>
Office equipment................... 7 years
Vehicles........................... 5 years
Machinery & equipment.............. 5-7 years
Buildings.......................... 31 years
Towers............................. 10 years
</TABLE>
F-41
<PAGE>
COMMUNICATION SITE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
YEAR ENDED DECEMBER 31, 1996
Certain assets are pledged as security for loan allegations. See Note 4
below. Assets which have not been put into operational use as of December 31,
1996, are carried at cost as equipment.
Loan Fees
Loan fees are amortized using the straight-line method over the length of
the loan. Loan fees are currently amortized over 120 months.
Income Taxes
The Company, with the consent of its stockholders, has elected under the
Internal Revenue Code to be an S Corporation. In lieu of corporate income
taxes, the stockholders of an S Corporation are taxed on their proportionate
share of the Company's taxable income. Therefore, no provision or liability
for federal income taxes has been included in the financial statements. The
Company reports income on the cash basis for income tax purposes, which
results in timing differences between income reported for financial statements
and income tax purposes.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
NOTE 2--PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31, 1996:
<TABLE>
<CAPTION>
1996
---------
<S> <C>
Office equipment................................................ $ 34,714
Vehicles........................................................ 513,090
Machinery and equipment......................................... 173,807
Buildings and improvements...................................... 141,596
Land............................................................ 32,000
---------
895,207
Less: accumulated depreciation................................ (327,674)
---------
$ 567,533
=========
</TABLE>
Total depreciation expense is $112,131, of which $96,726, is included in the
cost of goods sold for the year ended December 31, 1996.
NOTE 3--COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
<TABLE>
<CAPTION>
1996
-----------
<S> <C>
Costs incurred on uncompleted contracts...................... $ 1,295,918
Estimated earnings........................................... 223,825
-----------
1,519,743
Billings to date............................................. (1,544,340)
-----------
$ (24,597)
===========
</TABLE>
F-42
<PAGE>
COMMUNICATION SITE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
YEAR ENDED DECEMBER 31, 1996
Included in the accompanying balance sheet under the following captions:
<TABLE>
<S> <C>
Costs & estimated earnings in excess of billings................ $ 37,616
Billings in excess of costs & estimated earnings................ (62,213)
--------
$(24,597)
========
</TABLE>
NOTE 4--NOTES PAYABLE
Notes payable consist of the following at December 31, 1996:
<TABLE>
<S> <C>
1996
--------
Notes payable to bank, payable in monthly installments of
$2,687, including interest at 8.25 percent through March, 2006.
Secured by real estate with a net book value of $151,185 at
year end....................................................... $263,312
Notes payable to bank, payable in monthly installments of $859,
including interest at 8.04 percent through January, 1999.
Secured by a vehicle with a net book value of $21,621 at year
end............................................................ 19,684
Notes payable to bank, payable in monthly installments of
$3,099, including interest at 8.25 percent through December,
1998. Secured by a vehicle with a net book value of $173,840 at
year end....................................................... 162,066
Capital lease payable, payable in monthly installments of $140
including interest at 12.21 percent through December, 1998.
Secured by equipment with a net book value of $3,600........... 3,010
Note payable to bank, payable in monthly installments of $2,821,
including interest at 9 percent through September, 1997.
Secured by equipment with a net book value of $34,735 at year
end............................................................ 24,464
Note payable to bank, credit line with $250,000 available.
Interest is payable monthly at 1 percent over the bank prime.
Interest is at 8 percent at year end. Secured by real estate
owned by the stockholder....................................... 1
--------
Total notes payable........................................... 472,537
Less: current portion....................................... (70,952)
--------
Long-term debt portion........................................ $401,585
========
</TABLE>
Maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
-----------
<S> <C>
1997.............................................................. $ 70,952
1998.............................................................. 49,854
1999.............................................................. 42,587
2000.............................................................. 32,845
2001.............................................................. 49,233
Thereafter........................................................ 227,066
--------
$472,537
========
</TABLE>
F-43
<PAGE>
COMMUNICATION SITE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
YEAR ENDED DECEMBER 31, 1996
NOTE 5--SCHEDULE OF CONTRACT BACKLOG
The following schedule summarizes changes in backlog contracts during the
year ended December 31, 1996. Backlog represents the amount of revenue the
company expects to realize from work to be performed or uncompleted contracts
in progress at year end and from contracted agreements on which work has not
yet begun.
<TABLE>
<S> <C>
Balance, January 1, 1996....................................... $ 249,899
New contracts during 1996...................................... 7,675,843
----------
7,925,742
Less: contract revenue earned, 1996............................ 6,055,073
----------
Balance, December 31, 1996..................................... $1,870,669
==========
</TABLE>
NOTE 6--BUSINESS SEGMENT AND MAJOR CUSTOMER INFORMATION
The Company operates in one business segment. The Company is engaged
primarily in the erection and repairs of transmission towers for various
communication companies in the southeast. Accordingly, the risk exists that
the ability to collect amounts due from customers could be affected by
economic fluctuations in the markets for communication towers in the
southeast. At December 31, 1996, 83 percent of the accounts receivable balance
is owed by two customers.
Approximately 10 percent of the Company's sales for 1996 are comprised of
one job site. The Additional Information on pages F-41 and F-42 contain
schedules of major contracts completed during 1996, and contracts in progress
at year end.
NOTE 7--RELATED PARTY TRANSACTIONS
The Company has common ownership with Segars Communication Group, Inc.
During the year, certain expenses were paid and revenues received in behalf of
Segars Communication Group, Inc. The net of these transactions are reflected
in Communication Site Services, Inc.'s books as a receivable of $143,376 from
Segars Communication Group, Inc., at December 31, 1996. Additionally, at
December 31, 1996, the Company has a contract in progress for a tower
construction project for Segars Communication Group. See contract number 96-78
on the Schedule of Contracts in Progress.
NOTE 8--SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION
Cash paid during the year ended December 31,1996, for interest expense is
$36,872.
Significant Non-Cash Transactions:
. The Company entered into a capital lease during 1996 for equipment with
an estimated purchase value of $4,200.
F-44
<PAGE>
COMMUNICATION SITE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
YEAR ENDED DECEMBER 31, 1996
. The Company refinanced the mortgage on the warehouse and office
building. The total loan amount was $277,000, with $117,626 going
directly to pay off prior mortgage, $30,323 to pay off short-term
borrowings and $8,258 used to pay loan costs. The net cash to the
Company amounted to $120,793.
NOTE 9--PENSION PLANS
The Company has a SAR-SEP pension plan covering substantially all employees.
The Company may contribute amounts as determined by the Board of Directors.
The Company has accrued and paid contributions totalling $30,357 for the year
ended December 31, 1996.
NOTE 10--PRIOR PERIOD ADJUSTMENT
Certain errors, resulting in both the overstatement and understatement of
previously reported assets, liabilities and expenses of the prior year were
corrected this year, resulting in the following changes to retained earnings
as of December 31, 1995:
<TABLE>
<CAPTION>
RETAINED
EARNINGS
--------
<S> <C>
As previously reported............................................ $488,882
Understatement of costs and estimated earnings
in excess of billings on uncompleted contracts................... 29,992
Understatement of accounts payable................................ (1,728)
--------
As adjusted..................................................... $517,146
========
</TABLE>
F-45
<PAGE>
COMMUNICATION SITE SERVICES, INC.
SCHEDULE OF MAJOR CONTRACTS COMPLETED
SCHEDULE 1
<TABLE>
<CAPTION>
1996
----------
CONTRACT
CONTRACT OVER $100,000 REVENUES
- ---------------------- ----------
<S> <C>
95-49............................................................. $ 249,427
96-14............................................................. 110,546
96-34............................................................. 120,060
96-35............................................................. 106,390
96-41............................................................. 106,115
96-46............................................................. 110,050
96-47............................................................. 123,445
96-50............................................................. 172,755
96-52............................................................. 114,866
96-53............................................................. 111,220
96-54............................................................. 154,762
96-56............................................................. 113,865
96-66............................................................. 111,500
96-67............................................................. 106,295
----------
Total contracts over $100,000....................................... 1,811,296
Contracts over $50,000 less $100,000................................ 1,590,630
Contracts less $50,000.............................................. 1,133,404
----------
Contract revenues from completed contracts in 1996.................. $4,535,330
==========
</TABLE>
See independent auditors' report.
The accompanying notes are an integral part of these financial statements.
F-46
<PAGE>
COMMUNICATION SITE SERVICES, INC.
SCHEDULE OF CONTRACTS IN PROGRESS
FOR THE YEAR ENDED DECEMBER 31, 1996
SCHEDULE 2
<TABLE>
<CAPTION>
ESTIMATED CONTRACT COST IN BILLINGS
CONTRACT GROSS REVENUES COST TO GROSS BILLINGS COSTS TO EXCESS OF IN EXCESS PERCENT
CONTRACT PRICE PROFIT EARNED DATE PROFIT TO DATE COMPLETE BILLINGS OF COSTS COMPLETE
- -------- ---------- --------- ---------- ---------- -------- ---------- ---------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
96-13........... $ 164,920 $ 35,005 $ 150,321 $ 118,415 $ 31,906 $ 164,920 $ 11,500 $ 0 $14,599 91.2%
96-30........... 177,910 39,260 176,293 137,390 38,903 177,910 1,260 0 1,617 99.0%
96-31........... 206,023 27,336 203,963 176,715 27,248 206,023 1,972 2,060 99.0%
96-43........... 108,240 16,732 58,654 49,587 9,067 76,890 41,921 0 18,236 54.2%
96-61........... 146,857 32,273 110,290 86,053 24,237 130,017 28,531 0 19,727 75.1%
96-69........... 1,115,910 112,387 615,424 553,427 61,997 620,910 450,096 0 5,486 55.2%
96-78........... 178,427 0 77,015 77,015 0 62,582 101,412 14,433 0 43.0%
96-79........... 67,090 13,780 66,956 53,193 13,763 60,605 117 6,351 0 99.8%
96-81........... 162,500 32,500 0 0 0 0 130,000 0 0 0.0%
96-82........... 121,018 24,204 0 0 0 0 96,814 0 0 0.0%
96-80........... 171,500 34,300 0 0 0 0 137,200 0 0 0.0%
96-83........... 105,450 21,090 0 0 0 0 84,360 0 0 0.0%
96-84........... 164,177 27,810 6,567 5,025 1,542 0 131,342 6,567 0 4.0%
96-85........... 217,430 43,485 0 144 (144) 0 173,801 0 0 0.0%
96-86........... 38,850 6,603 38,850 32,247 6,603 30,885 0 7,965 0 100.0%
96-87........... 101,775 30,532 0 0 0 0 71,243 0 0 0.0%
96-88........... 12,098 7,869 12,098 4,229 7,869 11,298 0 800 0 100.0%
96-89........... 33,925 10,177 1,812 1,269 543 2,300 22,479 0 488 5.3%
96-91........... 46,312 13,894 0 0 0 0 32,418 0 0 0.0%
96-93........... 25,000 (1,996) 500 319 181 0 26,677 500 0 2.0%
96-94........... 25,000 3,869 1,000 890 110 0 20,241 1,000 0 4.0%
---------- -------- ---------- ---------- -------- ---------- ---------- ------- -------
$3,390,412 $531,110 $1,519,743 $1,295,918 $223,825 $1,544,340 $1,563,384 $37,616 $62,213
========== ======== ========== ========== ======== ========== ========== ======= =======
</TABLE>
See independent auditors' report.
The accompanying notes are an integral part of these financial statements.
F-47
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
December 23, 1997
To the Stockholders of
Communication Site Services, Inc.
Ocala, Florida
We have audited the accompanying balance sheet of Communication Site
Services, Inc. (an S corporation) as of December 31, 1995, and the related
statements of income, retained earnings, and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Communication Site
Services, Inc. as of December 31, 1995, and the results of operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information contained in
the Schedule of Major Contracts Completed and the Schedule of Contracts in
Progress is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Robson, Scribner & Stewart,
P.A.
_____________________________________
ROBSON, SCRIBNER & STEWART, P.A.
Certified Public Accountants
F-48
<PAGE>
COMMUNICATION SITE SERVICES, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
------------
ASSETS
<S> <C>
Current assets:
Cash and cash equivalents......................................... $ 31,349
Accounts receivable, trade........................................ 464,706
Accounts receivable, miscellaneous................................ --
Accounts receivable, SCGI......................................... 49,172
Inventories....................................................... 29,335
Costs and estimated earnings in excess of billings on uncompleted
contracts........................................................ 102,592
----------
Total current assets.......................................... 677,154
Land, property and equipment:
Land, property and equipment.................................... 629,220
Less: accumulated depreciation.................................. 228,377
----------
Net property and equipment, net............................... 400,843
Other assets:
Deposit......................................................... 1,500
Loan fees, net.................................................. --
----------
Total other assets............................................ 1,500
----------
Total assets................................................ $1,079,497
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................ $ 288,539
Accrued expenses................................................ 11,430
Billings in excess of costs and estimated earnings on
uncompleted contracts.......................................... 83,556
Current portion of notes payable................................ 37,201
----------
Total current liabilities..................................... 420,726
Long-term debt, net of current portion............................ 141,525
----------
Total liabilities............................................. 562,251
Stockholders' equity:
Common stock, $1 par value, 100 shares issued and outstanding... 100
Retained earnings............................................... 517,146
----------
Total stockholders' equity.................................... 517,246
----------
Total liabilities and stockholders' equity.................. $1,079,497
==========
</TABLE>
See independent auditors' report.
The accompanying notes are an integral part of these financial statements.
F-49
<PAGE>
COMMUNICATION SITE SERVICES, INC.
STATEMENT OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
------------
<S> <C>
Net sales.......................................................... $3,479,153
Cost of sales...................................................... 2,734,460
----------
Gross profit................................................... 744,693
----------
Operating expenses:
Advertising...................................................... 1,090
Consultants...................................................... --
Depreciation..................................................... 10,023
Dues and subscriptions........................................... 2,977
Entertainment.................................................... 2,291
Interest......................................................... 23,755
Insurance, employee health....................................... 17,365
Insurance, general............................................... 23,629
Insurance, workers compensation.................................. 87,347
Miscellaneous expenses........................................... 412
Office supplies and expenses..................................... 8,625
Payroll taxes.................................................... 42,355
Postage and shipping............................................. 2,351
Professional fees................................................ 5,269
Radio............................................................ 109
Repairs and maintenance.......................................... 7,818
Salaries......................................................... 155,103
Security......................................................... 945
SEP retirement contribution...................................... 2,224
Taxes and license................................................ 9,995
Telephone........................................................ 40,166
Travel........................................................... --
Utilities........................................................ 4,764
----------
Total operating expenses....................................... 448,613
----------
Income from operations....................................... 296,080
Other income (expenses):
Interest and dividend income..................................... 472
Contributions.................................................... (3,775)
(Loss) on sale of equipment...................................... 1,855
Miscellaneous income (expense)................................... 180
----------
Net income..................................................... (1,268)
----------
$ 294,812
==========
</TABLE>
See independent auditors' report.
The accompanying notes are an integral part of these financial statements.
F-50
<PAGE>
COMMUNICATION SITE SERVICES, INC.
STATEMENT OF RETAINED EARNINGS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
------------
<S> <C>
Retained earnings, beginning of year............................... $303,219
Net income......................................................... 294,812
Distributions to stockholders:
Cash distributions............................................... (80,885)
--------
Retained earnings, end of year..................................... $517,146
========
</TABLE>
See independent auditors' report.
The accompanying notes are an integral part of these financial statements.
F-51
<PAGE>
COMMUNICATION SITE SERVICES, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
------------
<S> <C>
Cash flows from operating activities:
Net income...................................................... $ 294,812
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation.................................................. 84,581
(Loss) on sale of equipment................................... (1,855)
(Increase) decrease in:
Accounts receivable, trade.................................... (151,299)
Accounts receivable, Segars Communication Group, Inc. ........ (31,609)
Inventories................................................... (942)
Costs in excess of billings on uncompleted contracts.......... (94,194)
Increases (decreases) in:
Accounts payable.............................................. 206,296
Accrued expenses.............................................. 11,313
Billings in excess of costs on uncompleted contracts.......... 33,313
---------
Net cash provided by operating activities......................... 350,416
---------
Cash flows from investing activities:
Proceeds from sale of equipment................................. 8,000
Purchase of equipment........................................... (159,500)
Decrease in deposits............................................
Increase in miscellaneous receivables...........................
---------
Net cash used by investing activities............................. (151,500)
---------
Cash flows from financing activities:
Payments on notes and leases payable............................ (112,564)
Loan proceeds................................................... 0
Stockholder distributions....................................... (80,885)
---------
Net cash used by financing activities............................. (193,449)
---------
Net increase in cash.............................................. 5,467
Cash and cash equivalents, beginning of year...................... 25,882
---------
Cash and cash equivalents, end of year............................ $ 31,349
=========
</TABLE>
See independent auditors' report.
The accompanying notes are an integral part of these financial statements.
F-52
<PAGE>
COMMUNICATION SITE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation
of the accompanying financial statements is as follows:
Business Activity
The Company's primary business activity is the erection and repair of
transmission towers, including hanging of antennae, cabling, and associated
tower components.
Revenue and Cost Recognition
For financial reporting, the Company recognized revenues from fixed-price
and modified fixed-price construction contracts on the percentage-of-
completion method of accounting, determined by the percentage of cost incurred
to date to management's estimated total anticipated cost for each contract.
That method is used because management considers total cost to be the best
available measure of progress on the contracts. These amounts are based on
estimates, and the uncertainty inherent in the estimates initially is reduced
progressively as work on the contracts nears completion.
Contract costs include all direct material, labor, subcontractor costs and
indirect costs related to direct labor. Selling, general and administrative
costs are charged to expense as incurred. Provisions for estimated losses on
uncompleted contracts are made in the period in which such losses are
determined. Changes in job performance, job conditions and estimated
profitability may result in revisions to costs and income, which are
recognized in the period in which the revisions are determined.
The asset, "Costs & Estimated Earnings in Excess of Billings", represents
revenues recognized in excess of amounts billed. The liability, "Billings in
Excess of Costs & Estimated Earnings", represents billings in excess of
revenues recognized.
Cash and Cash Equivalents
For the purposes of the statement of cash flows, cash equivalents includes
all highly liquid investments with an original maturity of three months or
less.
Inventory
Inventory is stated at the lower of cost (first-in, first-out method) or
market.
Accounts Receivable
Management believes that all accounts receivable are collectible, therefore,
no allowance for uncollectible accounts has been established. Accounts which
are deemed to be uncollectible are charged to expense when that determination
is made.
Property and Equipment
Property and equipment are carried at cost. Depreciation is provided for on
the accelerated method over the estimated useful lives of the assets as
follows:
<TABLE>
<S> <C>
Office equipment................... 7 years
Vehicles........................... 5 years
Machinery & equipment.............. 5-7 years
Buildings.......................... 31 years
Towers............................. 10 years
</TABLE>
F-53
<PAGE>
COMMUNICATION SITE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
YEAR ENDED DECEMBER 31, 1995
Certain assets are pledged as security for loan obligations. See Note 4
below. Assets which have not been put into operational use as of December
31,1996, are carried at cost as equipment.
Loan Fees
Loan fees are amortized using the straight-line method over the length of
the loan. Loan fees are currently amortized over 60 months.
Income Taxes
The Company, with the consent of its stockholders, has elected under the
Internal Revenue Code to be an S Corporation. In lieu of corporate income
taxes, the stockholders of an S Corporation are taxed on their proportionate
share of the Company's taxable income. Therefore, no provision or liability
for federal income taxes has been included in the financial statements. The
Company reports income on the cash basis for income tax purposes, which
results in timing differences between income reported for financial statements
and income tax purposes.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
NOTE 2--PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31, 1995:
<TABLE>
<CAPTION>
1995
---------
<S> <C>
Office equipment................................................ $ 14,092
Vehicles........................................................ 286,524
Machinery and equipment......................................... 156,794
Buildings and improvements...................................... 139,810
Land............................................................ 32,000
---------
629,220
Less: Accumulated depreciation................................ (228,377)
---------
$ 400,843
=========
</TABLE>
Total depreciation expense is $84,581, of which $74,558, is included in the
cost of goods sold for the year ended December 31, 1995.
NOTE 3--COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
<TABLE>
<CAPTION>
1995
--------
<S> <C>
Costs incurred on uncompleted contracts.......................... $739,112
Estimated earnings............................................... 209,341
--------
948,261
Billings to date................................................. (929,225)
--------
$ 19,036
========
</TABLE>
F-54
<PAGE>
COMMUNICATION SITE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
YEAR ENDED DECEMBER 31, 1995
Included in the accompanying balance sheet under the following captions:
<TABLE>
<S> <C>
Costs & estimated earnings in excess of billings................. $102,592
Billings in excess of costs & estimated earnings................. (83,556)
--------
$ 19,036
========
</TABLE>
NOTE 4--NOTES PAYABLE
Notes payable consist of the following at December 31, 1995:
<TABLE>
<S> <C>
1995
--------
Note payable to bank, payable in monthly installments of $1,290,
including interest at 8 percent through July, 2007. Secured by
real estate with a net book value of $156,061 at year end...... $117,630
Note payable to bank, payable in monthly installments of $387,
including interest at 9.746 percent through June 1997. Secured
by a vehicle with a net book value of $8,294 at year end....... 6,464
Note payable to bank, payable in monthly installments of $2,821,
including interest at 9 percent through September 1997. Secured
by a vehicle with a net book value of $53,462 at year end...... 54,631
Note payable to bank, credit line with $150,000 available.
Interest is payable monthly at 2 percent over the bank prime.
Interest is at 8 percent at year end. Secured by real estate
owned by the stockholder....................................... 1
--------
Total notes payable........................................... 178,726
Less: current portion....................................... (37,201)
--------
Long-term debt portion........................................ $141,525
========
</TABLE>
Maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
-----------
<S> <C>
1997.............................................................. $ 37,201
1998.............................................................. 33,544
1999.............................................................. 7,380
2000.............................................................. 7,993
2001.............................................................. 7,233
Thereafter........................................................ 48,174
--------
$141,525
========
</TABLE>
F-55
<PAGE>
COMMUNICATION SITE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
YEAR ENDED DECEMBER 31, 1995
NOTE 5--SCHEDULE OF CONTRACT BACKLOG
The following schedule summarizes changes in backlog contracts during the
year ended December 31, 1995. Backlog represents the amount of revenue the
company expects to realize from work to be performed or uncompleted contracts
in progress at year end and from contracted agreements on which work has not
yet begun.
<TABLE>
<S> <C>
Balance, January 1, 1995....................................... $ 112,068
New contracts during 1995...................................... 3,616,984
----------
3,729,052
Less: contract revenue earned, 1995............................ 3,479,153
----------
Balance, December 31, 1995..................................... $ 249,899
==========
</TABLE>
NOTE 6--BUSINESS SEGMENT AND MAJOR CUSTOMER INFORMATION
The Company operates in one business segment. The Company is engaged
primarily in the erection and repairs of transmission towers for various
communication companies in the southeast. Accordingly, the risk exists that
the ability to collect amounts due from customers could be affected by
economic fluctuations in the markets for communication towers in the
southeast. At December 31, 1995, 92 percent of the accounts receivable balance
is owed by five customers.
Approximately 37 percent of the Company's sales for 1996 are comprised of
eight job sites. The Additional Information on pages F-53 and F-54 contain
schedules of major contracts completed during 1995, and contracts in progress
at year end.
NOTE 7--RELATED PARTY TRANSACTIONS
The Company has common ownership with Segars Communication Group, Inc.
During the year, certain expenses were paid and revenues received in behalf of
Segars Communication Group, Inc. The net of these transactions are reflected
in Communication Site Services, Inc.'s books as a receivable of $49,172 from
Segars Communication Group, Inc., at December 31, 1995. Additionally, at
December 31, 1995, the Company has a contract in progress for a tower
construction project for Segars Communication Group. See contract labeled
Owens Road on the Schedule of Contracts in Progress. The amount due on this
contract of $82,901, is included in Accounts Receivable Trade as part of the
tower construction project for Segars Communications Group, Inc.
NOTE 8--SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION
Cash paid during the year ended December 31,1995 for interest expense is
$23,755.
NOTE 9--PENSION PLANS
The Company has a SAR-SEP pension plan covering substantially all employees.
The Company may contribute amounts as determined by the Board of Directors.
The Company has accrued and paid contributions totalling $2,224 for the year
ended December 31, 1995.
F-56
<PAGE>
COMMUNICATION SITE SERVICES, INC.
SCHEDULE OF MAJOR CONTRACTS COMPLETED
SCHEDULE 1
<TABLE>
<CAPTION>
1995
----------
CONTRACT
CONTRACT OVER $100,000 REVENUES
- ---------------------- ----------
<S> <C>
Cellular One-DA II................................................ $ 237,095
Havana............................................................ 174,471
Nutall Rise....................................................... 167,185
Ponce de Leon..................................................... 147,100
Clarksville....................................................... 144,987
Capital Circle.................................................... 142,397
North Bay......................................................... 142,378
Holopaw........................................................... 126,929
----------
Total contracts over $100,000....................................... $1,282,542
==========
</TABLE>
See independent auditors' report.
The accompanying notes are an integral part of these financial statements.
F-57
<PAGE>
COMMUNICATIONS SITE SERVICES, INC.
SCHEDULE OF CONTRACTS IN PROGRESS
FOR THE YEAR ENDED DECEMBER 31, 1995
SCHEDULE 2
<TABLE>
<CAPTION>
ESTIMATED COST IN BILLINGS
CONTRACT GROSS REVENUES COST TO GROSS BILLINGS COSTS TO EXCESS OF IN EXCESS PERCENT
CONTRACT PRICE PROFIT EARNED DATE PROFIT TO DATE COMPLETE BILLINGS OF COSTS COMPLETE
-------- ---------- --------- -------- -------- -------- -------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Plant City.............. $ 691,212 $172,764 $681,535 $511,348 $170,345 $612,712 $ 7,100 $ 68,823 $ -- 98.6%
Greenland............... 61,883 15,471 53,838 40,412 13,460 55,694 6,000 -- 1,856 87.0%
Winter Park Roof........ 61,765 15,265 -- -- -- 55,589 46,500 -- 55,589 0.0%
Orange Park............. 38,718 9,773 33,375 24,945 8,424 34,718 4,000 -- 1,343 86.2%
Anders.................. 79,465 19,873 56,659 42,492 14,169 71,519 17,100 -- 14,860 71.3%
Jax Bch Water Twr....... 50,683 12,624 345 259 88 -- 37,800 345 -- 0.7%
Worthington Wireless ... 7,150 1,759 3,432 2,591 844 -- 2,800 3,432 -- 48.0%
Sprint Generators....... 11,985 4,727 2,077 1,258 818 11,985 6,000 -- 9,908 17.3%
Callahan................ 43,370 3,338 15,396 14,203 1,193 2,171 25,829 13,225 --
Owens Road.............. 151,929 -- 101,604 101,604 -- 84,837 50,325 16,767 --
---------- -------- -------- -------- -------- -------- -------- -------- -------
$1,198,160 $255,594 $948,261 $739,112 $209,341 $929,225 $203,454 $102,592 $83,556
========== ======== ======== ======== ======== ======== ======== ======== =======
</TABLE>
See independent auditors' report.
The accompanying notes are an integral part of these financial statements.
F-58
<PAGE>
SEGARS COMMUNICATION GROUP, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD ENDED NINE MONTHS ENDED YEAR ENDED
------------------ ------------------ -----------------
SEPTEMBER 18, 1997 SEPTEMBER 30, 1996 DECEMBER 31, 1996
------------------ ------------------ -----------------
(UNAUDITED) (UNAUDITED) (AUDITED)
<S> <C> <C> <C>
Net sales............... $194,204 $275,871 $362,960
Cost of sales........... 72,378 197,004 248,828
-------- -------- --------
Gross profit........ 121,826 78,867 114,132
-------- -------- --------
Operating expenses:
Advertising........... 500 2,073 3,136
Amortization.......... 2,770 2,173 2,897
Bank service charges.. -- 33 33
Depreciation.......... 358 1,675 2,233
Dues and
subscriptions........ -- 30 30
Entertainment......... -- 286 286
Insurance............. -- 4,249 5,779
Interest.............. 41,174 22,244 29,911
Office expense........ -- 1,390 1,412
Penalties............. -- -- 54
Professional fees..... 1,570 1,116 3,291
Rent.................. -- 1,597 2,290
Repairs and
maintenance.......... -- 150 150
Taxes and license..... 398 3,330 4,352
Telephone............. 524 5,038 6,302
Travel................ -- 264 264
Utilities............. -- 16 16
Vehicle expense....... -- 1,605 1,605
-------- -------- --------
Total operating
expenses........... 47,294 47,269 64,041
-------- -------- --------
Income from
operations....... 74,532 31,598 50,091
Other income (expenses):
Miscellaneous income.. 713 538 660
Contributions......... (13,988) (7,416) (15,676)
Gain on sale of
equipment............ -- 3,006 3,006
-------- -------- --------
Net other income
(expenses)......... (13,275) (3,872) (12,010)
-------- -------- --------
Net income........ $ 61,257 $ 27,726 $ 38,081
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-59
<PAGE>
SEGARS COMMUNICATION GROUP, INC.
STATEMENTS OF RETAINED EARNINGS
FOR THE PERIODS ENDED SEPTEMBER 18, 1997, SEPTEMBER 30, 1996, ANDFOR THE YEAR
ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
UNAUDITED UNAUDITED UNAUDITED
SEPTEMBER SEPTEMBER DECEMBER
18, 1997 30, 1996 31, 1996
--------- --------- ---------
<S> <C> <C> <C>
Retained Earnings, Beginning of Period.......... $ 17,834 $(20,247) $(20,247)
Net Income..................................... 61,257 27,726 38,081
Distributions to Stockholders:
Cash and Property Distributions............... (123,755) -- --
--------- -------- --------
Retained Earnings (Deficit), End of Period...... $ (44,664) $ 7,479 $ 17,834
========= ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-60
<PAGE>
SEGARS COMMUNICATION GROUP, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD ENDED NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 18, 1997 SEPTEMBER 30, 1996 DECEMBER 31, 1996
------------------ ------------------ -----------------
(UNAUDITED) (UNAUDITED) (AUDITED)
<S> <C> <C> <C>
Cash flows from
operating activities:
Net income........... $ 61,257 $ 27,726 $ 38,081
Adjustments to
reconcile net income
to net cash provided
by operating
activities
Depreciation....... 32,951 39,408 52,541
Amortization....... 2,770 2,173 2,897
(Gain) on sale of
equipment......... 0 (3,006) (3,006)
(Increase) decrease
in:
Accounts
receivable,
trade............. 2,567 (1,933) (4,947)
Deposits........... 9,840 (4,310) (9,310)
Inventories........ 0 (1,200) (1,200)
Increases (decreases)
in:
Accounts payable... 11,946 (54) (54)
Accounts payable--
CSSI.............. (6,443) 58,852 94,205
Accrued expenses... 2,005 4,509 1,605
Customer deposits.. 18,160 10,456 7,914
-------- -------- --------
Net cash provided
by operating
activities...... 135,053 132,621 178,726
-------- -------- --------
Cash flows from
investing activities:
Purchase of
equipment........... (284,417) (160,784) (226,174)
Proceeds from sale of
equipment........... 0 4,000 4,000
-------- -------- --------
Net cash used by
investing
activities...... (284,417) (156,784) (222,174)
-------- -------- --------
Cash flows from
financing activities:
Payments on notes
payable............. (77,813) (25,384) (35,590)
Stockholder
distributions....... (123,755) 0 (64,077)
Stockholder loans.... 0 (7,377) 0
Loan proceeds........ 390,000 95,000 133,500
-------- -------- --------
Net cash provided
by financing
activities...... 188,432 (62,239) 33,833
-------- -------- --------
Net increase
(decrease) in
cash............ 39,068 38,070 (9,615)
Cash and cash
equivalents, beginning
of period............. 6,315 15,927 15,927
-------- -------- --------
Cash and cash
equivalents, end of
period................ $ 45,383 $ 51,003 $ 6,312
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-61
<PAGE>
SEGARS COMMUNICATION GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 18, 1997, SEPTEMBER 30, 1996, AND DECEMBER 31, 1996
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
A summary of the significant accounting policies applied in the preparation
of the accompanying financial statements is as follows:
Business Activity
The Company's primary business activity is leasing air space on transmission
towers.
Revenue and Cost Recognition
The Company recognizes revenues on a monthly basis under the terms of the
signed lease contracts.
Cost of sales include all tower repairs, commission expense, land leases,
engineering costs and directly related depreciation costs. Selling, general
and administrative costs are charged to expense as incurred.
Cash and Cash Equivalents
For the purposes of the statement of cash flows, cash equivalents includes
all highly liquid investments with an original maturity of three months or
less.
Inventory
Inventory is stated at the lower of cost (first-in, first-out method) or
market.
Accounts Receivable
Management believes that all accounts receivable are collectible; therefore,
no allowance for uncollectible accounts has been established. Accounts which
are deemed to be uncollectible are charged as an expense when that
determination is made.
Property and Equipment
Property and equipment are carried at cost. Depreciation is provided for on
the accelerated method over the estimated useful lives of the assets as
follows:
<TABLE>
<S> <C>
Office Equipment.............................................. 5 Years
Buildings and Improvements.................................... 10-15 Years
Towers and Improvements....................................... 10 Years
Machinery and Equipment....................................... 5 Years
</TABLE>
Certain assets are pledged as security for loan obligations. See Note 3
below.
Loan Fees and Organizational Costs
Loan fees are amortized using the straight-line method over the length of
the loan. Organizational costs are amortized using the straight-line method
over 60 months.
F-62
<PAGE>
SEGARS COMMUNICATION GROUP, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 18, 1997, SEPTEMBER 30, 1996, AND DECEMBER 31, 1996
Income Taxes
The Company, with the consent of its stockholders, has elected under the
Internal Revenue Code to be an S Corporation. In lieu of corporate income
taxes, the stockholders of an S Corporation are taxed on their proportionate
share of the Company's taxable income. Therefore, no provision or liability
for federal income taxes has been included in the financial statements.
NOTE 2--PROPERTY AND EQUIPMENT:
Property and equipment consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 18, SEPTEMBER 30, DECEMBER 31,
1997 1996 1996
------------- ------------- ------------
<S> <C> <C> <C>
Office Equipment.................... $ 1,912 $ 1,912 $ 1,912
Towers & Improvements............. 455,248 223,609 288,998
Machinery & Equipment............. 321 321 321
Buildings and Improvements........ 298,477 180,309 180,309
Land.............................. 145,974 145,974 145,974
--------- --------- ---------
901,932 552,125 617,514
Less: Accumulated Depreciation.... (147,001) (100,440) (114,050)
--------- --------- ---------
$ 754,931 $ 451,685 $ 503,464
========= ========= =========
</TABLE>
Total depreciation expense for the period ended September 18, 1997 and
September 30, 1996 is $32,951 and $32,593 of which $32,593 and $37,733 is
included in the cost of goods sold. Total depreciation expense for the year
ended December 31, 1996 is $52,544 of which $50,311 is included in the cost of
goods sold.
NOTE 3--NOTES PAYABLE:
Notes payable consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 18, SEPTEMBER 30, DECEMBER 31,
1997 1996 1996
------------- ------------- ------------
<S> <C> <C> <C>
Note payable to bank, payable in
monthly installments of $4,005,
including interest at 9.25 percent
through December, 2000............ $166,547 $197,384 $189,917
Note payable to bank, payable in
monthly installments of $2,432,
including interest at 9.25 percent
through May, 2003................. 128,265 143,618 140,987
Note payable to bank, payable in
monthly installments of $3,205,
including interest at 8.50 percent
through August, 2004.............. 202,288 -- --
Note payable to bank, payable in
monthly installments of $3,028,
including interest at 8.5 percent
through Sept., 2004............... 191,132 -- --
Note payable to bank, payable in
monthly installments of $359,
including interest at 9.5 percent
through June, 2016................ -- -- 38,391
-------- -------- --------
Total Notes Payable.............. 688,232 341,002 369,295
Less: Current Portion............ (96,035) (42,117) (49,436)
-------- -------- --------
Long-Term Debt Portion........... $592,197 $298,885 $319,859
======== ======== ========
</TABLE>
F-63
<PAGE>
SEGARS COMMUNICATION GROUP, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 18, 1997, SEPTEMBER 30, 1996, AND DECEMBER 31, 1996
Maturities of long-term debt are as follows as of September 18, 1997:
<TABLE>
<S> <C>
1998............................................................. $ 97,381
1999............................................................. 106,424
2000............................................................. 116,308
2001............................................................. 123,106
Thereafter....................................................... 148,978
--------
$592,197
========
</TABLE>
NOTE 4--RELATED PARTY TRANSACTIONS:
The Company has common ownership with Communication Site Services, Inc.
During the year, certain expenses were paid and revenues received in behalf of
Communication Site Services, Inc. The net of these transactions are reflected
in Segars Communication Group, Inc.'s books as a payable to Communication Site
Services, Inc., of $136,934, $108,024, and $143,377, at September 18, 1997,
September 30, 1996, and December 31, 1996.
NOTE 5--SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid during the periods ended September 18, 1997 and September 30,
1996, for interest expense is $41,174 and $21,471, and for the year ended
December 31, 1996, is $29,911.
Significant Non-Cash Transactions:
During the period ending September 18, 1997, the Company obtained financing
for two new notes totalling $396,750. Loan costs were deducted from the note
balances providing for net cash loan proceeds of $390,000.
During 1996, the Company obtained financing for two new notes totalling
$138,500. Loan costs were deducted from the note balances providing for net
cash loan proceeds of $133,500.
F-64
<PAGE>
INDEPENDENT AUDITORS' REPORT
January 9, 1998
To the Stockholders of
Segars Communication Group, Inc.
Ocala, Florida
We have audited the accompanying balance sheet of Segars Communication
Group, Inc. (an S corporation) as of December 31, 1996, and the related
statements of income, retained earnings, and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Segars Communication
Group, Inc. as of December 31, 1996, and the results of operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ Robson, Scribner & Stewart, P.A.
_____________________________________
ROBSON, SCRIBNER & STEWART, P.A.
Certified Public Accountants
F-65
<PAGE>
SEGARS COMMUNICATION GROUP, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents........................................ $ 6,315
Accounts receivable, trade....................................... 5,780
Inventories...................................................... 9,923
--------
Total current assets........................................... 22,018
Land, property and equipment:
Land, property and equipment..................................... 617,514
Less: accumulated depreciation................................... 114,050
--------
Net property and equipment..................................... 503,464
Other assets:
Deposit.......................................................... 11,095
Intangible assets, net........................................... 9,314
--------
Total other assets............................................. 20,409
--------
Total assets................................................. $545,891
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................. $ --
Accounts payable--Communication Site Services, Inc. ............. 143,377
Customer deposits................................................ 9,825
Accrued expenses................................................. 3,987
Current portion of notes payable................................. 49,436
--------
Total current liabilities...................................... 206,625
Long-term debt, net of current portion............................. 319,859
Loan payable, stockholder.......................................... 1,373
--------
Total liabilities.............................................. 527,857
Stockholders' equity:
Common stock, $1 par value, 200 shares issued and outstanding.... 200
Retained earnings (deficit)...................................... 17,834
--------
Total stockholders' equity (deficit)........................... 18,034
--------
Total liabilities and stockholders' equity................... $545,891
========
</TABLE>
See independent auditors' report.
The accompanying notes are an integral part of these financial statements.
F-66
<PAGE>
SEGARS COMMUNICATION GROUP, INC.
STATEMENT OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996
------------
<S> <C>
Net sales.......................................................... $362,960
Cost of sales...................................................... 248,828
--------
Gross profit..................................................... 114,132
--------
Operating expenses:
Advertising...................................................... 3,136
Amortization..................................................... 2,897
Bank charges..................................................... 33
Depreciation..................................................... 2,233
Dues and subscriptions........................................... 30
Entertainment.................................................... 286
Interest......................................................... 29,911
Insurance........................................................ 5,779
Office supplies and expenses..................................... 1,412
Penalties........................................................ 54
Professional fees................................................ 3,291
Repairs and maintenance.......................................... 150
Rent............................................................. 2,290
Taxes and license................................................ 4,352
Telephone........................................................ 6,302
Travel........................................................... 264
Utilities........................................................ 16
Vehicle expense.................................................. 1,605
--------
Total operating expenses....................................... 64,041
--------
Income (loss) from operations...................................... 50,091
Other income (expenses):
Contributions.................................................... (15,676)
Donations........................................................ --
Gain on sale of equipment........................................ 3,006
Miscellaneous income............................................. 660
--------
Net other income (expenses).................................... (12,010)
--------
Net income (loss)................................................ $ 38,081
========
</TABLE>
See independent auditors' report.
The accompanying notes are an integral part of these financial statements.
F-67
<PAGE>
SEGARS COMMUNICATION GROUP, INC.
STATEMENT OF RETAINED EARNINGS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996
------------
<S> <C>
Retained earnings, beginning of year............................... $(20,247)
Net income......................................................... 38,081
--------
Retained earnings, end of year..................................... $ 17,834
========
</TABLE>
See independent auditors' report.
The accompanying notes are an integral part of these financial statements.
F-68
<PAGE>
SEGARS COMMUNICATION GROUP, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996
------------
<S> <C>
Cash flows from operating activities:
Net income $ 38,081
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation.................................................. 52,544
Amortization.................................................. 2,897
(Gain) on sale of equipment................................... (3,006)
(Increase) decrease in:
Accounts receivable, trade.................................... (4,947)
Deposits...................................................... (9,310)
Inventories................................................... (1,200)
Increases (decreases) in:
Accounts payable--Communication Site Services, Inc. .......... 94,205
Accounts payable.............................................. (54)
Accrued expenses.............................................. 1,605
Customer deposits............................................. 7,914
---------
Net cash provided by operating activities......................... 178,729
---------
Cash flows from investing activities:
Proceeds from sale of equipment................................. 4,000
Purchase of equipment and property.............................. (226,174)
---------
Net cash used by investing activities............................. (222,174)
---------
Cash flows from financing activities:
Payments on notes payable....................................... (35,590)
Loan proceeds................................................... 133,500
Stockholder distributions....................................... (64,077)
---------
Net cash provided by (used in) financing activities............... 33,833
---------
Net decrease in cash.............................................. (9,612)
Cash and cash equivalents, beginning of year...................... 15,927
---------
Cash and cash equivalents, end of year............................ $ 6,315
=========
</TABLE>
See independent auditors' report.
The accompanying notes are an integral part of these financial statements.
F-69
<PAGE>
SEGARS COMMUNICATION GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
A summary of the significant accounting policies applied in the preparation
of the accompanying financial statements is as follows:
Business Activity
The Company's primary business activity is leasing air space on transmission
towers.
Revenue and Cost Recognition
The Company recognizes revenues on a monthly basis under the terms of signed
lease contracts.
Cost of sales include all tower repairs, commission expense, land leases,
engineering costs and directly related depreciation costs. Selling, general
and administrative costs are charged to expense as incurred.
Cash and Cash Equivalents
For the purposes of the statement of cash flows, cash equivalents includes
all highly liquid investments with an original maturity of three months or
less.
Inventory
Inventory is stated at the lower of cost (first-in, first-out method) or
market.
Accounts Receivable
Management believes that all accounts receivable are collectible; therefore,
no allowance for uncollectible accounts has been established. Accounts which
are deemed to be uncollectible are charged as an expense when that
determination is made.
Property and Equipment
Property and equipment are carried at cost. Depreciation is provided for on
the accelerated method over the estimated useful lives of the assets as
follows:
<TABLE>
<S> <C>
Office equipment................. 5-7 years
Buildings and improvements....... 10-15 years
Towers and improvements.......... 10 years
Machinery and equipment.......... 5 years
</TABLE>
Certain assets are pledged as security for loan obligations. See Note 3
below.
Loan Fees and Organizational Costs
Loan fees are amortized using the straight-line method over the length of
the loan. Organizational costs are amortized using the straight-line method
over 60 months.
Income Taxes
The Company, with the consent of its stockholders, has elected under the
Internal Revenue Code to be an S Corporation. In lieu of corporate income
taxes, the stockholders of an S Corporation are taxed on their proportionate
share of the Company's taxable income. Therefore, no provision or liability
for federal income taxes has been included in the financial statements.
F-70
<PAGE>
SEGARS COMMUNICATION GROUP, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 2--PROPERTY AND EQUIPMENT:
Property and equipment consist of the following at December 31, 1996:
<TABLE>
<S> <C>
Office equipment................................................ $ 1,912
Towers & improvements........................................... 288,998
Machinery and equipment......................................... 321
Buildings and improvements...................................... 180,309
Land............................................................ 145,974
---------
617,514
Less: accumulated depreciation................................ (114,050)
---------
$ 503,464
=========
</TABLE>
Total depreciation expense is $52,544 of which $50,311 is included in the
cost of goods sold for the year ended December 31, 1996.
NOTE 3--NOTES PAYABLE:
Notes payable consist of the following at December 31, 1996:
<TABLE>
<S> <C>
Note payable to bank, payable in monthly installments of
$4,005, including interest at 9.25 percent through December,
2000. Secured by real estate with a net book value of $127,926
at year end................................................... $189,917
Note payable to bank, payable in monthly installments of
$2,432, including interest at 9.25 percent through May, 2003.
Secured by a real estate with a net book value of $134,151 at
year end...................................................... 140,987
Note payable to bank, payable in monthly installments of $359,
including interest at 9.5 percent through June, 2016. Secured
by real estate with a net book value of $163,280 at year end.. 38,391
--------
Total notes payable.......................................... 369,295
Less: current portion........................................ (49,436)
--------
Long-term debt portion....................................... $319,859
========
</TABLE>
Maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
-----------
<S> <C>
1998................................ $ 54,212
1999................................ 59,543
2000................................ 65,184
2001................................ 67,393
Thereafter.......................... 73,527
--------
$319,859
========
</TABLE>
F-71
<PAGE>
SEGARS COMMUNICATION GROUP, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996
NOTE 4--RELATED PARTY TRANSACTIONS:
The Company has common ownership with Communication Site Services, Inc.
During the year, certain expenses were paid and revenues received in behalf of
Communication Site Service, Inc. The net of these transactions are reflected
in Segars Communication Group, Inc.'s books as a payable of $143,377 to
Communication Site Service Inc., at December 31, 1996.
NOTE 5--SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid during the year ended December 31, 1996, for interest expense is
$29,911.
Significant Non-Cash Transactions: none.
During 1996, the Company obtained financing for two new notes totalling
$138,500. Loan costs were deducted from the note balances providing for net
cash loan proceeds of $133,500.
F-72
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
January 9, 1998
To the Stockholders of
Segars Communication Group, Inc.
Ocala, Florida
We have audited the accompanying balance sheet of Segars Communication
Group, Inc. (an S corporation) as of December 31, 1995, and the related
statements of income, retained earnings, and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted audited
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
support the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Segars Communication
Group, Inc. as of December 31, 1995, and the results of operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ Robson, Scribner & Stewart, P.A.
_____________________________________
ROBSON, SCRIBNER & STEWART, P.A.
Certified Public Accountants
F-73
<PAGE>
SEGARS COMMUNICATION GROUP, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
1995
------------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents........................................ $ 15,927
Accounts receivable, trade....................................... 833
Inventories...................................................... 8,723
--------
Total current assets........................................... 25,483
Land, property and equipment:
Land, property and equipment..................................... 393,941
Less: accumulated depreciation................................... 63,112
--------
Net property and equipment..................................... 330,829
Other assets:
Deposit.......................................................... 1,785
Intangible assets, net........................................... 7,211
--------
Total other assets............................................. 8,996
--------
Total assets................................................. $365,308
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................. $ 54
Accounts payable--Communication Site Services, Inc. ............. 49,172
Customer deposits................................................ 1,911
Accrued expenses................................................. 2,382
Current portion of notes payable................................. 38,220
--------
Total current liabilities...................................... 91,739
Long-term debt, net of current portion............................. 228,166
Loan payable, stockholder.......................................... 65,450
--------
Total liabilities.............................................. 385,355
Stockholders' equity:
Common stock, $1 par value, 200 shares issued and outstanding.... 200
Retained earnings (deficit)...................................... (20,247)
--------
Total stockholders' equity (deficit)........................... (20,047)
--------
Total liabilities and stockholders' equity................... $365,308
========
</TABLE>
See independent auditors' report.
The accompanying notes are an integral part of these financial statements.
F-74
<PAGE>
SEGARS COMMUNICATION GROUP, INC.
STATEMENT OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
------------
<S> <C>
Net sales.......................................................... $ 85,871
Cost of sales...................................................... 52,634
--------
Gross profit..................................................... 33,237
--------
Operating expenses:
Advertising...................................................... 600
Amortization..................................................... 1,897
Bank charges..................................................... 30
Depreciation..................................................... --
Dues and subscriptions........................................... --
Entertainment.................................................... --
Interest......................................................... 25,913
Insurance........................................................ 5,565
Office supplies and expenses..................................... 51
Penalties........................................................ 42
Professional fees................................................ 5,608
Repairs and maintenance.......................................... 8,053
Rent............................................................. --
Taxes and license................................................ 2,914
Telephone........................................................ 786
Travel........................................................... --
Utilities........................................................ 1,910
Vehicle expense.................................................. --
--------
Total operating expenses....................................... 53,369
--------
Income (loss) from operations...................................... (20,132)
Other income (expenses):
Contributions.................................................... --
Donations........................................................ (6,970)
Gain on sale of equipment........................................ --
Miscellaneous income............................................. 112
--------
Net other income (expenses).................................... (6,858)
--------
Net income (loss)................................................ $(26,990)
========
</TABLE>
See independent auditors' report.
The accompanying notes are an integral part of these financial statements.
F-75
<PAGE>
SEGARS COMMUNICATION GROUP, INC.
STATEMENT OF RETAINED EARNINGS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
------------
<S> <C>
Retained earnings, beginning of year............................... $ 6,743
Net loss........................................................... (26,990)
--------
Retained earnings, end of year..................................... $(20,247)
========
</TABLE>
See independent auditors' report.
The accompanying notes are an integral part of these financial statements.
F-76
<PAGE>
SEGARS COMMUNICATION GROUP, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
------------
<S> <C>
Cash flows from operating activities:
Net loss $(26,990)
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation............................................... 44,100
Amortization............................................... 1,897
(Gain) on sale of equipment................................ --
(Increase) decrease in:
Accounts receivable, trade................................. (833)
Deposits................................................... 305
Inventories................................................ (1,225)
Increases (decreases) in:
Accounts payable--Communication Site Services, Inc. ....... 31,609
Accounts payable........................................... (426)
Accrued expenses........................................... --
Customer deposits.......................................... 1,911
--------
Net cash provided by operating activities...................... 50,348
--------
Cash flows from investing activities:
Proceeds from sale of equipment.............................. --
Purchase of equipment and property........................... (40,799)
--------
Net cash used by investing activities.......................... (40,799)
--------
Cash flows from financing activities:
Payments on notes payable.................................... (28,513)
Loan proceeds................................................ 50,000
Stockholder distributions.................................... (25,900)
--------
Net cash provided by (used in) financing activities............ (4,413)
--------
Net decrease in cash........................................... 5,136
Cash and cash equivalents, beginning of year................... 10,791
--------
Cash and cash equivalents, end of year......................... $ 15,927
========
</TABLE>
See independent auditors' report.
The accompanying notes are an integral part of these financial statements.
F-77
<PAGE>
SEGARS COMMUNICATION GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
A summary of the significant accounting policies applied in the preparation
of the accompanying financial statements is as follows:
Business Activity
The Company's primary business activity is leasing air space on transmission
towers.
Revenue and Cost Recognition
The Company recognizes revenues on a monthly basis under the terms of signed
lease contracts.
Cost of sales include all tower repairs, commission expense, land leases,
engineering costs and directly related depreciation costs. Selling, general
and administrative costs are charged to expense as incurred.
Cash and Cash Equivalents
For the purposes of the statement of cash flows, cash equivalents includes
all highly liquid investments with an original maturity of three months or
less.
Inventory
Inventory is stated at the lower of cost (first-in, first-out method) or
market.
Accounts Receivable
Management believes that all accounts receivable are collectible; therefore,
no allowance for uncollectible accounts has been established. Accounts which
are deemed to be uncollectible are charged as an expense when that
determination is made.
Property and Equipment
Property and equipment are carried at cost. Depreciation is provided for on
the accelerated method over the estimated useful lives of the assets as
follows:
<TABLE>
<S> <C>
Office equipment................. 5-7 years
Buildings and improvements....... 10-15 years
Towers and improvements.......... 10 years
Machinery and equipment.......... 5 years
</TABLE>
Certain assets are pledged as security for loan obligations. See Note 3
below. Assets which have not been put into operational use as of December 31,
1995 are carried at cost as equipment.
Loan Fees and Organizational Costs
Loan fees are amortized using the straight-line method over the length of
the loan. Organizational costs are amortized using the straight-line method
over 60 months.
Income Taxes
The Company, with the consent of its stockholders, has elected under the
Internal Revenue Code to be an S Corporation. In lieu of corporate income
taxes, the stockholders of an S Corporation are taxed on their proportionate
share of the Company's taxable income. Therefore, no provision or liability
for federal income taxes has been included in the financial statements.
F-78
<PAGE>
SEGARS COMMUNICATION GROUP, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
NOTE 2--PROPERTY AND EQUIPMENT:
Property and equipment consist of the following at December 31, 1995:
<TABLE>
<S> <C>
Towers & improvements........................................... $ 228,303
Machinery and equipment......................................... 2,600
Buildings and improvements...................................... 18,064
Land............................................................ 144,974
---------
393,941
Less: accumulated depreciation................................ (63,112)
---------
$ 330,829
=========
</TABLE>
Total depreciation expense is $44,100, which is included in the cost of
goods sold for the year ended December 31, 1995.
NOTE 3--NOTES PAYABLE:
Notes payable consist of the following at December 31, 1995:
<TABLE>
<S> <C>
Note payable to bank, payable in monthly installments of $4,005,
including interest at 9.25 percent through December 2000.
Secured by real estate with a net book value of $159,484 at
year end....................................................... $216,386
Note payable to bank, payable in monthly installments of $2,432,
including interest at 9.25 percent through May 2003. Secured by
a real estate with a net book value of $57,874 at year end.
This amount represents the first construction draw first draw
taken.......................................................... 50,000
--------
Total notes payable........................................... 266,386
Less: current portion......................................... (38,220)
--------
Long-term debt portion........................................ $228,166
========
</TABLE>
Maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
-----------
<S> <C>
1997................................ $ 48,747
1998................................ 53,452
1999................................ 43,839
2000................................ 42,036
2001................................ 40,092
--------
$228,166
========
</TABLE>
NOTE 4--RELATED PARTY TRANSACTIONS:
The Company has common ownership with Communication Site Services, Inc.
During the year, certain expenses were paid and revenues received in behalf of
Communication Site Service, Inc. The net of these transactions are reflected
in Segars Communication Group, Inc.'s books as a payable of $49,172 to
Communication Site Service Inc., at December 31, 1995.
NOTE 5--SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid during the year ended December 31, 1995, for interest expense is
$25,913.
Significant Non-Cash Transactions: none
F-79
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER
CONTAINED HEREIN OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR THE SOLICITATION OF AN OFFER TO BUY, ANY SECURITY OTHER THAN THOSE
TO WHICH IT RELATES NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR THE
SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.
-----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 1
Risk Factors.............................................................. 16
The Exchange Offer........................................................ 27
Use of Proceeds........................................................... 35
Reorganization and Prior S Corporation Status............................. 35
Capitalization............................................................ 36
Unaudited Pro Forma Condensed Consolidated Financial Statements........... 37
Selected Historical Financial Data........................................ 41
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 43
Industry Overview......................................................... 52
Business.................................................................. 56
Management................................................................ 68
Certain Transactions...................................................... 73
Ownership of Capital Stock................................................ 75
Description of Capital Stock.............................................. 77
Description of Credit Facility............................................ 82
Description of Exchange Notes............................................. 84
Certain United States Federal Income Tax Considerations................... 108
Book-Entry; Delivery and Form............................................. 109
Plan of Distribution...................................................... 111
Legal Matters............................................................. 112
Independent Accountants................................................... 112
Available Information..................................................... 112
Index to Financial Statements............................................. F-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
--------------
PROSPECTUS
--------------
SBA Communications
Corporation
OFFER TO EXCHANGE ITS
12% SENIOR DISCOUNT
NOTES DUE 2008 WHICH HAVE BEEN
REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, FOR
ANY AND ALL OF ITS OUTSTANDING 12%
SENIOR DISCOUNT NOTES DUE 2008
, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under the Florida Business Corporation Act (the "FBCA"), a director is not
personally liable for monetary damages to the corporation or any other person
for any statement, vote, decision, or failure to act unless (i) the director
breached or failed to perform his duties as a director and (ii) the director's
breach of, or failure to perform, those duties constitutes: (1) a violation of
the criminal law, unless the director had reasonable cause to believe his
conduct was lawful or had no reasonable cause to believe his conduct was
unlawful, (2) a transaction from which the director derived an improper
personal benefit, either directly or indirectly, (3) a circumstance under
which an unlawful distribution is made, (4) in a proceeding by or in the right
of the corporation to procure a judgment in its favor or by or in the right of
a stockholder, conscious disregard for the best interest of the corporation or
willful misconduct, or (5) in a proceeding by or in the right of someone other
than the corporation or stockholder, recklessness or an act or omission which
was committed in bad faith or with malicious purpose or in a manner exhibiting
wanton and willful disregard of human rights, safety, or property. A
corporation may purchase and maintain insurance on behalf of any director or
officer against any liability asserted against him or her and incurred by him
or her in his or her capacity or arising out of his or her status as such,
whether or not the corporation would have the power to indemnify him or her
against such liability under the FBCA.
The Articles of the Company provide that the Company shall, to the fullest
extent permitted by applicable law, as amended from time to time, indemnify
all officers and directors of the Company.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
+3.1 --Articles of Incorporation, as amended, of SBA Communications Corporation.
+3.2 --Amended and Restated Statement of Designation of SBA Communications
Corporation.
+3.3 --By-Laws of SBA Communications Corporation.
4.1 --Indenture, dated as of March 2, 1998, between SBA Communications Corporation
and State Street Bank and Trust Company, as trustee, relating to $269,000,000 in
aggregate principal amount at maturity of 12% Senior Discount Notes due 2008.
4.2 --Specimen Certificate of 12% Senior Discount Notes due 2008 (the "Private
Notes") (included in Exhibit 4.1 hereto).
4.3 --Specimen Certificate of 12% Senior Discount Notes due 2008 (the "Exchange
Notes") (included in Exhibit 4.1 hereto).
4.4 --Registration Rights Agreement, dated as of March 2, 1998, between SBA
Communications Corporation and BT Alex. Brown Incorporated and Lehman Brothers
Inc.
5.1 --Opinion of Latham & Watkins regarding the validity of the Exchange Notes.
5.2 --Opinion of Gunster, Yoakley, Valdes-Fauli & Stewart, P.A., regarding the
validity of the Exchange Notes.
+10.1 --SBA Communications Corporation Registration Rights Agreement dated as of March
5, 1997, among the Company, Steven E. Bernstein, Ronald G. Bizick, II and Robert
M. Grobstein.
+10.2 --SBA Communications Corporation Registration Rights Agreement dated as of March
6, 1997, among the Company and the Preferred Shareholders, as defined therein.
+10.3 --SBA Communications Corporation Shareholders Agreement dated as of March 6,
1997, among the Company, Steven E. Bernstein and the Preferred Shareholders, as
defined therein.
+10.4 --$3,500,000 Promissory Note dated as of March 8, 1997 of Steven E. Bernstein in
favor of the Company.
+10.5 --Pledge and Security Agreement dated as of March 8, 1997, between the Company
and Steven E. Bernstein.
+10.6 --Warrant to Purchase 402,500 Shares of Class A Common Stock of SBA
Communications Corporation dated March 6, 1997.
10.7 --Credit Agreement dated as of August 8, 1997, among the Company, BankBoston,
N.A., First Union National Bank and Fleet National Bank.
10.71 --Credit Agreement Amendment No. 2 among the Company, BankBoston, N.A., Banque
Paribas, First Union National Bank, Fleet National Bank, Lehman Commercial Paper
Inc. and Suntrust Bank, Central Florida, N.A.
10.75 --Amended and Restated Credit Agreement dated as of June 29, 1998, among SBA
Telecommunications, Inc., BankBoston, N.A., First Union National Bank and Fleet
National Bank.
+10.8 --Employment Agreement dated as of January 1, 1997, between the Company and
Ronald G. Bizick, II.
+10.9 --Employment Agreement dated as of January 1, 1997, between the Company and
Robert M. Grobstein.
10.10 --Employment Agreement dated as of March 14, 1997, between the Company and
Jeffrey A. Stoops.
10.105 --Employment Agreement dated as of June 15, 1998, between the Company and Michael
N. Simkin.
+10.11 --Stock Option Agreement dated as of March 5, 1997, between the Company and
Ronald G. Bizick, II.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
+10.12 --Stock Option Agreement dated as of March 5, 1997, between the Company and
Robert M. Grobstein.
10.125 --Incentive Stock Option Agreement dated as of June 15, 1998 between the Company
and Michael N. Simkin.
10.13 --Nonqualified Stock Option Agreement-Revised dated March 14, 1997, between the
Company and Jeffrey A. Stoops.
10.14 --SBA Communications Corporation Subordination Agreement dated as of August 8,
1997, among the Company, the holders of in excess of the 73% of the Company's
Series A Convertible Preferred Stock, and BankBoston, N.A.
10.15 --Purchase and Sale Agreement, dated July 22, 1997, by and among SBA Towers
Florida, Inc., SBA Construction Acquisition, Inc., Communication Site Services,
Inc., Segars Communication Group, Inc., Robert Segars and Denise Segars.
12.1 --Statement of Computation of Ratio of Earnings to Fixed Charges.
21.1 --Subsidiaries of SBA Communications Corporation.
23.1 --Consent of Latham & Watkins (included in their opinion filed as Exhibit 5.1).
23.2 --Consent of Arthur Andersen LLP
23.3 --Consent of Robson, Scribner & Stewart, P.A.
+24.1 --Power of Attorney of SBA Communications Corporation (included on signature page
to this Registration Statement on Form S-4).
25.1 --Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture
Act of 1939 of State Street Bank and Trust Company.
+27.1 --Financial Data Schedule.
99.1 --Form of Letter of Transmittal and related documents to be used in conjunction
with the Exchange Offer.
</TABLE>
- --------
+ Previously filed.
(b) Financial Statement Schedules:
Schedule II. Valuation of Qualifying Accounts.
II-3
<PAGE>
SCHEDULES OMITTED
Schedules not listed above are omitted because of the absence of the
conditions under which they are required or because the information required
by such omitted schedules is set forth in the financial statements or the
notes thereto.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the Registrant pursuant to the
foregoing provisions described under Item 20 above, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim of indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit paid by a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted against
the Registrant by such director, officer or controlling person in connection
with the securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes (i) to respond to requests for
information that is incorporated by reference into this Prospectus pursuant to
Items 4, 10(b), 11, or 13 of Form S-4, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This undertaking also includes documents filed
subsequent to the effective date of the Registration Statement through the
date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the Registration Statement when it became effective.
The undersigned Registrant hereby undertakes to file, during any period in
which offers or sales are being made, a post-effective amendment to this
registration statement: (i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any
facts or events arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information set forth
in the registration statement (notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent no
more than 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective registration
statement); and (iii) to include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c),
the undersigned undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the application form.
II-4
<PAGE>
The undersigned Registrant hereby undertakes that every prospectus: (i) that
is filed pursuant to the immediately preceding paragraph or (ii) that purports
to meet the requirements of Section 10(a)(3) of the Securities Act of 1933 and
is used in connection with an offering of securities subject to Rule 415, will
be filed as a part of an amendment to the registration statement and will not
be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such post-
effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
The undersigned Registrant hereby undertakes to remove from registration by
means of a post-effective amendment any of the securities being registered
which remain unsold at the termination of the Exchange Offer.
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF BOCA
RATON, STATE OF FLORIDA ON JULY 7, 1998.
SBA Communications Corporation
By: /s/ Steven E. Bernstein
---------------------------------
STEVEN E. BERNSTEIN
CHAIRMAN OF THE BOARD OF DIRECTORS,
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and
directors of SBA Communications Corporation, a Florida corporation (the
"Company"), for himself and not for one another, does hereby constitute and
appoint Jeffrey A. Stoops and Robert M. Grobstein and each of them, his true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Registration Statement with
respect to the proposed issuance, sale and delivery by the Company of 12%
Senior Discount Notes due 2008, or any registration statement for this
offering that is to be effective upon the filing pursuant to rule 462(b) under
the Securities Act of 1933, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that each of said attorneys-in-fact or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND AS OF THE DATES INDICATED.
SIGNATURE TITLE DATE
Chairman of the Board of
* Directors, President and Chief July 7,
_________________________________ Executive Officer (Principal 1998
STEVEN E. BERNSTEIN Executive Officer)
/s/ Robert M. Grobstein Chief Financial Officer
- --------------------------------- (Principal Financial and July 7,
ROBERT M. GROBSTEIN Accounting Officer) 1998
Director
* July 7,
- --------------------------------- 1998
DONALD B. HEBB, JR.
Director
* July 7,
- --------------------------------- 1998
C. KEVIN LANDRY
Director
* July 7,
- --------------------------------- 1998
RICHARD W. MILLER
*By: /s/ Robert M. Grobstein
------------------------ July 7,
ROBERT M. GROBSTEIN 1998
ATTORNEY-IN-FACT
II-6
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO DEDUCTIONS BALANCE AT
BEGINNING OF COSTS AND FROM END OF
PERIOD EXPENSES RESERVES PERIOD
------------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
Allowance for Doubtful Accounts:
December 31, 1995............. $ -- $572,751 $ -- $ 572,751
December 31, 1996............. $ 572,751 $451,349 $ -- $1,024,100
December 31, 1997............. $1,024,100 $163,416 $679,248 $ 508,268
</TABLE>
S-1
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
------- ----------- ----
<C> <S> <C>
+3.1 --Articles of Incorporation, as amended, of SBA Communications
Corporation.
+3.2 --Amended and Restated Statement of Designation of SBA
Communications Corporation.
+3.3 --By-Laws of SBA Communications Corporation.
4.1 --Indenture, dated as of March 2, 1998, between SBA
Communications Corporation and State Street Bank and Trust
Company, as trustee, relating to $269,000,000 in aggregate
principal amount at maturity of 12% Senior Discount Notes due
2008.
4.2 --Specimen Certificate of 12% Senior Discount Notes due 2008
(the "Private Notes") (included in Exhibit 4.1 hereto).
4.3 --Specimen Certificate of 12% Senior Discount Notes due 2008
(the "Exchange Notes") (included in Exhibit 4.1 hereto).
4.4 --Registration Rights Agreement, dated as of March 2, 1998,
between SBA Communications Corporation and BT Alex. Brown
Incorporated and Lehman Brothers Inc.
5.1 --Opinion of Latham & Watkins regarding the validity of the
Exchange Notes.
5.2 --Opinion of Gunster, Yoakley, Valdes-Fauli & Stewart, P.A.,
regarding the validity of the Exchange Notes.
+10.1 --SBA Communications Corporation Registration Rights Agreement
dated as of March 5, 1997, among the Company, Steven E.
Bernstein, Ronald G. Bizick, II and Robert M. Grobstein.
+10.2 --SBA Communications Corporation Registration Rights Agreement
dated as of March 6, 1997, among the Company and the Preferred
Shareholders, as defined therein.
+10.3 --SBA Communications Corporation Shareholders Agreement dated
as of March 6, 1997, among the Company, Steven E. Bernstein
and the Preferred Shareholders, as defined therein.
+10.4 --$3,500,000 Promissory Note dated as of March 8, 1997 of
Steven E. Bernstein in favor of the Company.
+10.5 --Pledge and Security Agreement dated as of March 8, 1997,
between the Company and Steven E. Bernstein.
+10.6 --Warrant to Purchase 402,500 Shares of Class A Common Stock of
SBA Communications Corporation dated March 6, 1997.
10.7 --Credit Agreement dated as of August 8, 1997, between the
Company, BankBoston, N.A., First Union National Bank and Fleet
National Bank.
10.71 --Credit Agreement Amendment No. 2 among the Company,
BankBoston, N.A., Banque Paribas, First Union National Bank,
Fleet National Bank, Lehman Commercial Paper Inc. and Suntrust
Bank, Central Florida, N.A.
10.75 --Amended and Restated Credit Agreement dated as of June 29,
1998, among SBA Telecommunications, Inc., BankBoston, N.A.,
First Union National Bank and Fleet National Bank.
+10.8 --Employment Agreement dated as of January 1, 1997, among the
Company and Ronald G. Bizick, II.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
-------- ----------- ----
<C> <S> <C>
+10.9 --Employment Agreement dated as of January 1, 1997, between
the Company and Robert M. Grobstein.
10.10 --Employment Agreement dated as of March 14, 1997, between the
Company and Jeffrey A. Stoops.
10.105 --Employment Agreement dated as of June 15, 1998, between the
Company and Michael N. Simkin.
+10.11 --Stock Option Agreement dated as of March 5, 1997, between
the Company and Ronald G. Bizick, II.
+10.12 --Stock Option Agreement dated as of March 5, 1997, between
the Company and Robert M. Grobstein.
10.125 --Incentive Stock Option Agreement dated as of June 15, 1998
between the Company and Michael N. Simkin.
10.13 --Nonqualified Stock Option Agreement-Revised dated March 14,
1997, between the Company and Jeffrey A. Stoops.
10.14 --SBA Communications Corporation Subordination Agreement dated
as of August 8, 1997, among the Company, the holders of in
excess of the 73% of the Company's Series A Convertible
Preferred Stock, and BankBoston, N.A.
10.15 --Purchase and Sale Agreement, dated July 22, 1997, by and
among SBA Towers Florida, Inc., SBA Construction Acquisition,
Inc., Communication Site Services, Inc., Segars Communication
Group, Inc., Robert Segars and Denise Segars.
12.1 --Statement of Computation of Ratio of Earnings to Fixed
Charges.
21.1 --Subsidiaries of SBA Communications Corporation.
23.1 --Consent of Latham & Watkins (included in their opinion filed
as Exhibit 5.1).
23.2 --Consent of Arthur Andersen LLP
23.3 --Consent of Robson, Scribner & Stewart, P.A.
+24.1 --Power of Attorney of SBA Communications Corporation
(included on signature page to this Registration Statement on
Form S-4).
25.1 --Statement of Eligibility and Qualification (Form T-1) under
the Trust Indenture Act of 1939 of State Street Bank and
Trust Company.
+27.1 --Financial Data Schedule.
99.1 --Form of Letter of Transmittal and related documents to be
used in conjunction with the Exchange Offer.
</TABLE>
- --------
+ Previously filed.
<PAGE>
EXHIBIT 4.1
================================================================================
SBA COMMUNICATIONS CORPORATION
as Issuer
and
--------------
STATE STREET BANK AND TRUST COMPANY
as Trustee
--------------
INDENTURE
Dated as of March 2, 1998
up to $350,000,000
12% Senior Discount Notes due 2008, Series A
12% Senior Discount Notes due 2008, Series B
================================================================================
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
- ----------- -----------------
<S> <C>
310(a)(1)....................................................................... 7.10
(a)(2)..................................................................... 7.10
(a)(3)..................................................................... N.A.
(a)(4)..................................................................... N.A.
(a)(5)..................................................................... 7.10
(b)........................................................................ 7.10
(c)........................................................................ N.A.
311(a).......................................................................... 7.11
(b)........................................................................ 7.11
(c)........................................................................ N.A.
312(a).......................................................................... 2.05
(b)........................................................................ 11.03
(c)........................................................................ 11.03
313(a).......................................................................... 7.06
(b)(1)..................................................................... 10.03
(b)(2)..................................................................... 7.07
(c)........................................................................ 7.06, 11.02
(d)........................................................................ 7.06
314(a).......................................................................... 4.03, 11.02
(b)........................................................................ 10.02
(c)(1)..................................................................... 11.04
(c)(2)..................................................................... 11.04
(c)(3)..................................................................... N.A.
(d)........................................................................ 10.03, 10.04, 10.05
(e)........................................................................ 11.05
(f)........................................................................ NA
315(a).......................................................................... 7.01
(b)........................................................................ 7.05, 11.02
(c)........................................................................ 7.01
(d)........................................................................ 7.01
(e)........................................................................ 6.11
316(a)(last sentence)........................................................... 2.09
(a)(1)(A).................................................................. 6.05
(a)(1)(B).................................................................. 6.04
(a)(2)..................................................................... N.A.
(b)........................................................................ 6.07
(c)........................................................................ 2.12
317(a)(1)....................................................................... 6.08
(a)(2)..................................................................... 6.09
(b)........................................................................ 2.04
318(a).......................................................................... 11.01
(b)........................................................................ N.A.
(c)........................................................................ 11.01
</TABLE>
__________________
N.A. means Not Applicable
*This Cross-Reference Table is not part of the Indenture
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE.................................................. 1
SECTION 1.01. Definitions........................................................................ 1
SECTION 1.02. Other Definitions.................................................................. 17
SECTION 1.03. Incorporation by Reference of TIA.................................................. 17
SECTION 1.04. Rules of Construction.............................................................. 18
ARTICLE 2. THE NOTES................................................................................... 18
SECTION 2.01. Form and Dating.................................................................... 18
SECTION 2.02. Execution and Authentication....................................................... 20
SECTION 2.03. Registrar and Paying Agent......................................................... 20
SECTION 2.04. Paying Agent to Hold Money in Trust................................................ 20
SECTION 2.05. Holder Lists....................................................................... 21
SECTION 2.06. Transfer and Exchange.............................................................. 21
SECTION 2.07. Replacement Notes.................................................................. 33
SECTION 2.08. Outstanding Notes.................................................................. 33
SECTION 2.09. Treasury Notes..................................................................... 34
SECTION 2.10. Temporary Notes.................................................................... 34
SECTION 2.11. Cancellation....................................................................... 34
SECTION 2.12. Defaulted Interest................................................................. 35
ARTICLE 3. REDEMPTION AND PREPAYMENT................................................................... 35
SECTION 3.01. Notices to Trustee................................................................. 35
SECTION 3.02. Selection of Notes to Be Redeemed.................................................. 35
SECTION 3.03. Notice of Redemption............................................................... 36
SECTION 3.04. Effect of Notice of Redemption..................................................... 36
SECTION 3.05. Deposit of Redemption Price........................................................ 36
SECTION 3.06. Notes Redeemed in Part............................................................. 37
SECTION 3.07. Optional Redemption................................................................ 37
SECTION 3.08. Mandatory Redemption............................................................... 38
SECTION 3.09. Offer to Purchase by Application of Excess Proceeds................................ 38
ARTICLE 4. COVENANTS................................................................................... 40
SECTION 4.01. Payment of Notes................................................................... 40
SECTION 4.02. Maintenance of Office or Agency.................................................... 40
SECTION 4.03. Reports............................................................................ 40
SECTION 4.04. Compliance Certificate............................................................. 41
SECTION 4.05. Taxes.............................................................................. 42
SECTION 4.06. Stay, Extension and Usury Laws..................................................... 42
SECTION 4.07. Restricted Payments................................................................ 42
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries................... 44
SECTION 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock....................... 45
SECTION 4.10. Asset Sales...................................................................... 47
SECTION 4.11. Transactions with Affiliates..................................................... 48
SECTION 4.12. Liens............................................................................ 49
SECTION 4.13. Business Activities.............................................................. 49
SECTION 4.14. Corporate Existence.............................................................. 49
SECTION 4.15. Offer to Repurchase upon Change of Control....................................... 49
SECTION 4.16. Limitation on Sale and Leaseback Transactions.................................... 51
SECTION 4.17. [Reserved]....................................................................... 51
SECTION 4.18. Limitation on Issuances of Guarantees of Indebtedness............................ 51
ARTICLE 5. SUCCESSORS................................................................................ 51
SECTION 5.01. Merger, Consolidation or Sale of Assets.......................................... 51
SECTION 5.02. Successor Corporation Substituted................................................ 52
ARTICLE 6. DEFAULTS AND REMEDIES..................................................................... 52
SECTION 6.01. Events of Default................................................................ 52
SECTION 6.02. Acceleration..................................................................... 53
SECTION 6.03. Other Remedies................................................................... 54
SECTION 6.04. Waiver of Past Defaults.......................................................... 54
SECTION 6.05. Control by Majority.............................................................. 54
SECTION 6.06. Limitation on Suits.............................................................. 54
SECTION 6.07. Rights of Holders of Notes to Receive Payment.................................... 55
SECTION 6.08. Collection Suit by Trustee....................................................... 55
SECTION 6.09. Trustee May File Proofs of Claim................................................. 55
SECTION 6.10. Priorities....................................................................... 56
SECTION 6.11. Undertaking for Costs............................................................ 56
ARTICLE 7. TRUSTEE................................................................................... 56
SECTION 7.01. Duties of Trustee................................................................ 56
SECTION 7.02. Rights of Trustee................................................................ 57
SECTION 7.03. Individual Rights of Trustee..................................................... 58
SECTION 7.04. Trustee's Disclaimer............................................................. 58
SECTION 7.05. Notice of Defaults............................................................... 58
SECTION 7.06. Reports by Trustee to Holders of the Notes....................................... 59
SECTION 7.07. Compensation and Indemnity....................................................... 59
SECTION 7.08. Replacement of Trustee........................................................... 60
SECTION 7.09. Successor Trustee by Merger, etc................................................. 61
SECTION 7.10. Eligibility; Disqualification.................................................... 61
SECTION 7.11. Preferential Collection of Claims Against Company................................ 61
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE.................................................. 61
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 8.01. Option to Effect Legal Defeasance or Covenant Defeasance......................... 61
SECTION 8.02. Legal Defeasance and Discharge................................................... 61
SECTION 8.03. Covenant Defeasance.............................................................. 62
SECTION 8.04. Conditions to Legal or Covenant Defeasance....................................... 62
SECTION 8.05. Deposited Money and Government Securities to Be Held in Trust; Other
Miscellaneous Provisions........................................................ 64
SECTION 8.06. Repayment to Company............................................................. 64
SECTION 8.07. Reinstatement.................................................................... 64
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER.......................................................... 65
SECTION 9.01. Without Consent of Holders of Notes.............................................. 65
SECTION 9.02. With Consent of Holders of Notes................................................. 65
SECTION 9.03. Compliance with Trust Indenture Act.............................................. 67
SECTION 9.04. Revocation and Effect of Consents................................................ 67
SECTION 9.05. Notation on or Exchange of Notes................................................. 67
SECTION 9.06. Trustee to Sign Amendments, etc.................................................. 67
ARTICLE 10. MISCELLANEOUS............................................................................ 68
SECTION 10.01. Trust Indenture Act Controls..................................................... 68
SECTION 10.02. Notices.......................................................................... 68
SECTION 10.03. Communication by Holders of Notes with Other Holders of Notes.................... 69
SECTION 10.04. Certificate and Opinion as to Conditions Precedent............................... 69
SECTION 10.05. Statements Required in Certificate or Opinion.................................... 69
SECTION 10.06. Rules by Trustee and Agents...................................................... 70
SECTION 10.07. No Personal Liability of Directors, Officers, Employees and Stockholders......... 70
SECTION 10.08. Governing Law.................................................................... 70
SECTION 10.09. No Adverse Interpretation of Other Agreements.................................... 70
SECTION 10.10. Successors....................................................................... 70
SECTION 10.11. Severability..................................................................... 70
SECTION 10.12. Counterpart Originals............................................................ 71
SECTION 10.13. Table of Contents, Headings, etc................................................. 71
</TABLE>
EXHIBITS
Exhibit A-1 FORM OF NOTE
Exhibit A-2 FORM OF REGULATION S GLOBAL NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED
INVESTORS
Exhibit E FORM OF NOTATION OF GUARANTEE
Exhibit F FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY SUBSEQUENT
GUARANTORS
-iii-
<PAGE>
INDENTURE dated as of March 2, 1998 between SBA Communications
Corporation, a Florida corporation (the "Company"), and State Street Bank and
-------
Trust Company, a Massachusetts trust company, as trustee (the "Trustee").
-------
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the 12% Series A
Senior Discount Notes due 2008 (the "Series A Notes") and the 12% Series B
--------------
Senior Discount Notes due 2008 (the "Series B Notes" and, together with the
--------------
Series A Notes, the "Notes"):
-----
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
-----------
"144A Global Note" means one or more global notes in the form of
----------------
Exhibit A-1 hereto bearing the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that will represent the aggregate principal amount of
the Notes sold in reliance on Rule 144A.
"Accreted Value" means, as of any date of determination the sum of (a)
--------------
the initial Accreted Value (which is $558.50 per $1,000 in principal amount at
maturity of Notes) and (b) the portion of the excess of the principal amount at
maturity of each Note over such initial Accreted Value which shall have been
amortized through such date, such amount to be so amortized on a daily basis and
compounded semiannually on each March 1 and September 1 at the rate of 12% per
annum from the date of original issuance of the Notes through the date of
determination computed on the basis of a 360-day year of twelve 30-day months.
The Accreted Value of any Note on or after the Full Accretion Date shall be
equal to 100% of its stated principal amount.
"Acquired Debt" means, with respect to any specified Person, (i)
-------------
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Adjusted Consolidated Cash Flow" has the meaning given to such term
-------------------------------
in the definition of "Debt to Adjusted Consolidated Cash Flow Ratio."
"Affiliate" of any specified Person means any other Person directly or
---------
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
-----
<PAGE>
"Applicable Procedures" means, with respect to any transfer or
---------------------
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer or
exchange.
"Asset Sale" means (i) the sale, lease, conveyance or other
----------
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback, as seller), in any case, outside of the ordinary course of
business provided that the sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company and its Subsidiaries taken as
a whole will be governed by the provisions of this Indenture described in
Section 4.15 and/or the provisions described in Section 5.01 and not by the
provisions of Section 4.10 and (ii) the issue or sale by the Company or any of
its Restricted Subsidiaries of Equity Interests of any of the Company's
Subsidiaries (other than (x) directors' qualifying shares or shares required by
applicable law to be held by a Person other than the Company or a Restricted
Subsidiary or (y) Permitted Subsidiary Equity Interests), in the case of either
clause (i) or (ii), whether in a single transaction or a series of related
transactions (a) that have a fair market value in excess of $2.0 million or (b)
for net proceeds in excess of $2.0 million. Notwithstanding the foregoing, the
following items shall not be deemed to be Asset Sales: (i) a transfer of assets
by the Company to a Restricted Subsidiary or by a Restricted Subsidiary to the
Company or to another Restricted Subsidiary, (ii) an issuance of Equity
Interests by a Subsidiary to the Company or to another Restricted Subsidiary,
(iii) a Restricted Payment or Permitted Investment that is permitted by Section
4.07, (iv) grants of leases or licenses in the ordinary course of business and
(v) disposals of Cash Equivalents.
"Attributable Debt" in respect of a sale and leaseback transaction
-----------------
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
--------------
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or
------------------
any authorized committee of the Board of Directors.
"Broker-Dealer" means any broker or dealer registered under the
-------------
Exchange Act.
"Business Day" means any day other than a Legal Holiday.
------------
"Capital Lease Obligation" means, at the time any determination
------------------------
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
-------------
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
-2-
<PAGE>
"Cash Equivalents" means (i) United States dollars, (ii) securities
----------------
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having
maturities of not more than 12 months from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits with maturities of 12
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding 12 months and overnight bank deposits, in each case
with any lender party to the New Credit Facility or with any domestic commercial
bank having capital and surplus in excess of $500.0 million and a Thompson Bank
Watch Rating of "B" or better, (iv) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(ii) and (iii) above entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper having the
highest rating obtainable from either Moody's Investors Service, Inc. or
Standard & Poor's Ratings Group and in each case maturing within 12 months after
the date of acquisition and (vi) money market funds at least 95% of the assets
of which constitute Cash Equivalents of the kinds described in clauses (i)-(v)
of this definition.
"Cedel" means Cedel Bank, S.A.
-----
"Change of Control" means the occurrence of any of the following; (i)
-----------------
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries,
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act) other than a Principal or a Related Party of a Principal; (ii)
the adoption of a plan relating to the liquidation or dissolution of the
Company; (iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above) other than the Principals and their Related Parties,
becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule
13d-5 under the Exchange Act, except that a person shall be deemed to have
"beneficial ownership" of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable only upon
the occurrence of a subsequent condition), directly or indirectly, of more than
50% of the Voting Stock of the Company (measured by voting power rather than
number of shares); (iv) the first day on which a majority of the members of the
Board of Directors of the Company are not Continuing Directors; or (v) the
Company consolidates with, or merges with or into, any Person, or any Person
consolidates with, or merges with or into, the Company, in any such event
pursuant to a transaction in which any of the outstanding Voting Stock of the
Company is converted into or exchanged for cash, securities or other property,
other than any such transaction where (x) the Voting, Stock of the Company
outstanding immediately prior to such transaction is converted into or exchanged
for Voting Stock (other than Disqualified Stock) of the surviving, or transferee
Person constituting a majority of the outstanding, shares of such Voting Stock
of such surviving, or transferee Person (immediately after giving effect to such
issuance) or (y) the Principals and their Related Parties own a majority of such
outstanding, shares after such transaction.
"Commitment Letter" means that certain Commitment Letter and related
-----------------
Term Sheet dated as of February 3, 1998 by and among BankBoston, N.A. as agent,
BancBoston Securities Inc. as arranger, and SBA Communications Corporation.
"Company" has the meaning provided in the preamble to this Indenture.
-------
-3-
<PAGE>
"Consolidated Assets" means, with respect to the Company, the total
-------------------
consolidated assets of the Company and its Restricted Subsidiaries, as shown on
the most recent internal consolidated balance sheet of the Company and such
Restricted Subsidiaries calculated on a consolidated basis in accordance with
GAAP.
"Consolidated Cash Flow" means, with respect to any Person for any
----------------------
period, the Consolidated Net Income of such Person for such period, plus (i)
provision for taxes based on income or profits of such Person and its Restricted
Subsidiaries for such period to the extent that such provision for taxes was
included in computing such Consolidated Net Income, plus (ii) consolidated
interest expense ("Consolidated Interest Expense") of such Person and its
-----------------------------
Restricted Subsidiaries for such period, whether paid or accrued and whether or
not capitalized (including, without limitation, amortization of debt issuance
costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, imputed interest with
respect to Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations), to the extent that any
such expense was deducted in computing such Consolidated Net Income, plus (iii)
depreciation, amortization (including amortization of goodwill and other
intangibles) and other non-cash expenses (excluding any such non-cash expense to
the extent that it represents an accrual of or reserve for cash expenses in any
future period) of such Person and its Restricted Subsidiaries for such period to
the extent that such depreciation, amortization and other non-cash expenses were
deducted in computing such Consolidated Net Income, minus (iv) non-cash items
increasing such Consolidated Net Income for such period (excluding any items
that were accrued in the ordinary course of business), in each case on a
consolidated basis and determined in accordance with GAAP.
"Consolidated Indebtedness" means, with respect to any Person as of
-------------------------
any date of determination, the sum, without duplication, of (i) the total amount
of Indebtedness of such Person and its Restricted Subsidiaries, plus (ii) the
total amount of Indebtedness of any other Person, to the extent that such
Indebtedness has been Guaranteed by the referent Person or one or more of its
Restricted Subsidiaries, plus (iii) the aggregate liquidation value of all
Disqualified Stock of such Person and all preferred stock of Restricted
Subsidiaries of such Person (other than Permitted Subsidiary Equity Interests),
in each case, determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" has the meaning given to such term in
-----------------------------
the definition of Consolidated Cash Flow.
"Consolidated Net Income" means, with respect to any Person for any
-----------------------
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person (other
than the Company) that is not a Restricted Subsidiary of the Company or that is
accounted for by the equity method of accounting shall be excluded, except that
for purposes of determining compliance with Section 4.07, such Net Income shall
be included but only to the extent of the amount of dividends or distributions
paid in cash to the referent Person or a Restricted Subsidiary thereof, (ii) the
Net Income of any Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition shall be excluded, (iii) the
cumulative effect of a change in accounting principles shall be excluded, (iv)
the Net Income (but not loss) of any Unrestricted Subsidiary shall be excluded
whether or not distributed to the Company or one of its Restricted Subsidiaries
or whether or not otherwise included pursuant to clause (i) and (v) any deferred
-4-
<PAGE>
financing costs written off in connection with the early extinguishment of any
Indebtedness shall be added back to Consolidated Net Income to the extent
otherwise deducted therefrom.
"Continuing Directors" means, as of any date of determination, any
--------------------
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of this Indenture, (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board at the time of such
nomination or election or (iii) is a designee of a Principal or was nominated by
a Principal.
"Corporate Trust Office of the Trustee" shall be at the address of the
-------------------------------------
Trustee specified in Section 10.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Facility" means one or more senior debt facilities (including,
---------------
without limitation, the New Credit Facility) or commercial paper facilities with
banks or other institutional lenders providing for revolving credit loans, term
loans or letters of credit, in each case, as amended, modified, renewed,
refunded, replaced or refinanced in whole or in part from time to time
(including subsequent refinancings); provided, however, that the terms and
conditions in any such facility (including the New Credit Facility) relating to
the ability of Subsidiaries of the Company to pay dividends or make
distributions to the Company shall not, taken as a whole, be materially more
restrictive than those described in the Commitment Letter.
"Custodian" means the Trustee, as custodian with respect to the Notes
---------
in global form, or any successor entity thereto.
"Debt to Adjusted Consolidated Cash Flow Ratio" means, as of any date
---------------------------------------------
of determination, the ratio of (a) the Consolidated Indebtedness of the Company
as of such date to (b) the sum of (1) the Consolidated Cash Flow of the Company
for the four most recent full fiscal quarters ending immediately prior to such
date for which internal financial statements are available, less the Company's
Tower Cash Flow for such four-quarter period, plus (2) the product of four times
the Company's Tower Cash Flow for the most recent quarterly period (such sum
being, referred to as "Adjusted Consolidated Cash Flow"), in each case
-------------------------------
determined on a pro forma basis after giving effect to all acquisitions or
dispositions of assets made by the Company and its Subsidiaries from the
beginning of such four-quarter period through and including such date of
determination (including any related financing transactions) as if such
acquisitions and dispositions had occurred at the beginning of such four-quarter
period. For purposes of making the computation referred to above, (i)
acquisitions that have been made by the Company or any of its Restricted
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the reference period or subsequent to
such reference period and on or prior to the Calculation Date shall be deemed to
have occurred on the first day of the reference period and Consolidated Cash
Flow for such reference period shall be calculated without giving effect to
clause (ii) of the proviso set forth in the definition of Consolidated Net
Income, and (ii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to Calculation Date, shall be excluded.
"Default" means any event that is, or with the passage of time or the
-------
giving of notice or both would be, an Event of Default.
-5-
<PAGE>
"Definitive Note" means a certificated Note registered in the name of
---------------
the Holder thereof and issued in accordance with Section 2.06 hereof, in the
form of Exhibit A-1 hereto except that such Note shall not bear the Global Note
Legend and shall not have the "Schedule of Exchanges of Interests in the Global
Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
----------
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
------------------
the terms of any security into which it is convertible or for which it is
exchangeable, in each case, at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the Holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the Notes mature; provided, however, that any Capital Stock that
would constitute Disqualified Stock solely because the holders thereof have the
right to require the Company to repurchase such Capital Stock upon the
occurrence of a Change of Control or an Asset Sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that the Company
may not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with the covenant described in
Section 4.07.
"Eligible Indebtedness" means any Indebtedness for money borrowed
---------------------
incurred by one or more Restricted Subsidiaries of the Company, provided that
such Indebtedness for money borrowed is contractually pari passu with and
secured equally and ratably with all other Indebtedness for money borrowed of
such Restricted Subsidiaries, including, without limitation, Indebtedness
outstanding under the New Credit Facility.
"Equity Interests" means Capital Stock and all warrants, options or
----------------
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock) (it being understood that
Permitted Subsidiary Equity Interests shall not be deemed Equity Interests of
the Company until they have been converted into Equity Interests of the Company
in accordance with the terms thereof).
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
---------
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Exchange Notes" means the Notes issued in the Exchange Offer pursuant
--------------
to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration Rights
--------------
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
-------------------------------------
the Registration Rights Agreement.
-6-
<PAGE>
"Existing Indebtedness" means Indebtedness of the Company and its
---------------------
Subsidiaries (other than Indebtedness under the Credit Facility) in existence on
the original issuance of the Notes, until such amounts are repaid.
"fair market value" means the price which could be negotiated in an
-----------------
arm's length, free market transaction, for cash, between a willing and able
seller and a willing and able buyer, neither of whom is under undue pressure or
compulsion to complete the transaction. Fair market value shall be determined by
the Board of Directors of the Company acting reasonably and in good faith,
evidenced by a resolution of the Company's Board of Directors delivered to the
Trustee; provided, however, that fair market value shall be determined by a
nationally recognized independent investment banking, accounting or appraisal
firm for any transaction which is reasonably likely to exceed $10 million in
value.
"Final Offering Memorandum" means the offering memorandum dated
-------------------------
February 25, 1998 relating to the offer and sale of the Notes.
"Full Accretion Date" means March 1, 2003.
-------------------
"GAAP" means generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Global Note Legend" means the legend set forth in Section
------------------
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.
"Global Notes" means, individually and collectively, each of the
------------
Restricted Global Note and the Unrestricted Global Note, in the form of Exhibit
A hereto issued in accordance with Section 2.01, 2.06(b)(iv), 2.06(d)(ii) or
2.06(f) hereof.
"Government Securities" means direct obligations of, or obligations
---------------------
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Guarantee" means a guarantee (other than by endorsement of negotiable
---------
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the
-------------------
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements relating to or based upon fluctuations in interest
rates or currency exchange rates.
"Holder" means a Person in whose name a Note is registered.
------
"IAI Global Note" means the Global Note in the form of Exhibit A-1
---------------
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of and
-7-
<PAGE>
registered in the name of the Depositary or its nominee that will be issued in a
denomination equal to the outstanding principal amount of the Senior Notes sold
to Institutional Accredited Investors.
"Indebtedness" means, with respect to any Person, any indebtedness of
------------
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, as well as all Indebtedness of
others secured by a Lien on any asset of such Person whether or not such
Indebtedness is assumed by such Person (the amount of such Indebtedness as of
any date being deemed to be the lesser of the value of such property or assets
as of such date or the principal amount of such Indebtedness of such other
Person so secured) and, to the extent not otherwise included, the Guarantee by
such Person of any Indebtedness of any other Person. The amount of any
Indebtedness outstanding as of any date shall be (i) the accreted value thereof,
in the case of any Indebtedness issued with original issue discount, and (ii)
the principal amount thereof, together with any interest thereon that is more
than 30 days past due, in the case of any other Indebtedness. In calculating
the amount of Indebtedness outstanding, letters of credit supporting obligations
otherwise included as Indebtedness (and reimbursement obligations with respect
to such letters of credit to the extent supporting obligations otherwise
included in Indebtedness) shall not be included.
"Indenture" means this Indenture, as amended or supplemented from time
---------
to time.
"Indirect Participant" means a Person who holds a beneficial interest
--------------------
in a Global Note through a Participant.
"Institutional Accredited Investor" means an institution that is an
---------------------------------
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Investments" means, with respect to any Person, all investments by
-----------
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Restricted Subsidiary of the Company sells or otherwise
disposes of all Equity Interests of any direct or indirect Subsidiary of the
Company or a Restricted Subsidiary of the Company issues any of its Equity
Interests such that, in each case, after giving effect to any such sale or
disposition, such Person is no longer a Restricted Subsidiary of the Company,
the Company shall be deemed to have made an Investment on the date of any such
sale or disposition equal to the fair market value of the Equity Interests of
such Subsidiary not sold or disposed of in an amount determined as provided in
the final paragraph of the covenant described in Section 4.07.
"Issue Date" means March 2, 1998, the date of original issuance of the
----------
Notes.
-8-
<PAGE>
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
-------------
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared
---------------------
by the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
----
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Net Income" means, with respect to any Person, the net income (loss)
----------
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain or loss,
together with any related provision for taxes on such gain or loss, realized in
connection with (a) any asset sale outside the ordinary course of business
(including, without limitation, dispositions pursuant to sale and leaseback
transactions) or (b) the disposition of any securities by such Person or any of
its Restricted Subsidiaries or the extinguishment of any Indebtedness of such
Person or any of its Restricted Subsidiaries and (ii) any extraordinary gain or
loss, together with any related provision for taxes on such extraordinary gain
or loss.
"Net Proceeds" means the aggregate cash proceeds received by the
------------
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
(i) the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, (ii) taxes paid or payable as
a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), (iii) amounts required to be
applied to the repayment of Indebtedness (other than Indebtedness under a Credit
Facility) secured by a Lien on the asset or assets that were the subject of such
Asset Sale, (iv) all distributions and other payments required to be made to
minority interest holders in Restricted Subsidiaries as a result of such Asset
Sale, (v) the deduction of appropriate amounts provided by the seller as a
reserve in accordance with GAAP against any liabilities associated with the
assets disposed of in such Asset Sale and retained by the Company or any
Restricted Subsidiary after such Asset Sale and (vi) without duplication, any
reserves that the Company's Board of Directors determines in good faith should
be made in respect of the sale price of such asset or assets for post closing
adjustments; provided that in the case of any reversal of any reserve referred
to in clause (v) or (vi) above, the amount so reserved shall be deemed to be Net
Proceeds from an Asset Sale as of the date of such reversal.
"New Credit Facility" means that certain loan agreement to be entered
-------------------
into by SBA Telecommunications, Inc., on terms substantially equivalent to those
described in the Commitment Letter, and including any related notes, guarantees,
collateral documents, instruments and agree-
-9-
<PAGE>
ments executed in connection therewith, and in each case as amended, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to time
(including subsequent refinancings).
"New Notes" means the Company's 12% Senior Discount Notes due 2008 to
---------
be issued pursuant to this Indenture: (i) in the Exchange Offer or (ii) as
contemplated by the Registration Rights Agreement.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
-----------------
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender; (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
"Non-U.S. Person" means a Person who is not a U.S. Person.
---------------
"Notes" has the meaning assigned to it in the preamble to this
-----
Indenture.
"Obligations" means any principal, interest, penalties, fees,
-----------
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the offering of the Notes by the Company.
--------
"Officer" means, with respect to any Person, the Chairman of the
-------
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
---------------------
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 11.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
------------------
reasonably acceptable to the Trustee, that meets the requirements of Section
10.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Participant" means, with respect to the Depositary, Euroclear or
-----------
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and Cedel).
"Participating Broker-Dealer" has the meaning set forth in the
---------------------------
Registration Rights Agreement.
-10-
<PAGE>
"Payment Restriction" means, with respect to a subsidiary of any
-------------------
Person, any encumbrance, restriction or limitation, whether by operation of the
terms of its charter or by reason of any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation, on the ability of (i)
such subsidiary to (a) pay dividends or make other distributions on its Capital
Stock or make payments on any obligation, liability or Indebtedness owed to such
Person or any other subsidiary of such Person, (b) make loans or advances to
such Person or any other subsidiary of such Person, or (ii) such Person or any
other subsidiary of such Person to receive or retain any such (a) dividends,
distributions or payments, (b) loans or advances or (c) transfer of properties
or assets.
"Permitted Business" means any business conducted by the Company and
------------------
its Restricted Subsidiaries on the date of this Indenture and any other business
related, ancillary or complementary to any such business.
"Permitted Investments" means (a) any Investment in the Company or in
---------------------
a Restricted Subsidiary of the Company; (b) any Investment in Cash Equivalents;
(c) any Investment by the Company or any Restricted Subsidiary of the Company in
a Person, if as a result of such Investment (i) such Person becomes a Restricted
Subsidiary of the Company or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted Subsidiary of the
Company; (d) any Restricted Investment made as a result of the receipt of non-
cash consideration from an Asset Sale that was made pursuant to and in
compliance with Section 4.10; (e) any acquisition of assets solely in exchange
for the issuance of Equity Interests (other than Disqualified Stock) of the
Company; (f) receivables created in the ordinary course of business; (g) loans
or advances to employees made in the ordinary course of business not to exceed
$5.0 million at any one time outstanding; (h) securities and other assets
received in settlement of trade debts or other claims arising in the ordinary
course of business; and (i) other Investments in Permitted Businesses not to
exceed 5% of the Company's Consolidated Assets at any one time outstanding (each
such Investment being measured as of the date made and without giving effect to
subsequent changes in value).
"Permitted Liens" means (i) Liens securing Eligible Indebtedness of
---------------
the Company under one or more Credit Facilities that was permitted by the terms
of the Indenture to be incurred; (ii) Liens securing any Indebtedness of any of
the Company's Restricted Subsidiaries that was permitted by the terms of the
Indenture to be incurred; (iii) Liens in favor of the Company; (iv) Liens
existing on the Issue Date; (v) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent or that are being contested in
good faith by appropriate proceedings promptly instituted and diligently
concluded, provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor; (vi) Liens
securing Indebtedness permitted to be incurred under clause (iv) of the second
paragraph of Section 4.09; and (vii) Liens incurred in the ordinary course of
business of the Company or any Restricted Subsidiary of the Company with respect
to obligations that do not exceed $10 million at any one time outstanding and
that (a) are not incurred in connection with the borrowing of money or the
obtaining of advances or credit (other than trade credit in the ordinary course
of business) and (b) do not in the aggregate materially detract from the value
of the property or materially impair the use thereof in the operation of
business by the Company or such Restricted Subsidiary.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
----------------------------------
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to
-11-
<PAGE>
extend, refinance, renew, replace, defease or refund other Indebtedness of the
Company or any of its Restricted Subsidiaries (other than intercompany
Indebtedness); provided that: (i) the principal amount (or initial accreted
value, if applicable) of such Permitted Refinancing Indebtedness does not exceed
the principal amount of (or accreted value, if applicable), plus accrued
interest on, the Indebtedness so extended, refinanced, renewed, replaced,
defeased or refunded (plus the amount of expenses and prepayment premiums
incurred in connection therewith), (ii) such Permitted Refinancing Indebtedness
has a final maturity date later than the final maturity date of, and has a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded, (iii) if the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded is subordinated in right of
payment to the Notes, such Permitted Refinancing Indebtedness is subordinated in
right of payment to, the Notes on terms at least as favorable to the Holders of
Notes as those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded, and (iv) such
Indebtedness is incurred either by the Company or by the Restricted Subsidiary
who is the obligor on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded.
"Permitted Subsidiary Equity Interests" means Equity Interests of
-------------------------------------
Restricted Subsidiaries of the Company that (i) will automatically convert into
common stock of the Company in the event of a Public Equity Offering of the
Company or the occurrence of an Event of Default under this Indenture, (ii) does
not entitle the holder to any registration rights, (iii) is issued as
consideration in a Tower Asset Acquisition and (iv) does not provide for any
dividends other than in additional shares of such Equity Interests.
"Person" means any individual, corporation, partnership, joint
------
venture, association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any subdivision
or ongoing business of any such entity or substantially all of the assets of any
such entity, subdivision or business).
"Principal" means Steven E. Bernstein.
---------
"Private Placement Legend" means the legend set forth in Section
------------------------
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"Prospectus" means the prospectus included in a Registration Statement
----------
at the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
"Public Equity Offering" means an underwritten primary public offering
----------------------
of common stock of the Company pursuant to an effective registration statement
under the Securities Act.
"Qualified Equity Interests" means Equity Interests of the Company
--------------------------
other than Disqualified Stock.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
---
-12-
<PAGE>
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement, dated as of March 2, 1998, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.
"Registration Statement" means any registration statement of the
----------------------
Company relating to (a) an offering of New Notes pursuant to an Exchange Offer
or (b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, in each case, (i) that is filed pursuant to
the provisions of the Registration Rights Agreement and (ii) including the
Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
"Regulation S" means Regulation S promulgated under the Securities
------------
Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note
------------------------
or Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global Note in
----------------------------------
the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary global Note in
----------------------------------
the form of Exhibit A-2 hereto bearing the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee, issued in a denomination equal to the outstanding principal amount
of the Notes initially sold in reliance on Rule 903 of Regulation S.
"Related Party" with respect to any Principal means (A) any
-------------
controlling stockholder, 80% (or more) owned Subsidiary of such Principal or (B)
any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, members, partners, owners or Persons beneficially holding an 80%
or more controlling interest of which consist of such Principal and/or such
other Persons referred to in the immediately preceding clause (A).
"Responsible Officer" when used with respect to the Trustee, means any
-------------------
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the
--------------------------
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
----------------------
Placement Legend.
"Restricted Investment" means an Investment other than a Permitted
---------------------
Investment.
"Restricted Period" means the 40-day restricted period as defined in
-----------------
Regulation S.
-13-
<PAGE>
"Restricted Subsidiary" of a Person means any Subsidiary of the
---------------------
relevant Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
--------
"Rule 144A" means Rule 144A promulgated under the Securities Act.
---------
"Rule 903" means Rule 903 promulgated under the Securities Act.
--------
"Rule 904" means Rule 904 promulgated the Securities Act.
--------
"SEC" means the Securities and Exchange Commission.
---
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Seller Paper" means Indebtedness incurred by the Company or any of
------------
its Restricted Subsidiaries as consideration in a Tower Asset Acquisition.
"Shelf Registration Statement" means the Shelf Registration Statement
----------------------------
as defined in the Registration Rights Agreement.
"Significant Subsidiary" means, with respect to any Person, any
----------------------
Restricted Subsidiary of such Person that would be a "significant subsidiary" of
such Person as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date of
the Final Offering Memorandum, except that all references to "10 percent" in
Rule 1-02(w)(1), (2) and (3) shall mean "5 percent."
"Stated Maturity" means, with respect to any installment of interest
---------------
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Strategic Equity Investment" means a cash contribution to the common
---------------------------
equity capital of the Company or a purchase from the Company of common Equity
Interests (other than Disqualified Stock), in either case by or from a Strategic
Equity Investor and for aggregate cash consideration of at least $10.0 million.
"Strategic Equity Investor" means a Person engaged in a Permitted
-------------------------
Business whose Total Equity Market Capitalization exceeds $1 billion.
"Subsidiary" means, with respect to any Person, (i) any corporation,
----------
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or one or more Subsidiaries
of such Person (or any combination thereof).
-14-
<PAGE>
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
---
77bbbb) as in effect on the date on which this Indenture is qualified under the
TIA.
"Total Equity Market Capitalization" of any Person means, as of any
----------------------------------
day of determination, the sum of (i) the product of (A) the aggregate number of
outstanding primary shares of common stock of such Person on such day (which
shall not include any options or warrants on, or securities convertible or
exchangeable into, shares of common stock of such person) multiplied by (B) the
average closing price of such common stock listed on a national securities
exchange or the Nasdaq National Market System over the 20 consecutive business
days immediately preceding such day, plus (ii) the liquidation value of any
outstanding shares of preferred stock of such Person on such day.
"Tower Asset Acquisition" means an acquisition of Tower Assets or a
-----------------------
business substantially all of the assets of which are Tower Assets.
"Tower Asset Exchange" means any transaction in which the Company or
--------------------
one of its Restricted Subsidiaries exchanges assets for Tower Assets and/or cash
or Cash Equivalents where the fair market value (evidenced by a resolution of
the Board of Directors set forth in an Officers' Certificate delivered to the
Trustee) of the Tower Assets and cash or Cash Equivalents received by the
Company and its Restricted Subsidiaries in such exchange is at least equal to
the fair market value of the assets disposed of in such exchange.
"Tower Assets" means wireless transmission towers and related assets
------------
that are located on the site of a transmission tower.
"Tower Cash Flow" means, for any period, the Consolidated Cash Flow of
---------------
the Company and its Restricted Subsidiaries for such period that is directly
attributable to site rental revenue, license or management fees paid to manage,
lease or sublease space on communication sites owned, leased or managed by the
Company (collectively, "site leasing revenues"), all determined on a
---------------------
consolidated basis and in accordance with GAAP. Tower Cash Flow will not
include revenue derived from the sale of assets. In allocating, corporate,
general, administrative and other operating expenses that are not, in the
financial statements of the Company allocated to any particular line of
business, such expenses shall be allocated to the Company's site leasing
business in proportion to the percentage of the Company's total revenues for the
applicable period that were site leasing revenues.
"Transfer Restricted Securities" means each Note, until the earliest
------------------------------
to occur of (a) the date on which such Note is exchanged in the Exchange Offer
and entitled to be resold to the public by the Holder thereof without complying
with the prospectus delivery requirements of the Securities Act, (b) the date on
which such Note has been disposed of in accordance with a Shelf Registration
Statement, (c) the date on which such Note is disposed of by a Broker-Dealer
pursuant to the "Plan of Distribution" contemplated by the Exchange Offer
Registration Statement (including delivery of the Prospectus contained therein)
or (d) the date on which such Note is distributable to the public pursuant to
Rule 144 under the Securities Act.
"Trustee" means the party named as such above until a successor
-------
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
-15-
<PAGE>
"Unrestricted Definitive Note" means one or more Definitive Notes that
----------------------------
do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent Global Note in the form
------------------------
of Exhibit A-1 attached hereto that bears the Global Note Legend and that has
the "Schedule of Exchanges of Interests in the Global Note" attached thereto,
and that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Subsidiary" means any Subsidiary of the Company that is
-----------------------
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution; but only to the extent that such Subsidiary: (a) has no
Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company; (c) is a Person with respect to which
neither the Company nor any of its Restricted Subsidiaries has any direct or
indirect obligation (x) to subscribe for additional Equity Interests or (y) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or any of its Restricted Subsidiaries; and (e) has at least one
director on its board of directors that is not a director or executive officer
of the Company or any of its Restricted Subsidiaries and has at least one
executive officer that is not a director or executive officer of the Company or
any of its Restricted Subsidiaries. Any such designation by the Board of
Directors shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing conditions and was permitted by Section 4.07. If, at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary
shall be deemed to be incurred by a Restricted Subsidiary of the Company as of
such date (and, if such Indebtedness is not permitted to be incurred as of such
date under Section 4.09, the Company shall be in default of such covenant). The
Board of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that such designation shall
be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the
Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted under
Section 4.09, calculated on a pro forma basis as if such designation had
occurred at the beginning of the four-quarter reference period, and (ii) no
Default would occur or be in existence following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
-----------
Securities Act.
"Voting Stock" of any Person as of any date means the Capital Stock of
------------
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
---------------------------------
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multi-
-16-
<PAGE>
plying (a) the amount of each then remaining installment, sinking fund, serial
maturity or other required payments of principal, including payment at final
maturity, in respect thereof, by (b) the number of years (calculated to the
nearest one-twelfth) that will elapse between such date and the making of such
payment, by (ii) the then outstanding principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
----------------------------------
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person.
SECTION 1.02. Other Definitions.
-----------------
<TABLE>
<CAPTION>
Defined in
Term Section
---- --------------------
<S> <C>
"Affiliate Transaction"......................................................... 4.11
"Asset Sale Offer".............................................................. 3.09
"Authentication Order".......................................................... 2.02
"Change of Control Offer"....................................................... 4.15
"Change of Control Payment"..................................................... 4.15
"Change of Control Payment Date"................................................ 4.15
"Commission".................................................................... 4.03
"Covenant Defeasance"........................................................... 8.03
"Event of Default".............................................................. 6.01
"Excess Proceeds"............................................................... 4.10
"incur"......................................................................... 4.09
"Legal Defeasance".............................................................. 8.02
"Offer Amount".................................................................. 3.09
"Offer Period".................................................................. 3.09
"Pari Passu Notes".............................................................. 4.10
"Paying Agent".................................................................. 2.03
"Permitted Debt"................................................................ 4.09
"Purchase Date"................................................................. 3.09
"Registrar"..................................................................... 2.03
"Restricted Payments"........................................................... 4.07
</TABLE>
SECTION 1.03. Incorporation by Reference of TIA.
---------------------------------
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
--------------------
"indenture security holder" means a Holder of a Note;
-------------------------
"indenture to be qualified" means this Indenture;
-------------------------
-17-
<PAGE>
"indenture trustee" or "institutional trustee" means the Trustee; and
-----------------
"obligor" on the Notes means the Company and any successor obligor
-------
upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.04. Rules of Construction.
---------------------
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement of successor sections or
rules adopted by the SEC from time to time.
ARTICLE 2.
THE NOTES
SECTION 2.01. Form and Dating.
---------------
(a) General.
-------
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. Each
Note shall be dated the date of its authentication. The Notes shall be in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.
-18-
<PAGE>
(b) Global Notes.
------------
Notes issued in global form shall be substantially in the form of
Exhibit A-1 or A-2 attached hereto (including the Global Note Legend thereon and
the "Schedule of Exchanges of Interests in the Global Note" attached thereto).
Notes issued in definitive form shall be substantially in the form of Exhibit A-
1 attached hereto (but without the Global Note Legend thereon and without the
"Schedule of Exchanges of Interests in the Global Note" attached thereto). Each
Global Note shall represent such of the outstanding Notes as shall be specified
therein and each shall provide that it shall represent the aggregate principal
amount of outstanding Notes from time to time endorsed thereon and that the
aggregate principal amount of outstanding Notes represented thereby may from
time to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Note to reflect the amount of any
increase or decrease in the aggregate principal amount of outstanding Notes
represented thereby shall be made by the Trustee or the Note Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.06 hereof.
(c) Temporary Global Notes.
----------------------
Notes offered and sold in reliance on Regulation S shall be issued
initially in the form of the Regulation S Temporary Global Note, which shall be
deposited on behalf of the purchasers of the Notes represented thereby with the
Trustee, at its New York office, as custodian for the Depositary, and registered
in the name of the Depositary or the nominee of the Depositary for the accounts
of designated agents holding on behalf of Euroclear or Cedel Bank, duly executed
by the Company and authenticated by the Trustee as hereinafter provided. The
Restricted Period shall be terminated upon the receipt by the Trustee of (i) a
written certificate from the Depositary, together with copies of certificates
from Euroclear and Cedel Bank certifying that they have received certification
of non-United States beneficial ownership of 100% of the aggregate principal
amount of the Regulation S Temporary Global Note (except to the extent of any
beneficial owners thereof who acquired an interest therein during the Restricted
Period pursuant to another exemption from registration under the Securities Act
and who will take delivery of a beneficial ownership interest in a 144A Global
Note or an IAI Global Note bearing a Private Placement Legend, all as
contemplated by Section 2.06(a)(ii) hereof), and (ii) an Officers' Certificate
from the Company. Following the termination of the Restricted Period,
beneficial interests in the Regulation S Temporary Global Note shall be
exchanged for beneficial interests in Regulation S Permanent Global Notes
pursuant to the Applicable Procedures. Simultaneously with the authentication
of Regulation S Permanent Global Notes, the Trustee shall cancel the Regulation
S Temporary Global Note. The aggregate principal amount of the Regulation S
Temporary Global Note and the Regulation S Permanent Global Notes may from time
to time be increased or decreased by adjustments made on the records of the
Trustee and the Depositary or its nominee, as the case may be, in connection
with transfers of interest as hereinafter provided.
(d) Euroclear and Cedel Procedures Applicable.
-----------------------------------------
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be
applicable to transfers of beneficial interests in the Regulation S Temporary
Global Note and the Regulation S Permanent Global Notes that are held by
Participants through Euroclear or Cedel Bank.
-19-
<PAGE>
SECTION 2.02. Execution and Authentication.
----------------------------
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Notes and
may be in facsimile form.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by an
Officer (an "Authentication Order"), authenticate Notes for original issue up to
--------------------
the aggregate principal amount stated in paragraph 4 of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
SECTION 2.03. Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
---------
office or agency where Notes may be presented for payment ("Paying Agent"). The
------------
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall
notify the Trustee in writing of the name and address of any Agent not a party
to this Indenture. If the Company fails to appoint or maintain another entity
as Registrar or Paying Agent, the Trustee shall act as such. The Company or any
of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
SECTION 2.04. Paying Agent to Hold Money in Trust.
-----------------------------------
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all
-20-
<PAGE>
money held by it to the Trustee. The Company at any time may require a Paying
Agent to pay all money held by it to the Trustee. Upon payment over to the
Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall have
no further liability for the money. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy
or reorganization proceedings relating to the Company, the Trustee shall serve
as Paying Agent for the Notes.
SECTION 2.05. Holder Lists.
------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA (S) 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA (S) 312(a).
SECTION 2.06. Transfer and Exchange.
---------------------
(a) Transfer and Exchange of Global Notes. A Global Note may not be
-------------------------------------
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary. All Global Notes will be exchanged by the
Company for Definitive Notes if (i) the Company delivers to the Trustee notice
from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee; provided that in no event shall
the Regulation S Temporary Global Note be exchanged by the Company for
Definitive Notes prior to (x) the expiration of the Restricted Period and (y)
the receipt by the Registrar of any certificates required pursuant to Rule
903(c)(3)(ii)(B) under the Securities Act. Upon the occurrence of either of the
preceding events in (i) or (ii) above, Definitive Notes shall be issued in such
names as the Depositary shall instruct the Trustee. Global Notes also may be
exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b),(c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
-----------------------------------------------------------
Notes. The transfer and exchange of beneficial interests in the Global Notes
- -----
shall be effected through the Depositary, in accordance with the provisions of
this Indenture and the Applicable Procedures. Beneficial interests in the
Restricted Global Notes shall be subject to restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:
-21-
<PAGE>
(i) Transfer of Beneficial Interests in the Same Global Note.
--------------------------------------------------------
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend; provided, however,
that prior to the expiration of the Restricted Period, transfers of
beneficial interests in the Temporary Regulation S Global Note may not be
made to a U.S. Person or for the account or benefit of a U.S. Person (other
than an Initial Purchaser). Beneficial interests in any Unrestricted
Global Note may be transferred to Persons who take delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note. No written
orders or instructions shall be required to be delivered to the Registrar
to effect the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
------------------------------------------------------------
Global Notes. In connection with all transfers and exchanges of beneficial
------------
interests that are not subject to Section 2.06(b)(i) above, the transferor
of such beneficial interest must deliver to the Registrar either (A) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in
another Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to cause
to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the transfer
or exchange referred to in (1) above; provided that in no event shall
--------
Definitive Notes be issued upon the transfer or exchange of beneficial
interests in the Regulation S Temporary Global Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar of
any certificates required pursuant to Rule 903 under the Securities Act.
Upon consummation of an Exchange Offer by the Company in accordance with
Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall
be deemed to have been satisfied upon receipt by the Registrar of the
instructions contained in the Letter of Transmittal delivered by the Holder
of such beneficial interests in the Restricted Global Notes. Upon
satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Notes contained in this Indenture and the
Notes or otherwise applicable under the Securities Act, the Trustee shall
adjust the principal amount of the relevant Global Note(s) pursuant to
Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
-------------------------------------------------------------
Note. A beneficial interest in any Restricted Global Note may be
----
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
-22-
<PAGE>
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Note or the
Regulation S Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications and certificates and Opinion of Counsel required by
item (3) thereof, if applicable.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
-------------------------------------------------------------
Global Note for Beneficial Interests in an Unrestricted Global Note. A
-------------------------------------------------------------------
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note or
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a beneficial interest in an Unrestricted Global
Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of a beneficial interest in an Unrestricted Global Note, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar
so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that
such exchange or transfer is in compliance with the Secu-
-23-
<PAGE>
rities Act and that the restrictions on transfer contained herein and in
the Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
-----------------------------------------------------------------
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Restricted
Definitive Note or to transfer such beneficial interest to a Person who
takes delivery thereof in the form of a Restricted Definitive Note, then,
upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note, a certificate from such holder in the form
of Exhibit C hereto, including the certifications in item (2)(a)
thereof;
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (1) thereof;
(C) if such beneficial interest is being transferred to a Non-
U.S. Person in an offshore transaction in accordance with Rule 903 or
Rule 904 under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (2)
thereof;
(D) if such beneficial interest is being transferred pursuant to
an exemption from the registration requirements of the Securities Act
in accordance with Rule 144 under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if
applicable;
(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(b)
thereof; or
-24-
<PAGE>
(G) if such beneficial interest is being transferred pursuant
to an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest in a Restricted Global Note pursuant to this
Section 2.06(c) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are
so registered. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c)(i)
shall bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
(ii) Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a
beneficial interest in the Regulation S Temporary Global Note may not be
exchanged for a Definitive Note or transferred to a Person who takes
delivery thereof in the form of a Definitive Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar of
any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the
Securities Act, except in the case of a transfer pursuant to an exemption
from the registration requirements of the Securities Act other than Rule
903 or Rule 904.
(iii) Beneficial Interests in Restricted Global Notes to
--------------------------------------------------
Unrestricted Definitive Notes. A holder of a beneficial interest in a
-----------------------------
Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or may transfer such beneficial interest to a
Person who takes delivery thereof in the form of an Unrestricted Definitive
Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal that it is not (1) a broker-
dealer, (2) a Person participating in the distribution of the Exchange
Notes or (3) a Person who is an affiliate (as defined in Rule 144) of
the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the following:
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<PAGE>
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (1)(b)
thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of a Definitive Note that does not bear the Private Placement
Legend, a certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar
so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that
such exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
(iv) Beneficial Interests in Unrestricted Global Notes to
----------------------------------------------------
Unrestricted Definitive Notes. If any holder of a beneficial interest in
-----------------------------
an Unrestricted Global Note proposes to exchange such beneficial interest
for a Definitive Note or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Definitive Note, then, upon
satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the
Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the
Company shall execute and the Trustee shall authenticate and deliver to the
Person designated in the instructions a Definitive Note in the appropriate
principal amount. Any Definitive Note issued in exchange for a beneficial
interest pursuant to this Section 2.06(c)(iii) shall be registered in such
name or names and in such authorized denomination or denominations as the
holder of such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect
Participant. The Trustee shall deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. Any Definitive Note
issued in exchange for a beneficial interest pursuant to this Section
2.06(c)(iii) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial
--------------------------------------------------------
Interests.
(i) Restricted Definitive Notes to Beneficial Interests in
------------------------------------------------------
Restricted Global Notes. If any Holder of a Restricted Definitive Note
-----------------------
proposes to exchange such Note for a beneficial interest in a Restricted
Global Note or to transfer such Restricted Definitive Notes to a Person who
takes delivery thereof in the form of a beneficial interest in a Restricted
Global Note, then, upon receipt by the Registrar of the following
documentation:
(A) if the Holder of such Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global
Note, a certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (2)(b) thereof;
-26-
<PAGE>
(B) if such Restricted Definitive Note is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule 903
or Rule 904 under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (2)
thereof;
(D) if such Restricted Definitive Note is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if
applicable;
(F) if such Restricted Definitive Note is being transferred to
the Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(G) if such Restricted Definitive Note is being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause
to be increased the aggregate principal amount of, in the case of clause
(A) above, the appropriate Restricted Global Note, in the case of clause
(B) above, the 144A Global Note, in the case of clause (C) above, the
Regulation S Global Note, and in all other cases, the IAI Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
------------------------------------------------------
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
-------------------------
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Restricted Definitive Note to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global Note
only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
-27-
<PAGE>
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to
exchange such Notes for a beneficial interest in the Unrestricted
Global Note, a certificate from such Holder in the form of
Exhibit C hereto, including the certifications in item (1)(c)
thereof; or
(2) if the Holder of such Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof
in the form of a beneficial interest in the Unrestricted Global
Note, a certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar
so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that
such exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in
this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
--------------------------------------------------------
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
-------------------------
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Definitive Notes to a Person who takes delivery thereof in
the form of a beneficial interest in an Unrestricted Global Note at any
time. Upon receipt of a request for such an exchange or transfer, the
Trustee shall cancel the applicable Unrestricted Definitive Note and
increase or cause to be increased the aggregate principal amount of one of
the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
--------------------------------------------------------------
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to
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<PAGE>
such registration of transfer or exchange, the requesting Holder shall present
or surrender to the Registrar the Definitive Notes duly endorsed or accompanied
by a written instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by such Holder's attorney, duly authorized in
writing. In addition, the requesting Holder shall provide any additional
certifications, documents and information, as applicable, required pursuant to
the following provisions of this Section 2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
----------------------------------------------------------
Restricted Definitive Note may be transferred to and registered in the name
of Persons who take delivery thereof in the form of a Restricted Definitive
Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (1)
thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule
904, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof;
and
(C) if the transfer will be made pursuant to any other exemption
from the registration requirements of the Securities Act, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes.
------------------------------------------------------------
Any Restricted Definitive Note may be exchanged by the Holder thereof for
an Unrestricted Definitive Note or transferred to a Person or Persons who
take delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating Broker-
Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for an Unrestricted Definitive
Note, a certificate
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<PAGE>
from such Holder in the form of Exhibit C hereto, including the
certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take
delivery thereof in the form of an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar
so requests, an Opinion of Counsel in form reasonably acceptable to the
Company to the effect that such exchange or transfer is in compliance with
the Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
--------------------------------------------------------
Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes
-----
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note. Upon receipt of a request to register such a transfer,
the Registrar shall register the Unrestricted Definitive Notes pursuant to
the instructions from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
--------------
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not broker-
dealers, (y) they are not participating in a distribution of the Exchange Notes
and (z) they are not affiliates (as defined in Rule 144) of the Company, and
accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
-------
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
------------------------
(A) Except as permitted by subparagraph (B) below, each Global
Note and each Definitive Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the legend in
substantially the following form.
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
THE UNITED STATES SECURITIES ACT OF
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<PAGE>
1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED
HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED
THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE
HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR
(3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE,
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS
SET FORTH IN (A) ABOVE."
(B) Notwithstanding the foregoing, any Global Note or Definitive
Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii),
(d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) of this Section 2.06 (and
all Notes issued in exchange therefor or substitution thereof) shall
not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
------------------
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY
MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07
OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT
NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A
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<PAGE>
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY."
(iii) Regulation S Temporary Global Note Legend. The Regulation S
-----------------------------------------
Temporary Global Note shall bear a legend in substantially the following
form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND
THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED
NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER
THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY
GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON."
(iv) Original Issue Discount Legend. Each Note shall bear a legend
------------------------------
in substantially the following form:
"FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH
ORIGINAL ISSUE DISCOUNT; FOR EACH $1,000 PRINCIPAL AMOUNT OF THIS
SECURITY, THE ISSUE PRICE IS $558.50, THE AMOUNT OF ORIGINAL ISSUE
DISCOUNT IS $1,041.50, THE ISSUE DATE IS MARCH 2, 1998 AND THE YIELD
TO MATURITY IS 12% PER ANNUM."
(h) Cancellation and/or Adjustment of Global Notes.
----------------------------------------------
At such time as all beneficial interests in a particular Global Note
have been exchanged for Definitive Notes or a particular Global Note has been
redeemed, repurchased or canceled in whole and not in part, each such Global
Note shall be returned to or retained and canceled by the Trustee in accordance
with Section 2.11 hereof. At any time prior to such cancellation, if any
beneficial interest in a Global Note is exchanged for or transferred to a Person
who will take delivery thereof in the form of a beneficial interest in another
Global Note or for Definitive Notes, the principal amount of Notes represented
by such Global Note shall be reduced accordingly and an endorsement shall be
made on such Global Note by the Trustee or by the Depositary at the direction of
the Trustee to reflect such reduction; and if the beneficial interest is being
exchanged for or transferred to a Person who will take delivery thereof in the
form of a beneficial interest in another Global Note, such other Global Note
shall be increased accordingly and an endorsement shall be made on such Global
Note by the Trustee or by the Depositary at the direction of the Trustee to
reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
------------------------------------------------------
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Global Notes and Definitive
Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the
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<PAGE>
Company may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchange or transfer
pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of
or to exchange any Note selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes shall
be the valid obligations of the Company, evidencing the same debt, and entitled
to the same benefits under this Indenture, as the Global Notes or Definitive
Notes surrendered upon such registration of transfer or exchange.
(v) The Registrar shall not be required (A) to issue, to register
the transfer of or to exchange any Notes during a period beginning at the
opening of business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close of business on the
day of selection, (B) to register the transfer of or to exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part or (c) to register the transfer of or to
exchange a Note between a record date and the next succeeding Interest Payment
Date.
(vi) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the Person
in whose name any Note is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of and interest on such Notes and for
all other purposes, and none of the Trustee, any Agent or the Company shall be
affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive
Notes in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by facsimile.
SECTION 2.07. Replacement Notes.
-----------------
If any mutilated Note is surrendered to the Trustee or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.
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<PAGE>
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.08. Outstanding Notes.
-----------------
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; however, Notes held by the Company or a Subsidiary of
the Company shall not be deemed to be outstanding for purposes of Section
3.07(b) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.09. Treasury Notes.
--------------
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.
SECTION 2.10. Temporary Notes.
---------------
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the Company
considers appropriate for temporary Notes and as shall be reasonably acceptable
to the Trustee. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
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<PAGE>
SECTION 2.11. Cancellation.
------------
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it
has paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. Defaulted Interest.
------------------
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee
in writing of the amount of defaulted interest proposed to be paid on each Note
and the date of the proposed payment. The Company shall fix or cause to be
fixed each such special record date and payment date; provided that no such
special record date shall be less than 10 days prior to the related payment date
for such defaulted interest. At least 15 days before the special record date,
the Company (or, upon the written request of the Company, the Trustee in the
name and at the expense of the Company) shall mail or cause to be mailed to
Holders a notice that states the special record date, the related payment date
and the amount of such interest to be paid.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
SECTION 3.01. Notices to Trustee.
------------------
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 45 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price (expressed as a
percentage or principal amount).
SECTION 3.02. Selection of Notes to Be Redeemed.
---------------------------------
If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select the Notes to be redeemed
or purchased among the Holders of the Notes in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee shall deem fair and appropriate;
provided that no Notes of $1,000 or less shall be redeemed in part. In the
- --------
event of partial redemption by lot, the particular Notes to be redeemed shall be
selected, unless otherwise provided herein, not less than 30 nor more than 60
days prior to the redemption date by the Trustee from the outstanding Notes not
previously called for redemption.
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<PAGE>
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.03. Notice of Redemption.
--------------------
Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption
date upon surrender of such Note, a new Note or Notes in principal amount
equal to the unredeemed portion shall be issued upon cancellation of the
original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and
after the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
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<PAGE>
SECTION 3.04. Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. Deposit of Redemption Price.
---------------------------
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
SECTION 3.06. Notes Redeemed in Part.
----------------------
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. Optional Redemption.
-------------------
(a) Except as set forth in clause (b) of this Section 3.07, the
Company shall not have the option to redeem the Notes pursuant to this Section
3.07 prior to March 1, 2004. Thereafter, the Company shall have the option to
redeem the Notes, in whole or in part, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest thereon, if any, to the applicable redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date), if redeemed during the twelve-month
period beginning on March 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR Percentage
---- ----------
<S> <C>
2004................................................ 107.500%
2005................................................ 105.000
2006................................................ 102.500
2007 and thereafter................................. 100.000
</TABLE>
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<PAGE>
(b) Notwithstanding the provisions of clause (a) of this Section 3.07,
at any time prior to March 1, 2001, the Company may on any one or more occasions
redeem up to 20% of the aggregate principal amount at maturity of Notes issued
under this Indenture at a redemption price equal to 112% of the Accreted Value
thereof on the redemption date with the net cash proceeds of one or more Public
Equity Offerings and/or Strategic Equity Investments; provided that at least 80%
of the aggregate principal amount at maturity of Notes issued under this
Indenture remains outstanding immediately after the occurrence of such
redemption (excluding Notes held by the Company or any of its Subsidiaries);and
provided, further, that such redemption shall occur within 60 days of the date
of the closing of such Public Equity Offering and/or Strategic Equity
Investment.
(c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. Mandatory Redemption.
--------------------
The Company shall not be required to make mandatory redemption or
sinking fund payments with respect to the Notes.
SECTION 3.09. Offer to Purchase by Application of Excess Proceeds.
---------------------------------------------------
In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an offer to holders of Notes and Pari Passu Notes (an
"Asset Sale Offer") to purchase the maximum principal amount (or accreted value,
as applicable, of Notes and Pari Passu Notes that may be purchased out of Excess
Proceeds) of Notes and Pari Passu Notes it shall follow the procedures specified
below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
------------
five Business Days after the termination of the Offer Period (the "Purchase
--------
Date"), the Company shall purchase the principal amount (or accreted value, as
- ----
applicable) of Notes and Pari Passu Notes required to be purchased pursuant to
Section 4.10 hereof (on a pro rata basis if Notes and Pari Passu Notes tendered
are in excess of the Excess Proceeds) (which maximum principal amount of Notes
shall be the "Offer Amount") or, if less than the Offer Amount has been
tendered, all Notes and Pari Passu Notes tendered in response to the Asset Sale
Offer. Payment for any Notes so purchased shall be made in the same manner as
interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursu-
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<PAGE>
ant to the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders.
The notice, which shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer
shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue
to accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to
accrete or accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an
Asset Sale Offer may only elect to have all of such Note purchased and may
not elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, or transfer by book-entry transfer, to the Company, a
depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice at least three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives,
not later than the expiration of the Offer Period, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Note the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such Note
purchased;
(h) that, if the aggregate principal amount (or accreted value, as
applicable) of Notes and Pari Passu Notes tendered by Holders exceeds the
Offer Amount, the Company shall select the Notes to be purchased on a pro
rata basis (with such adjustments as may be deemed appropriate by the
Company so that only Notes in denominations of $1,000, or integral
multiples thereof, shall be purchased and Pari Passu Notes); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes, Pari Passu
Notes or portions thereof tendered, and shall deliver to the Trustee an
Officers' Certificate stating that such Notes, and Pari Passu Notes or portions
thereof were accepted for payment by the Company in accordance with the terms of
this Section 3.09. The Company, the Depositary or the Paying Agent, as the case
may be, shall promptly (but in any case not later than five days after the
Purchase Date) mail or deliver to each tendering Holder an amount equal to the
pur-
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<PAGE>
chase price of the Notes tendered by such Holder and accepted by the Company for
purchase, and the Company shall promptly issue a new Note, and the Trustee, upon
written request from the Company shall authenticate and mail or deliver such new
Note to such Holder, in a principal amount equal to any unpurchased portion of
the Note surrendered. Any Note not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof. The Company shall publicly
announce the results of the Asset Sale Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
ARTICLE 4.
COVENANTS
SECTION 4.01. Payment of Notes.
----------------
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest and Liquidated Damages, if any, on the Notes on the dates
and in the manner provided in the Notes. Principal, premium, if any, interest
and Liquidated Damages, if any, shall be considered paid on the date due if the
Paying Agent, if other than the Company or a Subsidiary thereof, holds as of
10:00 a.m. Eastern Time on the due date money deposited by the Company in
immediately available funds and designated for and sufficient to pay all
principal, premium, if any, interest and Liquidated Damages, if any, then due.
The Company shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
SECTION 4.02. Maintenance of Office or Agency.
-------------------------------
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give
prompt
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written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
SECTION 4.03. Reports.
-------
(a) Whether or not required by the rules and regulations of the
Securities and Exchange Commission (the "Commission"), so long as any Notes are
----------
outstanding, the Company will furnish to the Holders of Notes (i) all quarterly
and annual financial information that would be required to be contained in a
filing with the Commission on Forms 10-Q and 10-K if the Company were required
to file such Forms, including a "Management's Discussion and Analysis of
Financial Condition and Results of Operations" that describes the financial
condition and results of operations of the Company and its consolidated
Subsidiaries (showing in reasonable detail, in the footnotes to the financial
statements and in "Management's Discussion and Analysis of Financial Condition
and Results of Operations" (in each case to the extent not prohibited by the
Commission's rules and regulations), (a) the financial condition and results of
operations of the Company and its Restricted Subsidiaries separate from the
financial condition and results of operations of the Unrestricted Subsidiaries
of the Company and (b) the Tower Cash Flow for the most recently completed
fiscal quarter and the Adjusted Consolidated Cash Flow for the most recently
completed four-quarter period) and, with respect to the annual information only,
a report thereon by the Company's certified independent accountants, and (ii)
all current reports that would be required to be filed with the Commission on
Form 8-K if the Company were required to file such reports, in each case within
the time periods specified in the Commission's rules and regulations; provided
that the report for the period ended December 31, 1997 need not be furnished
until April 15, 1998. In addition, following the consummation of the exchange
offer contemplated by the Registration Rights Agreement, whether or not required
by the rules and regulations of the Commission, the Company will file a copy of
all such information and reports with the Commission for public availability
within the time periods specified in the Commission's rules and regulations
(unless the Commission will not accept such a filing) and make such information
available to securities analysts and prospective investors upon request.
(b) For so long as any Notes remain outstanding, the Company shall
furnish to the Holders and to securities analysts and prospective investors,
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.
SECTION 4.04. Compliance Certificate.
----------------------
(a) The Company shall deliver to the Trustee, within 90 days after the
end of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he
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or she may have knowledge and what action the Company is taking or proposes to
take with respect thereto) and that to the best of his or her knowledge no event
has occurred and remains in existence by reason of which payments on account of
the principal of or interest, if any, on the Notes is prohibited or if such
event has occurred, a description of the event and what action the Company is
taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
SECTION 4.05. Taxes.
-----
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.
SECTION 4.06. Stay, Extension and Usury Laws.
------------------------------
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
SECTION 4.07. Restricted Payments.
-------------------
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's Equity Interests
(including, without limitation, any payment in connection with any merger or
consolidation involving the Company) or to the direct or indirect holders of the
Company's Equity Interests in their capacity as such (other than dividends or
distributions payable in Qualified Equity Interests or to the Company or a
Restricted Subsidiary of the Company); (ii) purchase, redeem or otherwise
acquire or retire for value (including without limitation, in con-
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nection with any merger or consolidation involving the Company) any Equity
Interests of the Company; (iii) designate any Restricted Subsidiary as an
Unrestricted Subsidiary; or (iv) make any Restricted Investment (all such
payments and other actions set forth in clauses (i) through (iv) above being
collectively referred to as "Restricted Payments"), unless, at the time of and
-------------------
after giving effect to such Restricted Payment:
(a) no Default shall have occurred and be continuing or would occur as
a consequence thereof; and
(b) the Company would have been permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Debt to Adjusted Consolidated Cash
Flow Ratio test set forth in the first paragraph of Section 4.09; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the date of this Indenture (excluding Restricted
Payments permitted by clauses (ii) and (iii) of the next succeeding
paragraph), is less than the sum, without duplication, of (i) 50% of the
Consolidated Net Income of the Company (or, in the event such Consolidated
Net Income shall be a deficit, minus 100% of such deficit) accrued
subsequent to the Issue Date to the most recent date for which financial
information is available to the Company, taken as one accounting period,
plus (ii) 100% of the aggregate net cash proceeds received by the Company
(from persons other than Subsidiaries) since the Issue Date as a
contribution to its common equity capital or from the issue and sale of
Qualified Equity Interests (except to the extent such net cash proceeds are
used to incur new Indebtedness outstanding pursuant to clause (x) of the
second paragraph of Section 4.09) or from the issue and sale (other than to
a Subsidiary of the Company) of Disqualified Stock or debt securities of
the Company that have been converted into Qualified Equity Interests
(provided that any net cash proceeds that are used pursuant to Section
3.07(b) shall not be so included), plus (iii) to the extent that any
Unrestricted Subsidiary of the Company is redesignated as a Restricted
Subsidiary after the Issue Date, the fair market value of such Subsidiary
as of the date of such redesignation, plus (iv) to the extent not included
in the Adjusted Consolidated Cash Flow referred to in clause (i), 100% of
the net cash proceeds received by the Company or a Restricted Subsidiary
from (x) the sale or other disposition of Restricted Investments made by
the Company or any Restricted Subsidiary after the Issue Date or (y) the
sale of the Capital Stock of any Unrestricted Subsidiary by the Company or
any Restricted Subsidiary or the sale of all or substantially all of the
assets of any Unrestricted Subsidiary to the extent that a liquidating
dividend or similar distribution is paid to the Company or any Restricted
Subsidiary from the proceeds of such asset sale.
The foregoing provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; or (ii) the making of any Investment or the redemption or repurchase
of any Equity Interests in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Company) of,
any Qualified Equity Interests; provided that such net cash proceeds are not
used to incur new Indebtedness pursuant to clause (x) of the second paragraph of
Section 4.09 or pursuant to Section 3.07(b); and provided further that, in each
such case, the amount of any such net cash proceeds that are so utilized shall
be excluded from clause (c)(ii) of the preceding paragraph; or (iii) the
repurchase, redemption or other
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acquisition or retirement for value of Equity Interests of the Company held by
any member of the Company's management; provided that the aggregate amount
expended pursuant to this clause (iii) shall not exceed $500,000 in any twelve-
month period.
The Board of Directors may designate any Restricted Subsidiary to be
an Unrestricted Subsidiary if such Subsidiary, after giving effect to such
designation, would meet the requirements of the definition of "Unrestricted
Subsidiary." The Company shall not, and shall not permit any of its
Subsidiaries to, enter into, or suffer to exist, any transaction or arrangement,
with a Subsidiary that is a Restricted Subsidiary that would be inconsistent
with or violate the terms set forth in the definition of "Unrestricted
Subsidiary."
The amount of all Restricted Payments (other than cash), including the
amount of the Restricted Payment that will be deemed to occur upon the
designation of a Subsidiary as an Unrestricted Subsidiary, shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or the applicable Restricted
Subsidiary, or of the Company's proportionate interest in the Subsidiary so to
be designated as the case may be, pursuant to the Restricted Payment.
SECTION 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries.
--------------------------------------------------------------
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary to (i)(a) pay dividends or make any other
distributions to the Company or any of its Restricted Subsidiaries (1) on its
Capital Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any indebtedness owed to the Company or any
of its Restricted Subsidiaries, (ii) make loans or advances to the Company or
any of its Restricted Subsidiaries or (iii) transfer any of its properties or
assets to the Company or any of its Restricted Subsidiaries. However, the
foregoing restrictions will not apply to encumbrances or restrictions existing
under or by reason of (a) any agreement or instrument governing Existing
Indebtedness as in effect on the Issue Date or as amended, modified, restated or
renewed in any manner not materially more restrictive, taken as a whole, (b) the
Indenture, the Notes or the New Credit Facility or any other Credit Facility (so
long as such other Credit Facility contains restrictions that are not materially
more restrictive, taken as a whole, than those described in the Commitment
Letter), (c) applicable law, (d) any instrument governing Indebtedness or
Capital Stock of a Person acquired by the Company or any of its Restricted
Subsidiaries as in effect at the time of such acquisition (except to the extent
such Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of the Indenture to
be incurred, (e) by reason of customary non-assignment provisions in leases or
licenses or other contracts entered into in the ordinary course of business, (f)
purchase money obligations for property acquired in the ordinary course of
business that impose restrictions of the nature described in clause (iii) above
on the property so acquired, (g) the provisions of agreements governing
Indebtedness incurred pursuant to clause (iv) of the second paragraph of Section
4.09, (h) any agreement for the sale of a Restricted Subsidiary that restricts
that Restricted Subsidiary pending its sale, (i) Permitted Refinancing
Indebtedness, provided that the restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are not materially more
restrictive, taken as a whole, than those contained in the agreements governing
the
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Indebtedness being refinanced, (j) Liens permitted to be incurred pursuant to
the provisions of Section 4.12 that limit the right of the debtor to transfer
the assets subject to such Liens, (k) provisions with respect to the disposition
or distribution of assets or property in joint venture agreements and other
similar agreements and (l) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the ordinary course of
business.
SECTION 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.
----------------------------------------------------------
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly, or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
-----
Acquired Debt) and the Company will not issue any Disqualified Stock and will
not permit any of its Restricted Subsidiaries to issue any shares of preferred
stock; provided, however, that the Company may incur Indebtedness (including
Acquired Debt) or issue shares of Disqualified Stock and the Company's
Restricted Subsidiaries may incur Eligible Indebtedness if, in each case, (i) no
Default shall have occurred and be continuing or would occur as a consequence
thereof and (ii) the Company's Debt to Adjusted Consolidated Cash Flow Ratio at
the time of incurrence of such Indebtedness or the issuance of such Disqualified
Stock, after giving pro forma effect to such incurrence or issuance as of such
date and to the use of proceeds therefrom would have been no greater than (a)
6.5 to 1.0 if such incurrence or issuance is prior to the first anniversary of
the Issue Date; (b) 6.0 to 1.0 if such incurrence or issuance is on or after the
first anniversary of the Issue Date but prior to the second anniversary of the
Issue Date; (c) 5.5 to 1.0 if such incurrence or issuance is on or after the
second anniversary of the Issue Date; and (d) 6.0 to 1.0 if a Public Equity
Offering has occurred and a ratio more restrictive to the Company would
otherwise be in effect.
The provisions of the first paragraph of this covenant shall not apply
to the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt") if no Default shall have occurred and be continuing or would
- ---------------
occur as a consequence thereof:
(i) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness under one or more Credit Facilities or through
the issuance of Seller Paper in an aggregate principal amount (with letters
of credit being deemed to have an aggregate principal amount equal to the
maximum potential liability of the Company and its Restricted Subsidiaries
thereunder) at any one time outstanding not to exceed $125.0 million less
the aggregate amount of commitment reductions under Credit Facilities
resulting from the application of proceeds of Asset Sales since the Issue
Date; provided, however, that the aggregate principal amount of Seller
Paper at any one time outstanding under this clause (i) shall not exceed
$50.0 million;
(ii) the incurrence by the Company and its Restricted Subsidiaries
of the Existing Indebtedness;
(iii) the incurrence by the Company of Indebtedness represented by the
Notes issued on the Issue Date, and the New Notes;
(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case incurred
for the purpose of financing all or any part of the
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purchase price or cost of construction or improvement of property, plant or
equipment used in the business of the Company or such Restricted
Subsidiary, in an aggregate principal amount, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any other
Indebtedness incurred pursuant to this clause (iv), not to exceed $5.0
million at any one time outstanding;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace,
defease or refund, Indebtedness (other than intercompany Indebtedness) that
was permitted by the Indenture to be incurred under the first paragraph
hereof or clause (ii) or (iii) or this clause (v) of this paragraph;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness or intercompany preferred stock
between or among the Company and any of its Restricted Subsidiaries;
provided, however, that (i) if the Company is the obligor on such
Indebtedness, such Indebtedness is expressly subordinated to the prior
payment in full in cash of all Obligations with respect to the Notes and
(ii)(A) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness or preferred stock being held by a Person
other than the Company or a Restricted Subsidiary and (B) any sale or other
transfer of any such Indebtedness or preferred stock to a Person that is
not either the Company or a Restricted Subsidiary shall be deemed, in each
case, to constitute an incurrence of such Indebtedness or preferred stock
by the Company or such Restricted Subsidiary, as the case may be;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of
fixing or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of the Indenture to be
outstanding or currency exchange risk or otherwise entered into for bona
fide purposes designed to protect against interest rate or currency
exchange risk and not for speculative purposes;
(viii) the guarantee by the Company or any of its Restricted
Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of
the Company that was permitted to be incurred by another provision of the
Indenture;
(ix) the incurrence by the Company or any of its Restricted
Subsidiaries of Acquired Debt in connection with the acquisition of assets
or a new Subsidiary and the incurrence by the Company's Restricted
Subsidiaries of Indebtedness as a result of the designation of an
Unrestricted Subsidiary as a Restricted Subsidiary; provided that, in the
case of any such incurrence of Acquired Debt, such Acquired Debt was
incurred by the prior owner of such assets or such Restricted Subsidiary
prior to such acquisition by the Company or one of its Restricted
Subsidiaries and was not incurred in connection with, or in contemplation
of, such acquisition by the Company or one of its Restricted Subsidiaries;
and provided further that, in the case of any incurrence pursuant to this
clause (ix), the Company would have been permitted to incur at least $1.00
of additional Indebtedness (other than Permitted Debt) immediately after
such incurrence pursuant to the Debt to Adjusted Consolidated Cash Flow
Ratio test set forth in the first paragraph of this Section 4.09,
calculated as if such incurrence had occurred as of the actual date of
incurrence and the related acquisition
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or designation (as applicable) had occurred at the beginning of the most
recently ended four full fiscal quarter period of the Company for which
internal financial statements are available;
(x) the incurrence by the Company of Indebtedness not to exceed, at
any one time outstanding, 2.0 times the aggregate net cash proceeds from
the issuance and sale, other than to a Subsidiary, of Equity Interests
(other than Disqualified Stock) of the Company since the Issue Date (less
the amount of such proceeds used to make Restricted Payments as provided in
clause (c)(ii) of the first paragraph or clause (ii) of the second
paragraph of Section 4.07); provided that such Indebtedness does not mature
prior to the Stated Maturity of the Notes and the Weighted Average Life to
Maturity of such Indebtedness is longer than that of the Notes;
(xi) the issuance by Restricted Subsidiaries of Permitted Subsidiary
Equity Interests; and
(xii) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount
(or accreted value, as applicable) at any time outstanding not to exceed
$5.0 million.
The Company shall not (i) incur any Indebtedness that is contractually
subordinated in right of payment to any other Indebtedness of the Company unless
such Indebtedness is also contractually subordinated in right of payment to the
Notes on substantially identical terms; provided, however, that no Indebtedness
of the Company shall be deemed to be contractually subordinated in right of
payment to any other Indebtedness of the Company solely by virtue of being
unsecured; and (ii) permit any of its Unrestricted Subsidiaries to incur any
Indebtedness other than Non-Recourse Debt. Restricted Subsidiaries may not
issue or sell, and the Company may not permit any Restricted Subsidiary to have
outstanding, any Equity Interests (other than (x) Equity Interests held by the
Company or its Restricted Subsidiaries or (y) Permitted Subsidiary Equity
Interests).
For purposes of determining compliance with this Section 4.09, in the
event that an item of Indebtedness or preferred stock meets the criteria of more
than one of the categories of Permitted Debt described in clauses (i) through
(xii) in the second paragraph of this Section 4.09 or is entitled to be incurred
pursuant to the first paragraph of this Section 4.09, the Company shall, in its
sole discretion, classify such item of Indebtedness in any manner that complies
with this Section 4.09. Accrual of interest, accretion or amortization of
original issue discount and the payment of interest in the form of additional
Indebtedness will not be deemed to be an incurrence of Indebtedness for purposes
of this covenant.
SECTION 4.10. Asset Sales.
-----------
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of (a) cash
or Cash Equivalents, (b) Tower Assets or (c) any combination of the foregoing;
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provided that the amount of (x) any liabilities (as shown on the Company's or
such Restricted Subsidiary's most recent balance sheet) of the Company or any
Restricted Subsidiary (other than contingent liabilities and liabilities that
are by their terms subordinated to the Notes or any guarantee thereof) that are
assumed by the transferee of any such assets pursuant to a customary novation
agreement that releases the Company or such Restricted Subsidiary from further
liability and (y) any securities, notes or other obligations received by the
Company or any such Restricted Subsidiary from such transferee that are
converted by the Company or such Restricted Subsidiary into cash within 20 days
of the applicable Asset Sale (to the extent of the cash received) shall be
deemed to be cash for purposes of this provision.
Within 360 days after the receipt of any Net Proceeds from an Asset
Sale, the Company or the applicable Restricted Subsidiary may apply such Net
Proceeds to: (a) reduce (which reduction may be temporary) Indebtedness under a
Credit Facility; (b) reduce other Indebtedness of any of the Company's
Restricted Subsidiaries; (c) acquire all or substantially all the assets of a
Permitted Business; (d) acquire Voting Stock of a Permitted Business from a
Person that is not a Subsidiary of the Company; provided, that, after giving
effect thereto, the Company or its Restricted Subsidiary owns a majority of such
Voting Stock; or (e) make a capital expenditure or acquire other long-term
assets that are used or useful in a Permitted Business. Pending the final
application of any such Net Proceeds, the Company may invest such Net Proceeds
in any manner that is not prohibited by the Indenture. Any Net Proceeds from
Asset Sales that are not applied or invested as provided in the first sentence
of this paragraph will be deemed to constitute "Excess Proceeds." When the
---------------
aggregate amount of Excess Proceeds exceeds $5.0 million, the Company will be
required to make an offer (an "Asset Sale Offer") to all Holders of Notes and
----------------
all holders of other senior Indebtedness of the Company containing provisions
similar to those set forth in this Indenture with respect to offers to purchase
or redeem with the proceeds of sales of assets (such other Senior Indebtedness
of the Company, "Pari Passu Notes") to purchase, on a pro rata basis, the
----------------
maximum principal amount (or accreted value, as applicable) of Notes and such
other senior Indebtedness of the Company that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the principal
amount (or accreted value, as applicable) thereof plus accrued and unpaid
interest thereon, if any, to the date of purchase (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date), in accordance with the procedures set forth in
the Indenture and such other senior Indebtedness of the Company. To the extent
that any Excess Proceeds remain after consummation of an Asset Sale Offer, the
Company may use such Excess Proceeds for any purpose not otherwise prohibited by
this Indenture. If the aggregate principal amount of Notes and such other senior
Indebtedness of the Company tendered into such Asset Sale Offer surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes and such other senior Indebtedness to be purchased on a pro rata
basis. Upon completion of such offer to purchase, the amount of Excess Proceeds
shall be reset at zero.
SECTION 4.11. Transactions with Affiliates.
----------------------------
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or Guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
---------------------
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Restricted Subsidiary than those that
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would have been obtained in a comparable transaction by the Company or such
Restricted Subsidiary with an unrelated Person and (ii) the Company delivers to
the Trustee (a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $1.0
million, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause (i)
above and that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million, an opinion as to the fairness
to the Holders of such Affiliate Transaction from a financial point of view
issued by an accounting, appraisal or investment banking firm of national
standing. Notwithstanding the foregoing, the following items shall not be deemed
to be Affiliate Transactions: (i) any employment arrangements with any executive
officer of the Company or a Restricted Subsidiary that is entered into by the
Company or any of its Restricted Subsidiaries in the ordinary course of business
and consistent with compensation arrangements of similarly situated executive
officers at comparable companies engaged in Permitted Businesses, (ii)
transactions between or among the Company and/or its Restricted Subsidiaries,
(iii) payment of directors' fees in an aggregate annual amount not to exceed
$25,000 per Person, (iv) Restricted Payments and Permitted Investments that are
permitted by Section 4.07 and (v) the issuance or sale of Equity Interests
(other than Disqualified Stock) of the Company.
SECTION 4.12. Liens.
-----
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien securing Indebtedness or trade payables on any asset now owned or
hereafter acquired, or any income or profits therefrom or assign or convey any
right to receive income therefrom, except Permitted Liens.
SECTION 4.13. Business Activities.
-------------------
The Company shall not, and shall not permit any Restricted Subsidiary
to, engage in any business other than Permitted Businesses, except to such
extent as would not be material to the Company and its Restricted Subsidiaries
taken as a whole.
SECTION 4.14. Corporate Existence.
-------------------
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Restricted Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Restricted Subsidiary and (ii) the rights (charter and statutory), licenses
and franchises of the Company and its Subsidiaries; provided, however, that the
Company shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any of its Restricted
Subsidiaries, if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
its Restricted Subsidiaries, taken as a whole, and that the loss thereof is not
adverse in any material respect to the Holders of the Notes.
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SECTION 4.15. Offer to Repurchase upon Change of Control.
------------------------------------------
(a) Upon the occurrence of a Change of Control, each Holder of Notes
shall have the right to require the Company to purchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to
the offer described below (the "Change of Control Offer") at an offer price in
-----------------------
cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest thereon, if any (subject to the right of Holders of record on
the relevant record date to receive interest due on the relevant interest
payment date), to the date of purchase or, in the case of purchases of Notes
prior to the Full Accretion Date, at a purchase price equal to 101% of the
Accreted Value thereof on the date of purchase (the "Change of Control
-----------------
Payment"). Within 30 days following any Change of Control, the Company shall
- -------
mail a notice to each Holder stating: (i) that the Change of Control Offer is
being made pursuant to this Section 4.15 and that all Notes tendered will be
accepted for payment; (ii) the purchase price and the purchase date, which shall
be no earlier than 30 business days and no later than 60 days from the date such
notice is mailed (the "Change of Control Payment Date"); (iii) that any Note not
------------------------------
tendered will continue to accrete or accrue interest; (iv) that, unless the
Company defaults in the payment of the Change of Control Payment, all Notes
accepted for payment pursuant to the Change of Control Offer shall cease to
accrete or accrue interest after the Change of Control Payment Date; (v) that
Holders electing to have any Notes purchased pursuant to a Change of Control
Offer will be required to surrender the Notes, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Notes completed, to the Paying
Agent at the address specified in the notice prior to the close of business on
the third Business Day preceding the Change of Control Payment Date; (vi) that
Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the second Business Day
preceding the Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of Notes delivered for purchase, and a statement that such Holder is
withdrawing his election to have the Notes purchased; and (vii) that Holders
whose Notes are being purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered, which
unpurchased portion must be equal to $1,000 in principal amount or an integral
multiple thereof.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (i) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (iii) deliver or cause to be delivered to
the Trustee the Notes so accepted together with an Officers' Certificate stating
the aggregate principal amount of Notes or portions thereof being purchased by
the Company. The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof.
(c) The Company shall not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Indenture applicable to a Change of Control Offer
made by the Company and purchases all Notes validly tendered and not withdrawn
under such Change of Control Offer. The provisions under this Indenture
relative to the
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Company's obligation to make an offer to repurchase the Notes as a result of a
Change of Control may be waived or modified with the written consent of the
Holders of a majority in principal amount of the Notes then outstanding.
(d) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations applicable to any Change of Control Offer. To the extent that
the provisions of any such securities laws or securities regulations conflict
with the provisions of the covenant described above, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under the covenant described above by virtue
thereof.
SECTION 4.16. Limitation on Sale and Leaseback Transactions.
---------------------------------------------
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction (as seller);
provided that the Company or any of its Restricted Subsidiaries may enter into a
sale and leaseback transaction if (i) the Company or such Restricted Subsidiary,
as applicable, could have (a) incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction pursuant to
the Debt to Adjusted Consolidated Cash Flow Ratio test set forth in the first
paragraph of Section 4.09 and (b) incurred a Lien to secure such Indebtedness
pursuant to Section 4.12, (ii) the gross cash proceeds of such sale and
leaseback transaction are at least equal to the fair market value (as determined
in good faith by the Board of Directors) of the property that is the subject of
such sale and leaseback transaction and (iii) the transfer of assets in such
sale and leaseback transaction is permitted by, and the Company applies the
proceeds of such transaction in compliance with, Section 4.10.
SECTION 4.17. [Reserved]
SECTION 4.18. Limitation on Issuances of Guarantees of Indebtedness.
-----------------------------------------------------
The Company will not permit any Restricted Subsidiary, directly or
indirectly, to Guarantee or pledge any assets to secure the payment of any
Indebtedness of the Company (except Indebtedness of the Company under a
guarantee of Indebtedness of one or more of its Restricted Subsidiaries) unless
such Restricted Subsidiary simultaneously executes and delivers a supplemental
indenture to this Indenture providing for the Guarantee of the payment of the
Notes by such Restricted Subsidiary, which Guarantee shall be senior to or pari
passu with such Restricted Subsidiary's Guarantee of or pledge to secure such
other Indebtedness. Notwithstanding the foregoing, any such Guarantee by a
Restricted Subsidiary of the Notes shall provide by its terms that it shall be
automatically and unconditionally released and discharged upon any sale,
exchange or transfer, to any Person other than a Restricted Subsidiary of the
Company, of all of the Company's stock in, or all or substantially all the
assets of, such Restricted Subsidiary, which sale, exchange or transfer is made
in compliance with the applicable provisions of the Indenture. The form of such
Guarantee is attached as Exhibit D hereto.
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ARTICLE 5.
SUCCESSORS
SECTION 5.01. Merger, Consolidation or Sale of Assets.
---------------------------------------
The Company may not consolidate or merge with or into (whether or not
the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions to another corporation, Person or
entity unless (i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Company under the Notes
and this Indenture pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee; and (iii) immediately after such transaction no
Default exists.
SECTION 5.02. Successor Corporation Substituted.
---------------------------------
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "the Company" shall refer instead
to the successor corporation and not to the Company), and may exercise every
right and power of the Company under this Indenture with the same effect as if
such successor Person had been named as the Company herein, provided, however,
that the predecessor company shall not be relieved from the obligation to pay
the principal of and interest on the Notes except in the case of a sale of all
of the Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default.
-----------------
An "Event of Default" occurs if:
(a) the Company's defaults in the payment when due of interest on the
Notes and such default continues for a period of 30 days;
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes when the same becomes due and payable at
maturity, upon redemption (including in connection with an offer to
purchase) or otherwise;
(c) the Company fails to comply with any of the provisions of Section
4.10, 4.15 or 5.01 hereof;
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(d) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture or the Notes
for 30 days after notice to the Company by the Trustee or the Holders of at
least 25% in aggregate principal amount at maturity of the Notes then
outstanding voting as a single class;
(e) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Significant
Subsidiaries (or the payment of which is guaranteed by the Company or any
of its Significant Subsidiaries), whether such Indebtedness or guarantee
now exists, or is created after the date of this Indenture, which default
(a) is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "Payment
Default") or (b) results in the acceleration of such Indebtedness prior to
its express maturity and, in each case, the principal amount of such
Indebtedness, under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $5.0 million or more;
(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company
or any of its Significant Subsidiaries or any group of Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary and such
judgment or judgments remain undischarged for a period (during which
execution shall not be effectively stayed) of 60 days; provided that the
aggregate of all such undischarged judgments exceeds $5.0 million;
(g) the Company or any of its Restricted Subsidiaries that is a
Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in
an involuntary case,
(iii) consents to the appointment of a Custodian of it or for
all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due; or
(h) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Company or any Restricted
Subsidiary that is a Significant Subsidiary in an involuntary case;
(ii) appoints a Custodian of the Company or any Restricted
Subsidiary that is a Significant Subsidiary or for all or
substantially all of the property of the Company or any Restricted
Subsidiary that is a Significant Subsidiary; or
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<PAGE>
(iii) orders the liquidation of the Company or any Restricted
Subsidiary that is a Significant Subsidiary; and the order or decree
remains unstayed and in effect for 60 consecutive days.
SECTION 6.02. Acceleration.
------------
If any Event of Default (other than an Event of Default specified in
clause (g) or (h) of Section 6.01 hereof with respect to the Company, any
Significant Subsidiary or any group of Significant Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary) occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount at maturity of the
then outstanding Notes may declare all the Notes to be due and payable
immediately. Upon any such declaration, the principal of (or, if prior to the
Full Accretion Date, the Accreted Value of) and accrued and unpaid interest, if
any, shall become due and payable immediately. Notwithstanding the foregoing,
if an Event of Default specified in clause (g) or (h) of Section 6.01 hereof
occurs with respect to the Company, any of its Significant Subsidiaries or any
group of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary, shall be due and payable immediately without further action or
notice. The Holders of a majority in aggregate principal amount of the then
outstanding Notes by written notice to the Trustee may on behalf of all of the
Holders rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, interest or premium that has become due solely
because of the acceleration) have been cured or waived.
SECTION 6.03. Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, interest and Liquidated Damages, if any, on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
SECTION 6.04. Waiver of Past Defaults.
-----------------------
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium, if any, or interest on, the Notes
(including in connection with an offer to purchase) (provided, however, that the
-------- -------
Holders of a majority in aggregate principal amount of the then outstanding
Notes may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration). Upon any such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
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SECTION 6.05. Control by Majority.
-------------------
Holders of a majority in principal amount at maturity of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee determines
may be unduly prejudicial to the rights of other Holders of Notes or that may
involve the Trustee in personal liability.
SECTION 6.06. Limitation on Suits.
-------------------
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount at maturity of the
then outstanding Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any
loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount at maturity of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
SECTION 6.07. Rights of Holders of Notes to Receive Payment.
---------------------------------------------
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee.
--------------------------
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of
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collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim.
--------------------------------
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall
be deemed to authorize the Trustee to authorize or consent to or accept or adopt
on behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. Priorities.
----------
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs
and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium and Liquidated Damages, if any, and interest,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Notes for principal, premium and Liquidated
Damages, if any and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
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SECTION 6.11. Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount at maturity of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
SECTION 7.01. Duties of Trustee.
-----------------
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
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(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held
in trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02. Rights of Trustee.
-----------------
(a) The Trustee may conclusively rely upon any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
SECTION 7.03. Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
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permission to continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.
SECTION 7.04. Trustee's Disclaimer.
--------------------
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.05. Notice of Defaults.
------------------
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the Notes.
SECTION 7.06. Reports by Trustee to Holders of the Notes.
------------------------------------------
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA (S) 313(a) (but if no event described in
TIA (S) 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA
(S) 313(b)(2). The Trustee shall also transmit by mail all reports as required
by TIA (S) 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA (S) 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any stock
exchange.
SECTION 7.07. Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses
shall include the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
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the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to
the extent applicable.
SECTION 7.08. Replacement of Trustee.
----------------------
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount at maturity of the then outstanding Notes may
remove the Trustee by so notifying the Trustee and the Company in writing. The
Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount at maturity of the then
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outstanding Notes may appoint a successor Trustee to replace the successor
Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount at maturity of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10, such Holder of a Note may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee; provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Company's obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, etc.
--------------------------------
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10. Eligibility; Disqualification.
-----------------------------
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $50 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA (S) 310(a)(1), (2) and (5). The Trustee is subject to TIA
(S) 310(b).
SECTION 7.11. Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
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ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
--------------------------------------------------------
When (i) the Company delivers to the Trustee all outstanding Notes
(other than Notes replaced pursuant to Section 2.07) for cancellation or (ii)
all outstanding Notes have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article 3 hereof and
the Company irrevocably deposits with the Trustee funds sufficient to pay at
maturity or upon redemption all outstanding Notes, including interest thereon to
maturity or such redemption date (other than Notes replaced pursuant to Section
2.07), and if in either case the Company pays all other sums payable hereunder
by the Company, then this Indenture shall, subject to the proviso set forth in
Section 8.02, cease to be of further effect. The Company may, at the option of
its Board of Directors evidenced by a resolution set forth in an Officers'
Certificate, at any time, elect to have either Section 8.02 or 8.03 hereof
applied to all outstanding Notes upon compliance with the conditions set forth
below in this Article Eight.
SECTION 8.02. Legal Defeasance and Discharge.
------------------------------
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall
be deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same); provided that the following provisions which shall
--------
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of outstanding Notes to receive solely from the trust fund described in
Section 8.04 hereof, and as more fully set forth in such Section, payments in
respect of the principal of, premium, if any, and interest and Liquidated
Damages on such Notes when such payments are due, (b) the Company's obligations
with respect to such Notes under Article 2 and Section 4.02 hereof, (c) the
rights, powers, trusts, duties and immunities of the Trustee hereunder and the
Company's obligations in connection therewith and (d) this Article Eight.
Subject to compliance with this Article Eight, the Company may exercise its
option under this Section 8.02 notwithstanding the prior exercise of its option
under Section 8.03 hereof.
SECTION 8.03. Covenant Defeasance.
-------------------
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.15, 4.16, 4.17 and 4.18 hereof with respect to the
outstanding Notes on and after the date the conditions set forth in Section 8.04
are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
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thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding Notes,
the Company may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.01 hereof, but,
except as specified above, the remainder of this Indenture and such Notes shall
be unaffected thereby. In addition, upon the Company's exercise under Section
8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(d) through 6.01(f) hereof shall not constitute Events of Default.
SECTION 8.04. Conditions to Legal or Covenant Defeasance.
------------------------------------------
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, cash in United States dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest
and Liquidated Damages on the outstanding Notes on the stated maturity or
on the applicable redemption date, as the case may be, and the Company must
specify whether the Notes are being defeased to maturity or to a particular
redemption date;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that (A) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling or (B) since the date of this Indenture, there has been a
change in the applicable federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that,
the Holders of the outstanding Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such Legal Defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of
the outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Covenant Defeasance
had not occurred;
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(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the incurrence of Indebtedness all or a portion of
the proceeds of which will be used to defease the Notes pursuant to this
Article Eight concurrently with such incurrence) or insofar as Sections
6.01(g) or 6.01(h) hereof is concerned, at any time in the period ending on
the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the Company or
any of its Restricted Subsidiaries is a party or by which the Company or
any of its Restricted Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Opinion of
Counsel (which may be subject to customary exceptions) to the effect that
on the 91st day following the deposit, the trust funds will not be subject
to the effect of any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
SECTION 8.05. Deposited Money and Government Securities to Be
Held in Trust; Other Miscellaneous Provisions.
----------------------------------------------
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, interest and
Liquidated Damages, if any, but such money need not be segregated from other
funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion
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of a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
SECTION 8.06. Repayment to Company.
--------------------
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as a
secured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease.
SECTION 8.07. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. Without Consent of Holders of Notes.
-----------------------------------
Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture or the Notes without the consent
of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article 2 hereof
(including the related definitions) in a manner that does not materially
adversely affect any Holder;
(c) to provide for the assumption of the Company's obligations to the
Holders of the Notes by a successor to the Company pursuant to Article 5
hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the
legal rights hereunder of any Holder of the Note;
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(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.02. With Consent of Holders of Notes.
--------------------------------
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture (including Section 3.09, 4.10 and
4.15 hereto) and the Notes may be amended or supplemented with the consent of
the Holders of at least 66 2/3% of the aggregate principal amount at maturity of
the Notes then outstanding voting as a single class (including consents obtained
in connection with a tender offer or exchange offer for, or purchase of, the
Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or
Event of Default (other than a Default or Event of Default in the payment of the
principal of, premium, if any, or interest on the Notes, except a payment
default resulting from an acceleration that has been rescinded) or compliance
with any provision of this Indenture or the Notes may be waived with the consent
of the Holders of a majority in principal amount at maturity of the then
outstanding Notes voting as a single class (including consents obtained in
connection with a tender offer or exchange offer for, or purchase of, the
Notes). Section 2.08 hereof shall determine which Notes are considered to be
"outstanding" for purposes of this Section 9.02.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount at maturity of the Notes then outstanding
voting as a single class may waive compliance in a particular instance by the
Company with any provision of this Indenture or
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the Notes. However, without the consent of each Holder affected, an amendment or
waiver under this Section 9.02 may not (with respect to any Notes held by a non-
consenting Holder):
(a) reduce the principal amount at maturity of Notes whose Holders
must consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note
or alter or waive any of the provisions with respect to the redemption of
the Notes except as provided above with respect to Sections 3.09, 4.10 and
4.15 hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount at maturity of the then outstanding Notes and a
waiver of the payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the
Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal of, premium, if any, or interest on the Notes;
(g) change the ranking of the Notes; or
(h) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions.
SECTION 9.03. Compliance with Trust Indenture Act.
-----------------------------------
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
SECTION 9.04. Revocation and Effect of Consents.
---------------------------------
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.05. Notation on or Exchange of Notes.
--------------------------------
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue
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and the Trustee shall, upon receipt of an Authentication Order, authenticate new
Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. Trustee to Sign Amendments, etc.
-------------------------------
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article Nine if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Section 10.04 hereof, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10.
MISCELLANEOUS
SECTION 10.01. Trust Indenture Act Controls.
----------------------------
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA (S) 318(c), the imposed duties shall control.
SECTION 10.02. Notices.
-------
Any notice or communication by the Company or the Trustee to the
others is duly given if in writing and delivered in Person or mailed by first
class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address
If to the Company:
SBA Communications Corporation
One Town Center Road
Boca Raton, FL 33486
Telephone No.: (516) 995-7670
Telecopier No.: (561) 995-7626
Attention: General Counsel
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With a copy to:
Latham & Watkins
885 Third Avenue
Suite 1000
New York, NY 10022-4802
Telephone No.: (212) 906-1200
Telecopier No.: (212) 751-4864
Attention: Kirk Davenport
If to the Trustee:
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Telecopier No.: (617) 664-5371
Attention: Corporate Trust Department
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA (S) 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 10.03. Communication by Holders of Notes with Other Holders of Notes.
-------------------------------------------------------------
Holders may communicate pursuant to TIA (S) 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company,
the Trustee, the Registrar and anyone else shall have the protection of TIA (S)
312(c).
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SECTION 10.04. Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 11.05 hereof) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been satisfied.
SECTION 10.05. Statements Required in Certificate or Opinion.
---------------------------------------------
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA (S) 314(a)(4)) shall comply with the provisions of TIA
(S) 314(e) and shall include:
(a) a statement that the Person(s) making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has or
they have made such examination or investigation as is necessary to enable
such Person or Persons to express an informed opinion as to whether or not
such covenant or condition has been satisfied; and
(d) a statement as to whether or not, in the opinion of such Persons,
such condition or covenant has been satisfied.
SECTION 10.06. Rules by Trustee and Agents.
---------------------------
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 10.07. No Personal Liability of Directors, Officers, Employees and
-----------------------------------------------------------
Stockholders.
------------
No past, present or future director, officer, employee, incorporator
or stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes, this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or
-70-
<PAGE>
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes.
SECTION 10.08. Governing Law.
-------------
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 10.09. No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person.
Any such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 10.10. Successors.
----------
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
SECTION 10.11. Severability.
------------
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 10.12. Counterpart Originals.
---------------------
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 10.13. Table of Contents, Headings, etc.
--------------------------------
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
-71-
<PAGE>
SIGNATURES
Dated as of March 2, 1998
-
SBA COMMUNICATIONS CORPORATION
By: /s/ Jeffrey A. Stoops
-----------------------------------
Name: Jeffrey A. Stoops
Title: Sr. Vice President
By: /s/ Steven E. Bernstein
-----------------------------------
Name: Steven E. Bernstein
Title: President
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: /s/ Gerald P. Wheeler
-----------------------------------
Name: Gerald P. Wheeler
Title: Vice President
-72-
<PAGE>
FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE
DISCOUNT; FOR EACH $1,000 PRINCIPAL AMOUNT OF THIS SECURITY, THE ISSUE
PRICE IS $558.50, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $1,041.50, THE
ISSUE DATE IS MARCH 2, 1998 AND THE YIELD TO MATURITY IS 12% PER ANNUM.
CUSIP/CINS
12% Senior Discount Notes due 2008
No. Principal Amount at Maturity $
SBA COMMUNICATIONS CORPORATION
promises to pay to , or registered assigns, the principal sum of
on march 1, 2008.
Interest Payment Dates: September 1 and March 1, commencing September 1, 2003
Record Dates: August 15 and February 15
Dated:
SBA COMMUNICATIONS CORPORATION
By: ___________________________________
Name:
Title:
By: ___________________________________
Name:
Title:
This is one of the [Global] Notes referred
to in the within-mentioned Indenture:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: ______________________________
Authorized Signatory
A1-1
<PAGE>
[Back of Note]
12% Senior Discount Notes due 2008
[THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL
NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a)
OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE
FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS
GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR
WRITTEN CONSENT OF THE COMPANY.]
[THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A)
SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a)
TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE
COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL,
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF
THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE.]
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. Interest. SBA Communications Corporation, a Florida corporation
--------
(the "Company"), promises to pay interest on the principal amount of this Note
at 12% per annum from
A1-2
<PAGE>
March 1, 2003 until maturity. The Company will pay interest semi-annually in
arrears on March 1 and September 1 of each year, or if any such day is not a
Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"); provided that the first such interest payment date shall be September 1,
--------
2003. Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from March 1, 2003. The
Company shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time to
time on demand at a rate that is 1% per annum in excess of the rate then in
effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Notes
-----------------
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the February 15 or August 15 next preceding the
Interest Payment Date (each, a "Record Date"), even if such Notes are canceled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
The Notes will be payable as to principal, premium, if any, and interest at the
office or agency of the Company maintained for such purpose within or without
the City and State of New York, or, at the option of the Company, payment of
interest may be made by check mailed to the Holders at their addresses set forth
in the register of Holders, and provided that payment by wire transfer of
immediately available funds will be required with respect to principal of and
interest and premium on, all Global Notes and all other Notes the Holders of
which shall have provided wire transfer instructions to the Company or the
Paying Agent prior to the Record Date. Such payment shall be in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
3. Paying Agent and Registrar. Initially, State Street Bank and
--------------------------
Trust Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. Indenture. The Company issued the Notes under an Indenture dated
---------
as of March 2, 1998 ("Indenture") between the Company and the Trustee. The terms
of the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code (S)(S) 77aaa-77bbbb). The Notes are subject to all such terms, and Holders
are referred to the Indenture and such Act for a statement of such terms. To the
extent any provision of this Note conflicts with the express provisions of the
Indenture, the provisions of the Indenture shall govern and be controlling. The
Notes are obligations of the Company limited to $350 million in aggregate
principal amount at maturity.
5. Optional Redemption.
-------------------
(A) EXCEPT AS SET FORTH IN SUBPARAGRAPH (B) OF THIS PARAGRAPH 5, THE
NOTES SHALL NOT BE REDEEMABLE AT THE COMPANY'S OPTION PRIOR TO MARCH 1, 2004.
THEREAFTER, THE NOTES WILL BE SUBJECT TO REDEMPTION AT ANY TIME AT THE OPTION OF
THE COMPANY, IN WHOLE OR IN PART, UPON NOT LESS THAN 30 NOR MORE THAN 60 DAYS'
NOTICE AT THE RE-
A1-3
<PAGE>
DEMPTION PRICES (EXPRESSED AS PERCENTAGES OF PRINCIPAL AMOUNT) SET FORTH BELOW
PLUS ACCRUED AND UNPAID INTEREST TO THE APPLICABLE REDEMPTION DATE (SUBJECT TO
THE RIGHT OF HOLDERS OF RECORD ON THE RELEVANT RECORD DATE TO RECEIVE INTEREST
AND LIQUIDATED DAMAGES DUE ON THE RELEVANT INTEREST PAYMENT DATE), IF REDEEMED
DURING THE TWELVE-MONTH PERIOD BEGINNING ON MARCH 1 OF THE YEARS INDICATED
BELOW:
<TABLE>
<CAPTION>
YEAR Percentage
---- ----------
<S> <C>
2004.................................... 107.500%
2005.................................... 105.000
2006.................................... 102.500
2007 and thereafter..................... 100.000
</TABLE>
(B) NOTWITHSTANDING THE PROVISIONS OF SUBPARAGRAPH (A) OF THIS
PARAGRAPH 5, ON OR PRIOR TO MARCH 1, 2001, THE COMPANY MAY ON ANY ONE OR MORE
OCCASIONS REDEEM UP TO 20% OF THE AGGREGATE PRINCIPAL AMOUNT AT MATURITY OF
NOTES ISSUED UNDER THE INDENTURE AT A REDEMPTION PRICE EQUAL TO 112% OF THE
ACCRETED VALUE THEREOF ON THE REDEMPTION DATE WITH THE NET CASH PROCEEDS OF ONE
OR MORE PUBLIC EQUITY OFFERINGS AND/OR STRATEGIC EQUITY INVESTMENTS; PROVIDED
--------
THAT AT LEAST 80% OF THE AGGREGATE PRINCIPAL AMOUNT AT MATURITY OF NOTES ISSUED
UNDER THE INDENTURE REMAINS OUTSTANDING IMMEDIATELY AFTER THE OCCURRENCE OF SUCH
REDEMPTION (EXCLUDING NOTES HELD BY THE COMPANY OR ANY OF ITS SUBSIDIARIES);AND
PROVIDED, FURTHER, THAT SUCH REDEMPTION SHALL OCCUR WITHIN 60 DAYS OF THE DATE
- -------- -------
OF THE CLOSING OF SUCH PUBLIC EQUITY OFFERING AND/OR STRATEGIC EQUITY
INVESTMENT.
6. Mandatory Redemption. Except as set forth in paragraph 7 below,
--------------------
the Company shall not be required to make mandatory redemption payments with
respect to the Notes.
7. Repurchase at Option of Holder.
------------------------------
(a) Upon the occurrence of a Change of Control, each Holder of Notes
shall have the right to require the Company to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to
the offer described below (the "Change of Control Offer") at an offer price in
cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest to the date of purchase or, in the case of repurchases of Notes
prior to the Full Accretion Date, at a purchase price equal to 101% of the
Accreted Value thereof on the date of repurchase, to such date of repurchase
(the "Change of Control Payment"). Within 30 days following any Change of
Control, the Company shall mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset
Sales, within five days of each date on which the aggregate amount of Excess
Proceeds exceeds $5 million, the Company shall commence an offer to all Holders
of Notes (an "Asset Sale Offer") pursuant to Section 3.09 of the Indenture to
purchase the maximum principal amount (or Accreted Value, as applicable) of
Notes and such other senior Indebtedness of the Company that may be purchased
A1-4
<PAGE>
out of the Excess Proceeds, at an offer price in cash in an amount equal to 100%
of the principal amount (or Accreted Value, as applicable) thereof plus accrued
and unpaid interest to the date of purchase (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
Interest Payment Date), in accordance with the procedures set forth in the
Indenture and such other senior Indebtedness of the Company. To the extent that
any Excess Proceeds remain after consummation of an Asset Sale Offer, the
Company may use such Excess Proceeds for any purpose not otherwise prohibited by
the Indenture. If the aggregate principal amount of Notes and such other senior
Indebtedness of the Company tendered into such Asset Sale Offer surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes and such other senior Indebtedness to be purchased on a pro rata
basis. Upon completion of such offer to purchase, the amount of Excess Proceeds
shall be reset to zero. Holders of Notes that are the subject of an offer to
purchase will receive an Asset Sale Offer from the Company prior to any related
purchase date and may elect to have such Notes purchased by completing the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Notes.
8. Notice of Redemption. Notice of redemption will be mailed at
--------------------
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered
---------------------------------
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Registrar
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a Note may be
---------------------
treated as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain exceptions,
--------------------------------
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least 66 2/3% in aggregate principal amount at maturity of the
then outstanding Notes voting as a single class, and any existing default or
compliance with any provision of the Indenture or the Notes (other than a
default in the payment of the principal of, premium, if any, or interest on the
Notes) may be waived with the consent of the Holders of a majority in principal
amount at maturity of the then outstanding Notes voting as a single class.
Without the consent of any Holder of a Note, the Indenture or the Notes may be
amended or supplemented to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's obligations to Holders of
the Notes in case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the Holders of the Notes or that
does not adversely affect the legal rights under the Indenture of any such
Holder, to
A1-5
<PAGE>
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act.
12. Defaults and Remedies. Events of Default include: (i) default
---------------------
for 30 days in the payment when due of interest on the Notes; (ii) default in
payment when due of principal of or premium, if any, on the Notes when the same
becomes due and payable at maturity, upon redemption (including in connection
with an offer to purchase) or otherwise, (iii) failure by the Company to comply
with Section 4.10, 4.15 or 5.01 of the Indenture; (iv) failure by the Company
for 30 days after notice to the Company by the Trustee or the Holders of at
least 25% in principal amount at maturity of the Notes then outstanding voting
as a single class to comply with certain other agreements in the Indenture or
the Notes; (v) default under certain other agreements relating to Indebtedness
of the Company which default (a) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness on the date of such default or (b)
results in the acceleration of such Indebtedness prior to its express maturity;
(vi) certain final judgments for the payment of money that remain undischarged
for a period of 60 days; and (vii) certain events of bankruptcy or insolvency
with respect to the Company or any of its Restricted Subsidiaries that is a
Significant Subsidiary. If any Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount at maturity of the
then outstanding Notes may declare all the Notes to be due and payable.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, all outstanding Notes will become
due and payable without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount at maturity of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of the Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest. The Holders of a majority in aggregate principal amount
at maturity of the Notes then outstanding by notice to the Trustee may on behalf
of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under the Indenture except a continuing Default or
Event of Default in the payment of interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
13. Trustee Dealings with Company. The Trustee, in its individual or
-----------------------------
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. No Recourse Against Others. A director, officer, employee,
--------------------------
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes.
15. Authentication. This Note shall not be valid until authenticated
--------------
by the manual signature of the Trustee or an authenticating agent.
A1-6
<PAGE>
16. Abbreviations. Customary abbreviations may be used in the name
-------------
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. Additional Rights of Holders of Restricted Global Notes and
-----------------------------------------------------------
Restricted Definitive Notes. In addition to the rights provided to Holders of
- ---------------------------
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement dated as of March 2, 1998, between the Company and the parties named
on the signature pages thereof (the "Registration Rights Agreement").
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
-------------
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
SBA Communications Corporation
One Town Center Road
Boca Raton, FL 33486
Attention: General Counsel
A1-7
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
_______________________________________________________________________________
(Insert assignee's soc. or tax I.D. no.)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
_______________________________________________________________________________
Date: ______________
Your Signature: _________________________________
(Sign exactly as your name appears on the face of
this Note)
Signature Guarantee.
(Participant in a Recognized Signature
Guarantee Medallion Program)
A1-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[_] Section 4.10 [_] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:
$________
Date: ________________ Your Signature: _________________________________
(Sign exactly as your name appears on the face of
this Note)
Tax Identification No:___________________________
Signature Guarantee.
(Participant in a Recognized Signature
Guarantee Medallion Program)
A1-9
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE/1/
The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of at maturity of
decrease in Amount of increase this Global Note Signature of
Principal Amount in Principal Amount following such authorized officer
at maturity of at maturity of decrease (or of Trustee or
Date of Exchange this Global Note this Global Note increase) Note Custodian
- ---------------- ---------------- ---------------- -------- ---------------
<S> <C> <C> <C> <C>
</TABLE>
_____________________________________________
/1/ Insert this table only in a Global Note.
A1-10
<PAGE>
FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE
DISCOUNT; FOR EACH $1,000 PRINCIPAL AMOUNT OF THIS SECURITY, THE ISSUE
PRICE IS $558.50, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $1,041.50, THE
ISSUE DATE IS MARCH 2, 1998 AND THE YIELD TO MATURITY IS 12% PER ANNUM.
CUSIP/CINS
12% Senior Discount Notes due 2008
No. Principal Amount at Maturity $
SBA COMMUNICATIONS CORPORATION
promises to pay to , or registered assigns, the principal sum of
on March 1, 2008.
Interest Payment Dates: September 1 and March 1, Commencing September 1, 2003
Record Dates: August 15 and February 15
Dated:
SBA COMMUNICATIONS CORPORATION
By: _____________________________________
Name:
Title:
By: ______________________________________
Name:
Title:
This is one of the Global Notes referred
to in the within-mentioned Indenture:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: ____________________________
Authorized Signatory
A2-1
<PAGE>
[Back of Note]
12% Senior Discount Notes due 2008
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE NOTE
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES ACT. THE
HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN OF RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT
OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLI-
A2-2
<PAGE>
CABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THE NOTE EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE.
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
A2-3
<PAGE>
1. Interest. SBA Communications Corporation, a Florida corporation
--------
(the "Company"), promises to pay interest on the principal amount of this Note
at 12% per annum from March 1, 2003 until maturity. The Company will pay
interest semi-annually in arrears on March 1 and September 1 of each year, or if
any such day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"); provided that the first such interest payment date
---------
shall be September 1, 2003. Interest on the Notes will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from March 1, 2003. The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal and
premium, if any, from time to time on demand at a rate that is 1% per annum in
excess of the rate then in effect; it shall pay interest (including post-
petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
Until this Regulation S Temporary Global Note is exchanged for one or
more Regulation S Permanent Global Notes, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Senior Discount Notes under the Indenture.
2. Method of Payment. The Company will pay interest on the Notes
-----------------
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the February 15 or August 15 next preceding the
Interest Payment Date (each, a "Record Date"), even if such Notes are canceled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
The Notes will be payable as to principal, premium, if any, and interest at the
office or agency of the Company maintained for such purpose within or without
the City and State of New York, or, at the option of the Company, payment of
interest may be made by check mailed to the Holders at their addresses set forth
in the register of Holders, and provided that payment by wire transfer of
--------
immediately available funds will be required with respect to principal of and
interest and premium, all Global Notes and all other Notes the Holders of which
shall have provided wire transfer instructions to the Company or the Paying
Agent prior to the Record Date. Such payment shall be in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts.
3. Paying Agent and Registrar. Initially, State Street Bank and
--------------------------
Trust Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. Indenture. The Company issued the Notes under an Indenture dated
---------
as of March 2, 1998 ("Indenture") between the Company and the Trustee. The terms
of the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code (S)(S) 77aaa-77bbbb). The Notes are subject to all such terms, and Holders
are referred to the Indenture and such Act for a statement of such terms. The
Notes are obligations of the Company limited to $350 million in aggregate
principal amount at maturity.
5. Optional Redemption.
-------------------
A2-4
<PAGE>
(A) EXCEPT AS SET FORTH IN SUBPARAGRAPH (B) OF THIS PARAGRAPH 5, THE
NOTES SHALL NOT BE REDEEMABLE AT THE COMPANY'S OPTION PRIOR TO MARCH 1, 2004.
THEREAFTER, THE NOTES WILL BE SUBJECT TO REDEMPTION AT ANY TIME AT THE OPTION OF
THE COMPANY, IN WHOLE OR IN PART, UPON NOT LESS THAN 30 NOR MORE THAN 60 DAYS'
NOTICE AT THE REDEMPTION PRICES (EXPRESSED AS PERCENTAGES OF PRINCIPAL AMOUNT)
SET FORTH BELOW PLUS ACCRUED AND UNPAID INTEREST TO THE APPLICABLE REDEMPTION
DATE (SUBJECT TO THE RIGHT OF HOLDERS OF RECORD ON THE RELEVANT RECORD DATE TO
RECEIVE INTEREST AND LIQUIDATED DAMAGES DUE ON THE RELEVANT INTEREST PAYMENT
DATE), IF REDEEMED DURING THE TWELVE-MONTH PERIOD BEGINNING ON MARCH 1 OF THE
YEARS INDICATED BELOW:
<TABLE>
<CAPTION>
YEAR Percentage
---- ----------
<S> <C>
2004..................................... 107.500%
2005..................................... 105.000
2006..................................... 102.500
2007 and thereafter...................... 100.000
</TABLE>
(B) NOTWITHSTANDING THE PROVISIONS OF SUBPARAGRAPH (A) OF THIS
PARAGRAPH 5, ON OR PRIOR TO MARCH 1, 2001, THE COMPANY MAY ON ANY ONE OR MORE
OCCASIONS REDEEM UP TO 20% OF THE AGGREGATE PRINCIPAL AMOUNT AT MATURITY OF
NOTES ISSUED UNDER THE INDENTURE AT A REDEMPTION PRICE EQUAL TO 112% OF THE
ACCRETED VALUE THEREOF ON THE REDEMPTION DATE WITH THE NET CASH PROCEEDS OF ONE
OR MORE PUBLIC EQUITY OFFERINGS AND/OR STRATEGIC EQUITY INVESTMENTS; PROVIDED
--------
THAT AT LEAST 80% OF THE AGGREGATE PRINCIPAL AMOUNT AT MATURITY OF NOTES ISSUED
UNDER THE INDENTURE REMAINS OUTSTANDING IMMEDIATELY AFTER THE OCCURRENCE OF SUCH
REDEMPTION (EXCLUDING NOTES HELD BY THE COMPANY OR ANY OF ITS SUBSIDIARIES);AND
PROVIDED, FURTHER, THAT SUCH REDEMPTION SHALL OCCUR WITHIN 60 DAYS OF THE DATE
- -------- -------
OF THE CLOSING OF SUCH PUBLIC EQUITY OFFERING AND/OR STRATEGIC EQUITY
INVESTMENT.
6. Mandatory Redemption. Except as set forth in paragraph 7 below,
--------------------
the Company shall not be required to make mandatory redemption payments with
respect to the Notes.
7. Repurchase at Option of Holder.
------------------------------
(a) Upon the occurrence of a Change of Control, each Holder of Notes
shall have the right to require the Company to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to
the offer described below (the "Change of Control Offer") at an offer price in
cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest to the date of purchase or, in the case of repurchases of Notes
prior to the Full Accretion Date, at a purchase price equal to 101% of the
Accreted Value thereof on the date of repurchase, to such date of repurchase
(the "Change of Control Payment"). Within 30 days following any Change of
Control, the Company shall mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture.
A2-5
<PAGE>
(b) If the Company or a Restricted Subsidiary consummates any Asset
Sales, within five days of each date on which the aggregate amount of Excess
Proceeds exceeds $5 million, the Company shall commence an offer to all Holders
of Notes (as "Asset Sale Offer") pursuant to Section 3.09 of the Indenture to
purchase the maximum principal amount (or accreted value, as applicable) of
Notes and such other senior Indebtedness of the Company that may be purchased
out of the Excess Proceeds, at an offer price in cash in an amount equal to 100%
of the principal amount (or accreted value, as applicable) thereof plus accrued
and unpaid interest to the date of purchase (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date), in accordance with the procedures set forth in the
Indenture and such other senior Indebtedness of the Company. To the extent that
any Excess Proceeds remain after consummation of an Asset Sale Offer, the
Company may use such Excess Proceeds for any purpose not otherwise prohibited by
the Indenture. If the aggregate principal amount of Notes and such other senior
Indebtedness of the Company tendered into such Asset Sale Offer surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes and such other senior Indebtedness to be purchased on a pro rata
basis. Upon completion of such offer to purchase, the amount of Excess Proceeds
shall be reset to zero. Holders of Notes that are the subject of an offer to
purchase will receive an Asset Sale Offer from the Company prior to any related
purchase date and may elect to have such Notes purchased by completing the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Notes.
8. Notice of Redemption. Notice of redemption will be mailed at
--------------------
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered
---------------------------------
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
This Regulation S Temporary Global Note is exchangeable in whole or in
part for one or more Global Notes only (i) on or after the termination of the
40-day restricted period (as defined in Regulation S) and (ii) upon presentation
of certificates (accompanied by an Opinion of Counsel, if applicable) required
by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary
Global Note for one or more Global Notes, the Trustee shall cancel this
Regulation S Temporary Global Note.
10. Persons Deemed Owners. The registered Holder of a Note may be
---------------------
treated as its owner for all purposes.
A2-6
<PAGE>
11. Amendment, Supplement and Waiver. Subject to certain exceptions,
--------------------------------
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least 66 2/3% in aggregate principal amount at maturity of the
then outstanding Notes, and any existing default or compliance with any
provision of the Indenture or the Notes (other than a default in the payment of
the principal of, premium, if any, or interest on the Notes) may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes. Without the consent of any Holder of a Note, the Indenture
or the Notes may be amended or supplemented to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to or in place of
certificated Notes, to provide for the assumption of the Company's obligations
to Holders of the Notes in case of a merger or consolidation, to make any change
that would provide any additional rights or benefits to the Holders of the Notes
or that does not adversely affect the legal rights under the Indenture of any
such Holder, or to comply with the requirements of the Commission in order to
effect or maintain the qualification of the Indenture under the Trust Indenture
Act.
12. Defaults and Remedies. Events of Default include: (i) default
---------------------
for 30 days in the payment when due of interest on the Notes; (ii) default in
payment when due of principal of or premium, if any, on the Notes when the same
becomes due and payable at maturity, upon redemption (including in connection
with an offer to purchase) or otherwise, (iii) failure by the Company to comply
with Section 4.10, 4.15 or 5.01 of the Indenture; (iv) failure by the Company
for 30 days after notice to the Company by the Trustee or the Holders of at
least 25% in principal amount at maturity of the Notes then outstanding to
comply with certain other agreements in the Indenture or the Notes: (v) default
under certain other agreements relating to Indebtedness of the Company which
default (a) is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default or (b) results in the
acceleration of such Indebtedness prior to its express maturity; (vi) certain
final judgments for the payment of money that remain undischarged for a period
of 60 days; and (vii) certain events of bankruptcy or insolvency with respect to
the Company or any of its Restricted Subsidiaries that is a Significant
Subsidiary. If any Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount at maturity of the then
outstanding Notes may declare all the Notes to be due and payable.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, all outstanding Notes will become
due and payable without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount at maturity
of the Notes then outstanding by notice to the Trustee may on behalf of the
Holders of all of the Notes waive any existing Default or Event of Default and
its consequences under the Indenture except a continuing Default or Event of
Default in the payment of interest on, or the principal of, the Notes. The
Company is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
13. Trustee Dealings with Company. The Trustee, in its individual or
-----------------------------
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
A2-7
<PAGE>
14. No Recourse Against Others. A director, officer, employee,
--------------------------
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes.
15. Authentication. This Note shall not be valid until authenticated
--------------
by the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name
-------------
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. Additional Rights of Holders of Restricted Global Notes and
-----------------------------------------------------------
Restricted Definitive Notes. In addition to the rights provided to Holders of
- ---------------------------
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement dated as of March 2, 1997, between the Company and the parties named
on the signature pages thereof (the "Registration Rights Agreement").
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
-------------
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
SBA Communications Corporation
One Town Center Road
Boca Raton, FL 33486
Attention: General Counsel
A2-8
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
______________________________________________________________________________
(Insert assignee's soc. or tax I.D. no.)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ______________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
______________________________________________________________________________
Date: ____________________
Your Signature: ________________________________
(Sign exactly as your name appears on the face of
this Note)
Signature Guarantee.
(Participant in a recognized Signature
Guarantee Medallion Program)
A2-9
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[_] Section 4.10 [_] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:
$________
Date: __________________ Your Signature: ________________________________
(Sign exactly as your name appears on the face of
this Note)
Tax Identification No: _________________________
Signature Guarantee.
(Participant in a recognized Signature
Guarantee Medallion Program)
A2-10
<PAGE>
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE
The following exchanges of a part of this Regulation S Temporary
Global Note for an interest in another Global Note, or of other Restricted
Global Notes for an interest in this Regulation S Temporary Global Note, have
been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of at maturity of
decrease in Amount of increase this Global Note Signature of
Principal Amount in Principal Amount following such authorized officer
at maturity of at maturity of decrease (or of Trustee or
Date of Exchange this Global Note this Global Note increase) Note Custodian
- ---------------- ------------------ ------------------- --------- --------------
<S> <C> <C> <C> <C>
</TABLE>
A2-11
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
SBA Communications Corporation
One Town Center Road
Boca Raton, FL 33486
[Registrar address block]
Re: 12% Senior Discount Notes Due 2008
Reference is hereby made to the Indenture, dated as of March 2, 1998
(the "Indenture"), between SBA Communications Corporation, as issuer (the
---------
"Company"), and State Street Bank and Trust Company, as trustee. Capitalized
- --------
terms used but not defined herein shall have the meanings given to them in the
Indenture.
______________, (the "Transferor") owns and proposes to transfer the
----------
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
--------
to __________ (the "Transferee"), as further specified in Annex A hereto. In
----------
connection with the Transfer, the Transferor hereby certifies that:
1. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
----------------------------------------------------------------------
144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is
- -----------------------------------------------------------
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
2. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
----------------------------------------------------------------------
TEMPORARY REGULATION S GLOBAL NOTE, THE REGULATION S GLOBAL NOTE OR A DEFINITIVE
- --------------------------------------------------------------------------------
NOTE PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and
- -----------------------------
in accordance with Rule 903 or Rule 904 under the Securities Act and,
accordingly, the Transferor hereby further certifies that (i) the Transfer is
not being made to a person in the United States and (x) at the time the buy
order was originated, the Transferee was outside the United States or such
Transferor and any Person acting on its behalf reasonably believed and believes
that the Transferee was outside the United States or (y) the transaction was
executed in, on or through the facilities of a designated offshore securities
market and neither such Transferor nor any Person acting on its behalf knows
that the transaction
B-1
<PAGE>
was prearranged with a buyer in the United States, (ii) no directed selling
efforts have been made in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S under the Securities Act (iii) the transaction is
not part of a plan or scheme to evade the registration requirements of the
Securities Act and (iv) if the proposed transfer is being made prior to the
expiration of the Restricted Period, the transfer is not being made to a U.S.
Person or for the account or benefit of a U.S. Person (other than an Initial
Purchaser). Upon consummation of the proposed transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on Transfer enumerated in the Private
Placement Legend printed on the Regulation S Global Note, the Temporary
Regulation S Global Note and/or the Definitive Note and in the Indenture and the
Securities Act.
3. [_] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN AN IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF
THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being
effected in compliance with the transfer restrictions applicable to beneficial
interests in Restricted Global Notes and Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act and any applicable blue
sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) [_] such Transfer is being effected pursuant to and in
accordance with Rule 144 under the Securities Act;
or
(b) [_] such Transfer is being effected to the Company or a
subsidiary thereof;
or
(c) [_] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act.
or
(d) [_] such Transfer is being effected to an Institutional
Accredited Investor and pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904,
and the Transferor hereby further certifies that it has not engaged in any
general solicitation within the meaning of Regulation D under the Securities Act
and the Transfer complies with the transfer restrictions applicable to
beneficial interests in a Restricted Global Note or Restricted Definitive Notes
and the requirements of the exemption claimed, which certification is supported
by (1) a certificate executed by the Transferee in the form of Exhibit D to the
Indenture and (2) an Opinion of Counsel provided by the Transferor or the
Transferee (a copy of which the Transferor has attached to this certification),
to the effect that such Transfer is in compliance with the Securities Act. Upon
consummation of the proposed transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will be
subject to
B-2
<PAGE>
the restrictions on transfer enumerated in the Private Placement Legend printed
on the IAI Global Note and/or the Definitive Notes and in the Indenture and the
Securities Act.
4. [_] Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Definitive Note.
(a) [_] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer
is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(b) [_] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.
(c) [_] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
______________________________________
[Insert Name of Transferor]
By: _________________________________
Name:
Title:
Dated: _________, ____
B-3
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [_] a beneficial interest in the :
(i) [_] 144A Global Note (CUSIP _________), or
(ii) [_] Regulation S Global Note (CUSIP _________), or
(iii) [_] IAI Global Note (CUSIP _________), or
(b) [_] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [_] a beneficial interest in the:
(i) [_] 144A Global Note (CUSIP ________), or
(ii) [_] Regulation S Global Note (CUSIP ________), or
(iii) [_] IAI Global Note (CUSIP _________), or
(iv) [_] Unrestricted Global Note (CUSIP ________); or
(b) [_] a Restricted Definitive Note; or
(c) [_] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-4
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
SBA Communications Corporation
One Town Center Road
Boca Raton, FL 33486
[Registrar address block]*
Re: 12% Senior Discount Notes due 2008
----------------------------------
(CUSIP______________)
Reference is hereby made to the Indenture, dated as of March 2, 1998
(the "Indenture"), between SBA Communications Corporation, as issuer (the
---------
"Company"), and State Street Bank and Trust Company, as trustee. Capitalized
- --------
terms used but not defined herein shall have the meanings given to them in the
Indenture.
____________, (the "Owner") owns and proposes to exchange the Note[s]
-----
or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
--------
the Exchange, the Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN AN UNRESTRICTED GLOBAL NOTE
(a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
--------------------------------------------------
RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In
- ----------------------------------------------------------------------------
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Note for a beneficial interest in an Unrestricted Global Note in an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the
Global Notes and pursuant to and in accordance with the United States Securities
Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on
--------------
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
beneficial interest in an Unrestricted Global Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
(b) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
--------------------------------------------------
RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the
- ------------------------------------------------------
Exchange of the Owner's beneficial interest in a Restricted Global Note for an
Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Definitive Note is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
C-1
<PAGE>
(c) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
-------------------------------------------------------
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the
- --------------------------------------------------
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
-------------------------------------------------------
UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
- ----------------------------
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES
(a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
--------------------------------------------------
RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the
- ----------------------------------------------------
Exchange of the Owner's beneficial interest in a Restricted Global Note for a
Restricted Definitive Note with an equal principal amount, the Owner hereby
certifies that the Restricted Definitive Note is being acquired for the Owner's
own account without transfer. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Note
issued will continue to be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Definitive Note and in
the Indenture and the Securities Act.
(b) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
-------------------------------------------------------
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange
- -----------------------------------------------
of the Owner's Restricted Definitive Note for a beneficial interest in the
[CHECK ONE] 144A Global Note, Regulation S Global Note, IAI Global Note, with an
equal principal amount, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the relevant Restricted Global Note and in the
Indenture and the Securities Act.
C-2
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
______________________________________
[Insert Name of Transferor]
By: _________________________________
Name:
Title:
Dated: _________, ____
C-3
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
SBA Communications Corporation
One Town Center Road
Boca Raton, Florida 33486
State Street Bank and Trust Company
2 International Place
Boston, Massachusetts 02110
Re: SBA Communications Corporation 12% Senior Discount Notes
--------------------------------------------------------
due 2008
--------
Reference is hereby made to the Indenture, dated as of March 2, 1998
(the "Indenture"), between SBA Communications Corporation, as issuer (the
"Company"), and State Street Bank and Trust Company, as trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) [_] a beneficial interest in a Global Note, or
(b) [_] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Senior Notes or
any interest therein is subject to certain restrictions and conditions set forth
in the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Senior Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
--------------
2. We understand that the offer and sale of the Senior Notes have not
been registered under the Securities Act, and that the Senior Notes and any
interest therein may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which
we are acting as hereinafter stated, that if we should sell the Senior Notes or
any interest therein, we will do so only (A) to the Company or any subsidiary
thereof, (B) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (c) to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to you and to the
Company a signed letter substantially in the form of this letter and an Opinion
of Counsel in form reasonably acceptable to the Company to the effect that such
transfer is in compliance with the Securities Act, (D) outside the United States
in accordance with Rule 904 of Regulation S under the Securities Act, (E)
pursuant to the provisions of Rule 144(k) under the Securities Act or (F)
pursuant to an effective registration statement under the Securities Act, and we
further agree to provide to any
D-1
<PAGE>
person purchasing the Definitive Note or beneficial interest in a Global Note
from us in a transaction meeting the requirements of clauses (A) through (E) of
this paragraph a notice advising such purchaser that resales thereof are
restricted as stated herein.
3. We understand that, on any proposed resale of the Senior Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Senior Notes
purchased by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Senior Notes, and we
and any accounts for which we are acting are each able to bear the economic risk
of our or its investment.
5. We are acquiring the Senior Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
______________________________________
[Insert Name of Accredited Investor]
By: _________________________________
Name:
Title:
Dated: __________________, ____
D-2
<PAGE>
EXHIBIT E
FORM OF NOTATION OF GUARANTEE
For value received, each Guarantor (which term includes any successor
Person under the Indenture) has, jointly and severally, unconditionally
guaranteed, to the extent set forth in the Indenture and subject to the
provisions in the Indenture dated as of March 2, 1998 (the "Indenture") among
SBA COMMUNICATIONS CORPORATION, the Guarantors listed on Schedule I thereto and
STATE STREET BANK AND TRUST COMPANY, as trustee (the "Trustee"), (a) the due and
punctual payment of the principal of, premium, if any, and interest on the Notes
(as defined in the Indenture), whether at maturity, by acceleration, redemption
or otherwise, the due and punctual payment of interest on overdue principal and
premium, and, to the extent permitted by law, interest, and the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee all in accordance with the terms of the Indenture and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. The obligations of the Guarantors to
the Holders of Notes and to the Trustee pursuant to the Note Guarantee and the
Indenture are expressly set forth in Article 10 of the Indenture and reference
is hereby made to the Indenture for the precise terms of the Note Guarantee.
Each Holder of a Note, by accepting the same, (a) agrees to and shall be bound
by such provisions, (b) authorizes and directs the Trustee, on behalf of such
Holder, to take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose; provided, however, that the
-------- -------
Indebtedness evidenced by this Note Guarantee shall cease to be so subordinated
and subject in right of payment upon any defeasance of this Note in accordance
with the provisions of the Indenture.
[Name of Guarantor(s)]
By: _________________________________
Name:
Title:
E-1
<PAGE>
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS
Supplemental Indenture (this "Supplemental Indenture"), dated as of
________________, among __________________ (the "Guaranteeing Subsidiary"), a
subsidiary of SBA COMMUNICATIONS CORPORATION (or its permitted successor), a
Florida corporation (the "Company"), the Company, the other Guarantors (as
defined in the Indenture referred to herein) and STATE STREET BANK AND TRUST
COMPANY, as trustee under the Indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of March 2, 1998 providing for
the issuance of an aggregate principal amount of up to $350,000,000 of 12%
Senior Discount Notes due 2008 (the "Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the "Note Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. Capitalized Terms. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. Agreement to Guarantee. The Guaranteeing Subsidiary hereby agrees
as follows:
(a) Along with all Guarantors named in the Indenture, to jointly and
severally Guarantee to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors
and assigns, irrespective of the validity and enforceability of
the Indenture, the Notes or the obligations of the Company
hereunder or thereunder, that:
(i) the principal of and interest on the Notes will be promptly
paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and interest on the overdue
principal of and interest on the Notes, if any, if lawful,
and all other obligations of the Company to the Holders or
the Trustee hereunder or thereunder will be
F-1
<PAGE>
promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and
(ii) in case of any extension of time of payment or renewal of
any Notes or any of such other obligations, that same will
be promptly paid in full when due or performed in accordance
with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise. Failing
payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the
Guarantors shall be jointly and severally obligated to pay
the same immediately.
(b) The obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Notes or the
Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to
any provisions hereof or thereof, the recovery of any judgment
against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor.
(c) The following is hereby waived: diligence, presentment, demand
of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all
demands whatsoever.
(d) This Note Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and the
Indenture.
(e) If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors, or any
Custodian, Trustee, liquidator or other similar official acting
in relation to either the Company or the Guarantors, any amount
paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect.
(f) The Guaranteeing Subsidiary shall not be entitled to any right of
subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all
obligations guaranteed hereby.
(g) As between the Guarantors, on the one hand, and the Holders and
the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in
Article 6 of the Indenture for the purposes of this Note
Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any
declaration of acceleration of such obligations as provided in
Article 6 of the Indenture, such obligations (whether or not due
and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Note Guarantee.
F-2
<PAGE>
(h) The Guarantors shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does
not impair the rights of the Holders under the Guarantee.
(i) Pursuant to Section 10.02 of the Indenture, after giving effect
to any maximum amount and any other contingent and fixed
liabilities that are relevant under any applicable Bankruptcy or
fraudulent conveyance laws, and after giving effect to any
collections from, rights to receive contribution from or payments
made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under Article 10 of the
Indenture shall result in the obligations of such Guarantor under
its Note Guarantee not constituting a fraudulent transfer or
conveyance.
3. Execution and Delivery. Each Guaranteeing Subsidiary agrees that
the Note Guarantees shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Note Guarantee.
4. Guaranteeing Subsidiary May Consolidate, Etc. on Certain Terms.
(a) The Guaranteeing Subsidiary may not consolidate with or merge
with or into (whether or not such Guarantor is the surviving
Person) another corporation, Person or entity whether or not
affiliated with such Guarantor unless:
(i) subject to Section 10.05 of the Indenture, the Person formed
by or surviving any such consolidation or merger (if other
than a Guarantor or the Company) unconditionally assumes all
the obligations of such Guarantor, pursuant to a
supplemental indenture in form and substance reasonably
satisfactory to the Trustee, under the Notes, the Indenture
and the Note Guarantee on the terms set forth herein or
therein; and
(ii) immediately after giving effect to such transaction, no
Default or Event of Default exists.
(b) In case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Trustee and satisfactory
in form to the Trustee, of the Note Guarantee endorsed upon the
Notes and the due and punctual performance of all of the
covenants and conditions of the Indenture to be performed by the
Guarantor, such successor corporation shall succeed to and be
substituted for the Guarantor with the same effect as if it had
been named herein as a Guarantor. Such successor corporation
thereupon may cause to be signed any or all of the Note
Guarantees to be endorsed upon all of the Notes issuable
hereunder which theretofore shall not have been signed by the
Company and delivered to the Trustee. All the Note Guarantees so
issued shall in all respects have the same legal rank and benefit
under the Indenture as the Note Guarantees theretofore and
thereafter issued in accor-
F-3
<PAGE>
dance with the terms of the Indenture as though all of such Note
Guarantees had been issued at the date of the execution hereof.
(c) Except as set forth in Articles 4 and 5 of the Indenture, and
notwithstanding clauses (a) and (b) above, nothing contained in
the Indenture or in any of the Notes shall prevent any
consolidation or merger of a Guarantor with or into the Company
or another Guarantor, or shall prevent any sale or conveyance of
the property of a Guarantor as an entirety or substantially as an
entirety to the Company or another Guarantor.
5. Releases.
(a) In the event of a sale or other disposition of all of the assets
of any Guarantor, by way of merger, consolidation or otherwise,
or a sale or other disposition of all to the capital stock of any
Guarantor, then such Guarantor (in the event of a sale or other
disposition, by way of merger, consolidation or otherwise, of all
of the capital stock of such Guarantor) or the corporation
acquiring the property (in the event of a sale or other
disposition of all or substantially all of the assets of such
Guarantor) will be released and relieved of any obligations under
its Note Guarantee; provided that the Net Proceeds of such sale
--------
or other disposition are applied in accordance with the
applicable provisions of the Indenture, including without
limitation Section 4.10 of the Indenture. Upon delivery by the
Company to the Trustee of an Officers' Certificate and an Opinion
of Counsel to the effect that such sale or other disposition was
made by the Company in accordance with the provisions of the
Indenture, including without limitation Section 4.10 of the
Indenture, the Trustee shall execute any documents reasonably
required in order to evidence the release of any Guarantor from
its obligations under its Note Guarantee.
(b) Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of
and interest on the Notes and for the other obligations of any
Guarantor under the Indenture as provided in Article 10 of the
Indenture.
6. No Recourse Against Others. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the Company
or any Guaranteeing Subsidiary under the Notes, any Note Guarantees, the
Indenture or this Supplemental Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of the
Notes by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for issuance of the Notes. Such
waiver may not be effective to waive liabilities under the federal securities
laws and it is the view of the Commission that such a waiver is against public
policy.
7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES
F-4
<PAGE>
OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
8. Counterparts The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
9. Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction hereof.
10. The Trustee. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.
F-5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: _______________, ____
[Guaranteeing Subsidiary]
By: ______________________________
Name:
Title:
[COMPANY]
By: ______________________________
Name:
Title:
[EXISTING GUARANTORS]
By: ______________________________
Name:
Title:
[TRUSTEE]
as Trustee
By: ______________________________
Name:
Title:
F-6
<PAGE>
EXHIBIT 4.4
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of March 2, 1998
among
SBA COMMUNICATIONS CORPORATION
as Issuer
and
BT ALEX. BROWN INCORPORATED
LEHMAN BROTHERS INC.
as Initial Purchasers
$269,000,000
12% SENIOR DISCOUNT NOTES DUE 2008
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Definitions............................................................. 1
2. Exchange Offer.......................................................... 5
3. Shelf Registration...................................................... 9
(a) Shelf Registration.............................................. 9
(b) Withdrawal of Stop Orders....................................... 10
(c) Supplements and Amendments...................................... 10
(d) Provision by Holders of Certain
Information in Connection with the
Shelf Registration Statement.................................. 10
4. Additional Interest.................................................... 10
5. Registration Procedures................................................ 12
6. Registration Expenses.................................................. 23
7. Indemnification........................................................ 25
8. Rule 144 and 144A...................................................... 29
9. Underwritten Registrations............................................. 29
10. Miscellaneous......................................................... 29
(a) No Inconsistent Agreements...................................... 29
(b) Adjustments Affecting Registrable Notes......................... 30
(c) Amendments and Waivers.......................................... 30
(d) Notices 30
(e) Successors and Assigns.......................................... 32
(f) Counterparts.................................................... 32
(g) Headings32
(h) Governing Law................................................... 32
(i) Severability.................................................... 32
(j) Securities Held by the Company or Its Affiliates................ 32
(k) Third Party Beneficiaries....................................... 33
(l) Entire Agreement................................................ 33
</TABLE>
-i-
<PAGE>
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Registration Rights Agreement (the "Agreement"), dated as of
---------
March 2, 1998 is entered into by and among SBA Communications Corporation, a
Florida corporation (the "Company"), and BT Alex. Brown Incorporated and Lehman
-------
Brothers Inc. (together, the "Initial Purchasers").
------------------
This Agreement is entered into in connection with the Purchase
Agreement, dated as of February 25, 1998, by and among the Company and the
Initial Purchasers (the "Purchase Agreement"), which provides for the sale by
------------------
the Company to the Initial Purchasers of $269,000,000 principal amount at
maturity of the Company's 12% Senior Discount Notes due 2008 (the "Notes"). In
-----
order to induce the Initial Purchasers to enter into the Purchase Agreement, the
Company has agreed to provide the registration rights set forth in this
Agreement for the benefit of the Initial Purchasers and their direct and
indirect transferees and assigns. The execution and delivery of this Agreement
is a condition to the Initial Purchasers' obligation to purchase the Notes under
the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
-----------
As used in this Agreement, the following terms shall have the
following meanings:
Accreted Value: As of any date of determination the sum of (a) the
--------------
initial Accreted Value (which is $558.50 per $1,000 in principal amount at
maturity of Notes) and (b) the portion of the excess of the principal amount at
maturity of each Note over such initial Accreted Value which shall have been
amortized through such date, such amount to be so amortized on a daily basis and
compounded semiannually on each March 1 and September 1 at the rate of 12% per
annum from the date of original issuance of the Notes through the date of
determination computed on the basis of a 360-day year of twelve 30-day months.
The Accreted Value of any Note on or after the
<PAGE>
-2-
Full Accretion Date shall be equal to 100% of its stated principal amount.
Additional Interest: See Section 4(a) hereof.
-------------------
Advice: See the last paragraph of Section 5 hereof.
------
Agreement: See the first introductory paragraph hereto.
---------
Applicable Period: See Section 2(b) hereof.
-----------------
Closing Date: The Closing Date as defined in the Purchase Agreement.
------------
Company: See the first introductory paragraph hereto.
-------
Effectiveness Date: The date that is 150 days after the Issue Date.
------------------
Effectiveness Period: See Section 3(a) hereof.
--------------------
Exchange Act: The Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2(a) hereof.
--------------
Exchange Offer: See Section 2(a) hereof.
--------------
Exchange Offer Registration Statement: See Section 2(a) hereof.
-------------------------------------
Filing Date: (A) If no Exchange Registration Statement has been filed
-----------
by the Company pursuant to this Agreement, the 60th day after the Issue Date;
and (B) in each case (which may be applicable notwithstanding the consummation
of the Exchange Offer), the 60th day after the delivery of a Shelf Notice.
Full Accretion Date: March 1, 2003.
-------------------
<PAGE>
-3-
Holder: Any holder of a Registrable Note or Registrable Notes.
------
Indemnified Person: See Section 7(c) hereof.
------------------
Indemnifying Person: See Section 7(c) hereof.
-------------------
Indenture: The Indenture, dated as of March 2, 1998 between the
---------
Company and State Street Bank and Trust Company, as trustee, pursuant to which
the Notes are being issued, as amended or supplemented from time to time in
accordance with the terms thereof.
Initial Purchasers: See the first introductory paragraph hereto.
------------------
Inspectors: See Section 5(o) hereof.
----------
Issue Date: The date on which the original Notes were sold to the
----------
Initial Purchasers pursuant to the Purchase Agreement.
NASD: See Section 5(t) hereof.
----
Notes: See the second introductory paragraph hereto.
-----
Participant: See Section 7(a) hereof.
-----------
Participating Broker-Dealer: See Section 2(b) hereof.
---------------------------
Person: An individual, trustee, corporation, partnership, limited
------
liability company, joint stock company, trust, unincorporated association,
union, business association, firm or other legal entity.
Private Exchange: See Section 2(b) hereof.
----------------
Private Exchange Notes: See Section 2(b) hereof.
----------------------
Prospectus: The prospectus included in any Registration Statement
----------
(including, without limitation, any prospectus
<PAGE>
-4-
subject to completion and a prospectus that includes any information previously
omitted from a prospectus filed as part of an effective registration statement
in reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, and all other amendments and
supplements to the Prospectus, with respect to the terms of the offering of any
portion of the Registrable Notes covered by such Registration Statement
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.
Records: See Section 5(o) hereof.
-------
Registrable Notes: Each Note upon original issuance of the Notes and
-----------------
at all times subsequent thereto, each Exchange Note as to which Section 2(c)(iv)
hereof is applicable upon original issuance and at all times subsequent thereto
and each Private Exchange Note upon original issuance thereof and at all times
subsequent thereto, until in the case of any such Note, Exchange Note or Private
Exchange Note, as the case may be, the earliest to occur of the following: (i)
a Registration Statement (other than, with respect to any Exchange Note as to
which Section 2(c)(v) hereof is applicable, the Exchange Offer Registration
Statement) covering such Note, Exchange Note or Private Exchange Note, as the
case may be, has been declared effective by the SEC and such Note, Exchange Note
or Private Exchange Note, as the case may be, has been disposed of in accordance
with such effective Registration Statement, (ii) such Note, Exchange Note or
Private Exchange Note, as the case may be, is sold in compliance with Rule 144,
(iii) such Note has been exchanged for an Exchange Note or Exchange Notes
pursuant to an Exchange Offer and is entitled to be resold without complying
with the prospectus delivery requirements of the Securities Act, or (iv) such
Note, Exchange Note or Private Exchange Note, as the case may be, ceases to be
outstanding for purposes of the Indenture.
Registration Statement: Any registration statement of the Company,
----------------------
including, but not limited to, the Exchange Offer Registration Statement and any
registration statement filed in connection with a Shelf Registration, filed with
the SEC
<PAGE>
-5-
pursuant to the provisions of this Agreement, including the Prospectus,
amendments and supplements to such registration statement, including post-
effective amendments, all exhibits, and all material incorporated by reference
or deemed to be incorporated by reference in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
--------
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such
---------
Rule may be amended from time to time, or any similar rule (other than Rule 144)
or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
--------
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
---
Securities Act: The Securities Act of 1933, as amended, and the rules
--------------
and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c) hereof.
------------
Shelf Registration: See Section 3(a) hereof.
------------------
TIA: The Trust Indenture Act of 1939, as amended.
---
Trustee: The trustee under the Indenture and, if existent, the
-------
trustee under any indenture governing the Exchange Notes and Private Exchange
Notes (if any).
Purchase Agreement: See the second introductory paragraph hereto.
------------------
<PAGE>
-6-
Underwritten registration or underwritten offering: A registration in
--------------------------------------------------
which securities of the Company are sold to an underwriter for reoffering to the
public.
2. Exchange Offer
--------------
(a) Unless the Exchange Offer shall not be permitted by applicable
federal laws the Company shall file with the SEC no later than the Filing Date a
registration statement relating to an offer to exchange (the "Exchange Offer")
--------------
any and all of the Registrable Notes (other than the Private Exchange Notes, if
any) for a like aggregate principal amount of debt securities of the Company
that are identical in all material respects to the Notes (the "Exchange Notes")
--------------
(and that are entitled to the benefits of the Indenture or a trust indenture
that is identical in all material respects to the Indenture (other than such
changes to the Indenture or any such identical trust indenture as are necessary
to comply with any requirements of the SEC) and that, in either case, has been
qualified under the TIA), except that the Exchange Notes (other than Private
Exchange Notes, if any) shall have been registered pursuant to an effective
Registration Statement under the Securities Act and shall contain no restrictive
legend thereon. The Exchange Offer shall be registered under the Securities Act
on the appropriate form (the "Exchange Offer Registration Statement") and shall
-------------------------------------
comply with all applicable tender offer rules and regulations under the Exchange
Act. The Company agrees to use its reasonable best efforts to (x) cause the
Exchange Offer Registration Statement to be declared effective under the
Securities Act on or before the Effectiveness Date; (y) keep the Exchange Offer
open for at least 30 business days (or longer if required by applicable law)
after the date that notice of the Exchange Offer is mailed to Holders; and (z)
consummate the Exchange Offer on or prior to the 165th day following the Issue
Date. If after such Exchange Offer Registration Statement is declared effective
by the SEC, the Exchange Offer or the issuance of the Exchange Notes thereunder
is interfered with by any stop order, injunction or other order or requirement
of the SEC or any other governmental agency or court, such Exchange Offer
Registration Statement shall be
<PAGE>
-7-
deemed not to have become effective for purposes of this Agreement. Each Holder
who participates in the Exchange Offer will be required to represent (i) that
any Exchange Notes received by it will be acquired in the ordinary course of its
business, (ii) that such Holder has and will have no arrangement or
understanding with any Person to participate in the distribution (within the
meaning of the Securities Act) of the Exchange Notes in violation of the
Securities Act, (iii) that such Holder is not an "affiliate" (as defined in Rule
405 promulgated under the Securities Act) of the Company, (iv) if such Holder is
not a broker-dealer, that it is not engaged in, and does not intend to engage
in, the distribution of Exchange Notes, (v) if such Holder is a broker-dealer
(as defined below) that will receive Exchange Notes for its own account in
exchange for Notes that were acquired as a result of market-making or other
trading activities, that it will deliver a prospectus in connection with any
resale of such Exchange Notes, and (vi) that the Holder is not acting on behalf
of any persons or entities who could not truthfully make the foregoing
representations. Upon consummation of the Exchange Offer in accordance with this
Section 2, the provisions of this Agreement shall continue to apply, mutatis
-------
mutandis, solely with respect to Registrable Notes that are Private Exchange
- --------
Notes and Exchange Notes held by Participating Broker-Dealers, and the Company
shall have no further obligation to register Registrable Notes (other than
Private Exchange Notes and other than in respect of any Exchange Notes as to
which clause 2(c)(v) hereof applies) pursuant to Section 3 hereof. No securities
other than the Exchange Notes shall be included in the Exchange Offer
Registration Statement.
(b) The Company shall include within the Prospectus contained in the
Exchange Offer Registration Statement a section entitled "Plan of Distribution"
or "Private Placement," reasonably acceptable to the Initial Purchasers, that
shall contain a summary statement of the positions taken or policies made by the
Staff of the SEC with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of Exchange Notes received by such broker-dealer in the
<PAGE>
-8-
Exchange Offer (a "Participating Broker-Dealer"), whether such positions or
---------------------------
policies have been publicly disseminated by the Staff of the SEC or such
positions or policies, in the judgment of the Initial Purchasers, represent the
prevailing views of the Staff of the SEC. Such "Plan of Distribution" section
shall also expressly permit the use of the Prospectus by all Persons subject to
the prospectus delivery requirements of the Securities Act, including all
Participating Broker-Dealers, and include a statement describing the means by
which Participating Broker-Dealers may resell the Exchange Notes.
The Company shall use its reasonable best efforts to keep the Exchange
Offer Registration Statement effective and to amend and supplement the
Prospectus contained therein, in order to permit such Prospectus to be lawfully
delivered by all Persons subject to the prospectus delivery requirements of the
Securities Act for such period of time as is necessary to comply with applicable
law in connection with any resale of the Exchange Notes; provided, however, that
-------- -------
such period shall not exceed 180 days after the consummation of the Exchange
Offer (or such longer period if extended pursuant to the last paragraph of
Section 5 hereof) (the "Applicable Period").
-----------------
If, prior to consummation of the Exchange Offer, any Initial Purchaser
holds any Notes acquired by it and having, or that are reasonably likely to be
determined to have, the status of an unsold allotment in the initial
distribution, the Company, upon the request of such Initial Purchaser
simultaneously with the delivery of the Exchange Notes in the Exchange Offer,
shall issue and deliver to the Initial Purchaser in exchange (the "Private
-------
Exchange") for such Notes held by the Initial Purchaser a like principal amount
- --------
of debt securities of the Company that are identical in all material respects to
the Exchange Notes (the "Private Exchange Notes") (and that are issued pursuant
----------------------
to the same indenture as the Exchange Notes), except for the placement of a
restrictive legend on such Private Exchange Notes. The Private Exchange Notes
shall bear the same CUSIP number as the Exchange Notes.
Interest on the Exchange Notes and the Private Exchange Notes will
accrue (A) from the later of (i) the last in
<PAGE>
-9-
terest payment date on which interest was paid on the Note surrendered in
exchange therefor or (ii) if the Note is surrendered for exchange on a date in a
period which includes the record date for an interest payment date to occur on
or after the date of such exchange and as to which interest will be paid, the
date of such interest payment date or (B) if no interest has been paid on such
Note, from the Issue Date.
In connection with the Exchange Offer, the Company shall:
(1) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(2) utilize the services of a depository for the Exchange Offer with
an address in the Borough of Manhattan, The City of New York;
(3) permit Holders to withdraw tendered Notes tendered for exchange
in the Exchange Offer at any time prior to the close of business, New York
time, on the last business day on which the Exchange Offer shall remain
open; and
(4) otherwise comply in all material respects with all applicable
laws, rules and regulations.
As soon as practicable after the close of the Exchange Offer or the
Private Exchange, as the case may be, the Company shall:
(1) accept for exchange all Notes properly tendered and not validly
withdrawn pursuant to the Exchange Offer or the Private Exchange;
(2) deliver to the Trustee for cancellation all Notes so accepted for
exchange; and
(3) cause the Trustee to authenticate and deliver promptly to each
Holder of Notes, Exchange Notes or Pri-
<PAGE>
-10-
vate Exchange Notes, as the case may be, equal in outstanding principal
amount to the Notes of such Holder so accepted for exchange.
The Exchange Notes and the Private Exchange Notes may be issued under
(i) the Indenture or (ii) an indenture identical in all material respects to the
Indenture, which in either event shall provide that (1) the Exchange Notes shall
not be subject to the transfer restrictions set forth in the Indenture and (2)
the Private Exchange Notes shall be subject to the transfer restrictions set
forth in the Indenture. The Indenture or such indenture shall provide that the
Exchange Notes, the Private Exchange Notes and the Notes shall vote and consent
together on all matters as one class and that neither the Exchange Notes, the
Private Exchange Notes or the Notes will have the right to vote or consent as a
separate class on any matter.
(c) If, (i) because of any change in law or in currently prevailing
interpretations of the Staff of the SEC, the Company is not permitted to effect
an Exchange Offer, (ii) the Exchange Offer is not consummated within 165 days of
the Issue Date, (iii) any holder of Private Exchange Notes so requests at any
time after the consummation of the Private Exchange, (iv) in the case of any
Holder that participates in the Exchange Offer, such Holder does not receive
Exchange Notes on the date of the exchange that may be sold without restriction
under state and federal securities laws (other than due solely to the status of
such Holder as an affiliate of the Company within the meaning of the Securities
Act), then in each case the Company shall promptly deliver written notice
thereof (the "Shelf Notice") to the Trustee and in the case of clauses (i), (ii)
------------
and (iv), all Holders, in the case of clause (iii), the Holders of the Private
Exchange Notes and in the case of clause (iv), the affected Holder, and shall
file a Shelf Registration pursuant to Section 3 hereof.
3. Shelf Registration
------------------
If a Shelf Notice is delivered as contemplated by Section 2(c) hereof,
then:
<PAGE>
-11-
(a) Shelf Registration. The Company shall as promptly as practicable
------------------
file with the SEC a Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415 covering all of the Registrable Notes (the
"Shelf Registration"). If the Company shall not have yet filed an Exchange
------------------
Offer Registration Statement, the Company shall use its best efforts to file
with the SEC the Shelf Registration on or prior to the Filing Date. The Shelf
Registration shall be on Form S-1 or another appropriate form permitting
registration of such Registrable Notes for resale by Holders in the manner or
manners designated by them (including, without limitation, one or more
underwritten offerings). The Company shall not permit any securities other than
the Registrable Notes to be included in the Shelf Registration.
The Company shall use its reasonable best efforts to cause the Shelf
Registration to be declared effective under the Securities Act on or prior to
the Effectiveness Date and to keep the Shelf Registration continuously effective
under the Securities Act until the date that is two years from the Issue Date,
subject to extension pursuant to the last paragraph of Section 5 hereof (the
"Effectiveness Period"), or such shorter period ending when all Registrable
- ---------------------
Notes covered by the Shelf Registration have been sold in the manner set forth
and as contemplated in the Shelf Registration.
(b) Withdrawal of Stop Orders. If the Shelf Registration ceases to be
-------------------------
effective for any reason at any time during the Effectiveness Period (other than
because of the sale of all of the securities registered thereunder), the Company
shall use its reasonable best efforts to obtain the prompt withdrawal of any
order suspending the effectiveness thereof.
(c) Supplements and Amendments. The Company shall promptly supplement
--------------------------
and amend the Shelf Registration if required by the SEC, the rules, regulations
or instructions applicable to the registration form used for such Shelf
Registration or the Securities Act, or if reasonably requested by the Holders of
a majority in aggregate principal amount at maturity of the Registrable Notes
covered by such Registration Statement or by any underwriter of such Registrable
Notes.
<PAGE>
-12-
(d) Provision by Holders of Certain Information in Connection with
--------------------------------------------------------------
the Shelf Registration Statement. No Holder of Registrable Notes may include any
- --------------------------------
of its Registrable Notes in any Shelf Registration Statement pursuant to this
Agreement unless and until such Holder furnishes to the Company in writing,
within 20 days after receipt of a request therefor, the information specified in
Item 507 or 508 of Regulation S-K, as applicable, of the Securities Act for use
in connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Registrable Securities shall be
entitled to Additional Interest pursuant to Section 4 hereof unless and until
such Holder shall have provided all such information. Each selling Holder agrees
to promptly furnish additional information required to be disclosed in order to
make the information previously furnished to the Company by such Holder not
materially misleading.
4. Additional Interest
-------------------
(a) The Company and the Initial Purchasers agree that the Holders of
Registrable Notes will suffer damages if the Company fails to fulfill its
obligation under Section 2 or Section 3 hereof and that it would not be feasible
to ascertain the extent of such damages with precision. Accordingly, the
Company agrees to pay, as liquidated damages, additional interest on the Notes
("Additional Interest") under the circumstances and to the extent set forth
-------------------
below (without duplication):
(i) if (A) neither the Exchange Offer Registration Statement nor
the Shelf Registration Statement is filed with the SEC on or prior to the
applicable filing date or (B) notwithstanding that the Company has
consummated or will consummate an Exchange Offer, the Company is required
to file a Shelf Registration Statement and such Shelf Registration
Statement is not filed on or prior to the Filing Date applicable thereto,
then commencing on the day after either such required filing date,
Additional Interest shall accrue on the Notes in an amount equal to $.05
per week per $1000 of Accreted Value of Notes, such Additional Interest
rate increasing by an additional $.05 per week
<PAGE>
-13-
per $1000 of Accreted Value of Notes with respect to each subsequent 90-day
period; or
(ii) if (A) neither the Exchange Offer Registration Statement nor a
Shelf Registration Statement is declared effective by the SEC on or prior
to 150 days after the applicable filing date or (B) notwithstanding that
the Company has consummated or will consummate an Exchange Offer, the
Company is required to file a Shelf Registration Statement and such Shelf
Registration Statement is not declared effective by the SEC on or prior to
the 165th day following the date such Shelf Registration Statement was
filed, then, commencing on the day after the 165th day following the
applicable filing date, Additional Interest shall accrue on the Notes in an
amount equal to $.05 per week per $1000 of Accreted Value of Notes, such
Additional Interest rate increasing by an additional $.05 per week per
$1000 of Accreted Value of Notes with respect to each subsequent 90-day
period; or
(iii) if (A) the Company has not exchanged Exchange Notes for all
Notes validly tendered in accordance with the terms of the Exchange Offer
on or prior to the 30th day after the date on which the Exchange Offer
Registration Statement was first declared effective or (B) if applicable,
the Shelf Registration Statement has been declared effective and such Shelf
Registration Statement ceases to be effective (except as permitted in
paragraph (b)); at any time prior to the second anniversary of the Issue
Date (other than after such time as all Notes have been disposed of
thereunder), then Additional Interest shall accrue on the Notes in an
amount equal to $.05 per week per $1000 of Accreted Value of Notes the
first 90 days commencing on (x) the 31st day after such effective date, in
the case of (A) above, or (y) the day such Shelf Registration Statement
ceases to be effective, in the case of (B) above, such Additional Interest
rate increasing by an additional $.05 per week per $1000 of Accreted Value
of Notes with respect to each such subsequent 90-day period;
<PAGE>
-14-
provided, however, that the Additional Interest rate on the Notes may not exceed
in the aggregate $.50 per week per $1000 of Accreted Value of the Notes; and
provided, further, that (1) upon the filing of the Exchange Offer Registration
- -------- -------
Statement or a Shelf Registration Statement (in the case of clause (i) above),
(2) upon the effectiveness of the Exchange Offer Registration Statement or the
Shelf Registration Statement (in the case of clause (ii) above), (3) upon the
exchange of Exchange Notes for all Notes tendered (in the case of clause
(iii)(A) above), or (4) upon the effectiveness of the Shelf Registration
Statement which had ceased to remain effective (in the case of clause (iii)(B)
above), Additional Interest on the Notes as a result of such clause (or the
related subclause thereof), as the case may be, shall cease to accrue.
Any amounts of Additional Interest due pursuant to (a)(i), (a)(ii) or
(a)(iii) of this Section 4 shall be paid to the Holders entitled thereto, in the
manner provided for the payment of interest in the Indenture, on each Interest
Payment Date (as defined in the Indenture). The amount of Additional Interest
will be determined by multiplying the applicable Additional Interest rate by the
Accreted Value of the Registrable Notes, multiplied by a fraction, the numerator
of which is the number of days such Additional Interest rate was applicable
during such period (determined on the basis of a 360-day year comprised of
twelve 30-day months and, in the case of a partial month, the actual number of
days elapsed) and the denominator of which is 360.
5. Registration Procedures
-----------------------
In connection with the filing of any Registration Statement pursuant
to Sections 2 or 3 hereof, the Company shall effect such registration(s) to
permit the sale of the securities covered thereby in accordance with the
intended method or methods of disposition thereof, and pursuant thereto and in
connection with any Registration Statement filed by the Company hereunder, the
Company shall:
(a) Prepare and file with the SEC prior to the applicable filing date
a Registration Statement or Registration
<PAGE>
-15-
Statements as prescribed by Sections 2 or 3 hereof, and use its best efforts to
cause each such Registration Statement to become effective and remain effective
as provided herein; provided, however, that, if (1) such filing is pursuant to
-------- -------
Section 3 hereof or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, before filing any Registration Statement or
Prospectus or any amendments or supplements thereto, the Company shall furnish
to and afford the Holders of the Registrable Notes covered by such Registration
Statement or each such Participating Broker-Dealer, as the case may be, their
counsel and the managing underwriters, if any, a reasonable opportunity to
review copies of all such documents (including copies of any documents to be
incorporated by reference therein and all exhibits thereto) proposed to be filed
(in each case at least five business days prior to such filing). The Company
shall not file any Registration Statement or Prospectus or any amendments or
supplements thereto if the Holders of a majority in aggregate principal amount
at maturity of the Registrable Notes covered by such Registration Statement, or
any such Participating Broker-Dealer, as the case may be, or their counsel, or
the managing underwriters, if any, shall reasonably object within five business
days after the receipt thereof and shall be deemed to have reasonably objected
to such filing if such Registration Statement, amendment, Prospectus or
supplement, as applicable, as proposed to be filed, contains a material
misstatement or omission or fails to comply with the applicable requirements of
the Securities Act.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration or Exchange Offer Registration Statement,
as the case may be, as may be necessary to keep such Registration Statement
continuously effective for the Effectiveness Period or the Applicable Period, as
the case may be; cause the related Prospectus to be supplemented by any
prospectus supplement required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force)
<PAGE>
-16-
under the Securities Act; and comply with the provisions of the Securities Act
and the Exchange Act applicable to it with respect to the disposition of all
securities covered by such Registration Statement as so amended or in such
Prospectus as so supplemented and with respect to the subsequent resale of any
securities being sold by a Participating Broker-Dealer covered by any such
Prospectus; the Company shall be deemed not to have used its reasonable best
efforts to keep a Registration Statement effective during the Applicable Period
if it voluntarily takes any action that would cause selling Holders of the
Registrable Notes covered thereby or Participating Broker-Dealers seeking to
sell Exchange Notes not to be able to sell such Registrable Notes or such
Exchange Notes during that period unless such action is required by applicable
law or unless the Company complies with this Agreement, including without
limitation, the provisions of paragraphs 5(k) and 5(u) hereof.
(c) If (1) a Shelf Registration is filed pursuant to Section 3 hereof
or (2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, the Company shall notify the selling Holders of
Registrable Notes, or each such Participating Broker-Dealer, as the case may be,
their counsel and the managing underwriters, if any, promptly (but in any event
within two business days) and confirm such notice in writing if requested by
such persons, (i) when a Prospectus or any Prospectus supplement or post-
effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective
under the Securities Act (including in such notice a written statement that any
Holder may, upon request, obtain, at the sole expense of the Company, one
conformed copy of such Registration Statement or post-effective amendment
including financial statements and schedules, and, if the Holder so requests in
writing, documents incorporated or deemed to be incorporated by reference and
exhibits), (ii) of the issuance by the SEC of any stop order suspending the
effectiveness of a
<PAGE>
-17-
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus or the initiation of any proceedings for that purpose,
(iii) if at any time when a prospectus is required by the Securities Act to be
delivered in connection with sales of the Registrable Notes or resales of
Exchange Notes by Participating Broker-Dealers the representations and
warranties of the Company contained in any agreement (including any underwriting
agreement), contemplated by Section 5(n) hereof cease to be true and correct,
(iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of a
Registration Statement or any of the Registrable Notes or the Exchange Notes to
be sold by any Participating Broker-Dealer for offer or sale in any
jurisdiction, or the initiation or written threat of any proceeding for such
purpose, (v) of the happening of any event, the existence of any condition or
any information becoming known that makes any statement made in such
Registration Statement or related Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respects
or that requires the making of any changes in or amendments or supplements to
such Registration Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case of
the Prospectus, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading and (vi) of the Company's determination that a post-
effective amendment to a Registration Statement would be appropriate.
(d) Use its reasonable best efforts to prevent the issuance of any
order suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Notes
<PAGE>
-18-
or the Exchange Notes for sale in any jurisdiction and, if any such order is
issued, use its best efforts to obtain the withdrawal of any such order at the
earliest possible moment.
(e) Subject to Section 3(d) hereof, if a Shelf Registration is filed
pursuant to Section 3 and if reasonably requested by the managing underwriter or
underwriters (if any) or the Holders of a majority in aggregate principal amount
at maturity of the Registrable Notes being sold in connection with an
underwritten offering, (i) promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriter or
underwriters (if any), such Holders, or counsel for any of them determine is
reasonably necessary to be included therein, (ii) make all required filings of
such prospectus supplement or such post-effective amendment as soon as
practicable after the Company has received notification of the matters to be
incorporated in such prospectus supplement or post-effective amendment and (iii)
supplement or make amendments to such Registration Statement; provided, however,
-------- -------
that the Company shall not be required to take any action pursuant to this
Section 5(e) that would, in the opinion of counsel for the Company reasonably
satisfactory to the Initial Purchasers, violate applicable law.
(f) If (1) a Shelf Registration is filed pursuant to Section 3 hereof
or (2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, furnish to each selling Holder of Registrable Notes and
to each such Participating Broker-Dealer who so requests and to counsel and each
managing underwriter, if any, at the sole expense of the Company, one conformed
copy of the Registration Statement or Registration Statements and each post-
effective amendment thereto, including financial statements and schedules and,
if reasonably requested in writing, all documents incorporated or deemed to be
incorporated therein by reference and all exhibits.
<PAGE>
-19-
(g) If (1) a Shelf Registration is filed pursuant to Section 3 hereof
or (2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, deliver to each selling Holder of Registrable Notes, or
each such Participating Broker-Dealer, as the case may be, their respective
counsel and the underwriters, if any, at the sole expense of the Company, as
many copies of the Prospectus or Prospectuses (including each form of
preliminary prospectus) and each amendment or supplement thereto and if
requested in writing, any documents incorporated by reference therein, in each
case, as such Persons may reasonably request; and, subject to the last paragraph
of this Section 5, the Company hereby consents to the use of such Prospectus and
each amendment or supplement thereto (provided the manner of such use complies
with all applicable federal securities laws, the rules and regulations of the
SEC and applicable state securities "Blue Sky" laws and subject to the
provisions of this Agreement) by each of the selling Holders of Registrable
Notes or each such Participating Broker-Dealer, as the case may be, and the
underwriters or agents, if any, and dealers (if any), in connection with the
offering and sale of the Registrable Notes covered by, or the sale by
Participating Broker-Dealers of the Exchange Notes pursuant to, such Prospectus
and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes or Exchange
Notes or any delivery of a Prospectus contained in the Exchange Offer
Registration Statement by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, use its reasonable best efforts to
register or qualify such Registrable Notes (and to cooperate with the selling
Holders of Registrable Notes or each such Participating Broker-Dealer, as the
case may be, the managing underwriter or underwriters, if any, and their
respective counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable Notes)
for offer and sale under the securities or Blue Sky laws of such jurisdictions
within the United States as
<PAGE>
-20-
any selling Holder, Participating Broker-Dealer or the managing underwriter or
underwriters reasonably request in writing; provided, however, that where
-------- -------
Exchange Notes held by Participating Broker-Dealers or Registrable Notes are
offered other than through an underwritten offering, the Company agrees to cause
the Company's counsel to perform Blue Sky investigations and file registrations
and qualifications required to be filed pursuant to this Section 5(h); keep each
such registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Exchange Notes held by Participating
Broker-Dealers or the Registrable Notes covered by the applicable Registration
Statement; provided, however, that the Company shall not be required to (A)
-------- -------
qualify generally to do business in any jurisdiction where it is not then so
qualified, (B) take any action that would subject it to general service of
process in any such jurisdiction where it is not then so subject or (C) subject
itself to taxation in excess of a nominal dollar amount in any such jurisdiction
where it is not then so subject.
(i) If a Shelf Registration is filed pursuant to Section 3 hereof,
cooperate with the selling Holders of Registrable Notes and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Notes to be sold, which
certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Company; and enable such
Registrable Notes to be in such denominations and registered in such names as is
in accordance with the Indenture and as the managing underwriter or
underwriters, if any, or Holders may reasonably request.
(j) Use its reasonable best efforts to cause the Registrable Notes
covered by the Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
Holders thereof or the underwriter or underwriters, if any, to
<PAGE>
-21-
consummate the disposition of such Registrable Notes, except as may be required
solely as a consequence of the nature of such selling Holder's business, in
which case the Company will cooperate in all reasonable respects with the filing
of such Registration Statement and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3 hereof
or (2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, upon the occurrence of any event contemplated by
paragraph 5(c)(v) or 5(c)(vi) hereof, as promptly as practicable prepare and
(subject to Section 5(a) hereof) file with the SEC, at the Company's sole
expense, a supplement or post-effective amendment to the Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, or file with the SEC any other required
document so that, as thereafter delivered to the purchasers of the Registrable
Notes being sold thereunder or to the purchasers of the Exchange Notes to whom
such Prospectus will be delivered by a Participating Broker-Dealer, any such
Prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(l) Use its reasonable best efforts to cause the Registrable Notes
covered by a Registration Statement or the Exchange Notes, as the case may be,
to be rated with the appropriate rating agencies, if so requested by the Holders
of a majority in aggregate principal amount at maturity of Registrable Notes
covered by such Registration Statement or the Exchange Notes, as the case may
be, or the managing underwriter or underwriters, if any.
(m) Prior to the effective date of the first Registration Statement
relating to the Registrable Notes, (i) provide the Trustee with certificates for
the Registrable Notes or Exchange Notes, as the case may be, in a form eligible
<PAGE>
-22-
for deposit with The Depository Trust Company and (ii) provide a CUSIP number
for the Registrable Notes or Exchange Notes, as the case may be.
(n) In connection with any underwritten offering of Registrable Notes
pursuant to a Shelf Registration, enter into an underwriting agreement as is
customary in underwritten offerings of debt securities similar to the Notes and
take all such other actions as are reasonably requested by the managing
underwriter or underwriters in order to expedite or facilitate the registration
or the disposition of such Registrable Notes and, in such connection, (i) make
such representations and warranties to, and covenants with, the underwriters
with respect to the business of the Company and its subsidiaries (including any
acquired business, properties or entity, if applicable) and the Registration
Statement, Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, as are customarily made by
issuers to underwriters in underwritten offerings of debt securities similar to
the Notes, and confirm the same in writing if and when requested; (ii) obtain
the written opinion of counsel to the Company in form, scope and substance
reasonably satisfactory to the managing underwriter or underwriters, addressed
to the underwriters covering the matters customarily covered in opinions
requested in underwritten offerings of debt similar to the Notes and such other
matters as may be reasonably requested by the managing underwriter or
underwriters; (iii) obtain "cold comfort" letters and updates thereof in form,
scope and substance reasonably satisfactory to the managing underwriter or
underwriters from the independent certified public accountants of the Company
(and, if necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company for which
financial statements and financial data are, or are required to be, included or
incorporated by reference in the Registration Statement), addressed to each of
the underwriters, such letters to be in customary form and covering matters of
the type customarily covered in "cold comfort" letters in connection with
underwritten offerings of debt securities similar to the
<PAGE>
-23-
Notes and such other matters as reasonably requested by the managing underwriter
or underwriters; and (iv) if an underwriting agreement is entered into, the same
shall contain indemnification provisions and procedures no less favorable than
those set forth in Section 7 hereof (or such other provisions and procedures
acceptable to Holders of a majority in aggregate principal amount at maturity of
Registrable Notes covered by such Registration Statement and the managing
underwriter or underwriters or agents) with respect to all parties to be
indemnified pursuant to said Section and no more onerous to the indemnifying
parties than those set forth in Section 7. The above shall be done at each
closing under such underwriting agreement, or as and to the extent required
thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section 3 hereof
or (2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, make available for inspection by any selling Holder of
such Registrable Notes being sold, or each such Participating Broker-Dealer, as
the case may be, any underwriter participating in any such disposition of
Registrable Notes, if any, and any attorney, accountant or other agent retained
by any such selling Holder or each such Participating Broker-Dealer, as the case
may be, or underwriter (collectively, the "Inspectors"), at the offices where
----------
normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and instruments of the Company and its
subsidiaries (collectively, the "Records") as shall be reasonably necessary to
-------
enable them to exercise any applicable due diligence responsibilities, and cause
the officers, directors and employees of the Company and its subsidiaries to
supply all information reasonably requested by any such Inspector in connection
with such Registration Statement, as shall reasonably be necessary to enable the
Inspectors to conduct a reasonable investigation within the meaning of Section
11 of the Securities Act; provided, however, that the foregoing inspection and
-------- -------
information gathering shall
<PAGE>
-24-
be coordinated on behalf of the Initial Purchasers and such selling Holders by
the Initial Purchasers and on behalf of the other parties, by one counsel
designated by and on behalf of such other parties as described in Section 6
hereof, provided, further, that Records designated by the Company as
-------- -------
confidential at the time of delivery shall be kept confidential by the
Inspectors, unless (i) such Records are in the public domain or otherwise
publicly available, (ii) disclosure of such Records is required by court or
administrative order or (iii) disclosure of such Records, in the written opinion
of counsel to such Inspector, is otherwise required by law (including, without
limitation, pursuant to the requirements of the Securities Act). Each selling
Holder of such Registrable Securities and each such Participating Broker-Dealer
will be required to agree that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used by it as the
basis for any market transactions in the securities of the Company unless and
until such information is generally available to the public. Each selling Holder
of such Registrable Notes and each such Participating Broker-Dealer will be
required to further agree that it will, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, give notice to the
Company and allow the Company to undertake appropriate action to prevent
disclosure of the Records deemed confidential at the Company's sole expense.
(p) Provide an indenture trustee for the Registrable Notes or the
Exchange Notes, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2(a) hereof, as the case may be, to be
qualified under the TIA not later than the effective date of the Exchange Offer
or the first Registration Statement relating to the Registrable Notes; and in
connection therewith, cooperate with the trustee under any such indenture and
the Holders of the Registrable Notes, to effect such changes to such indenture
as may be required for such indenture to be so qualified in accordance with the
terms of the TIA; and execute, and use its reasonable best efforts to cause such
trustee to execute, all documents as may be required to effect such changes and
all other forms and documents
<PAGE>
-25-
required to be filed with the SEC to enable such indenture to be so qualified in
a timely manner.
(q) Comply with all applicable rules and regulations of the SEC and
make generally available to its securityholders earnings statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no later than 45 days
after the end of any 12-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing at the end of any fiscal
quarter in which Registrable Notes are sold to underwriters in a firm commitment
or best efforts underwritten offering and (ii) if not sold to underwriters in
such an offering, commencing on the first day of the first fiscal quarter of the
Company after the effective date of a Registration Statement, which statements
shall cover said 12-month periods.
(r) Upon consummation of an Exchange Offer or a Private Exchange,
obtain an opinion of counsel to the Company, in a form customary for
underwritten transactions, addressed to the Trustee for the benefit of all
Holders of Registrable Notes participating in the Exchange Offer or the Private
Exchange, as the case may be, that the Exchange Notes or Private Exchange Notes,
as the case may be, and the related indenture constitute legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject to customary exceptions and
qualifications.
(s) If an Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Notes by Holders to the Company (or to such
other Person as directed by the Company) in exchange for the Exchange Notes or
the Private Exchange Notes, as the case may be, the Company shall mark, or cause
to be marked, on such Registrable Notes that such Registrable Notes are being
canceled in exchange for the Exchange Notes or the Private Exchange Notes, as
the case may be; in no event shall such Registrable Notes be marked as paid or
otherwise satisfied.
<PAGE>
-26-
(t) Cooperate with each seller of Registrable Notes covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Notes and their respective counsel in connection
with any filings required to be made with the National Association of Securities
Dealers, Inc. (the "NASD").
----
(u) Use its reasonable best efforts to take all other steps necessary
or advisable to effect the registration of the Registrable Notes covered by a
Registration Statement contemplated hereby.
The Company may require each seller of Registrable Notes as to which
any registration is being effected to furnish to the Company such information
regarding such seller and the distribution of such Registrable Notes as the
Company may, from time to time, reasonably request. The Company may exclude
from such registration the Registrable Notes of any seller who unreasonably
fails to furnish such information within a reasonable time after receiving such
request and in such event shall have no further obligation under this Agreement
with respect to such seller or any subsequent holder of such Registrable Notes.
Each seller as to which any Shelf Registration is being effected agrees to
furnish promptly to the Company all information required to be disclosed in
order to make the information previously furnished to the Company by such seller
not materially misleading.
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by acquisition of such Registrable Notes or Exchange Notes to be sold by
such Participating Broker-Dealer, as the case may be, that, upon actual receipt
of any notice from the Company of the happening of any event of the kind
described in Sections 5(c)(ii), 5(c)(iv), 5(c)(v) or 5(c)(vi) hereof, such
Holder will forthwith discontinue disposition of such Registrable Notes covered
by such Registration Statement or Prospectus or Exchange Notes to be sold by
such Holder or Participating Broker-Dealer, as the case may be, until such
Holder's or Participating Broker-Dealer's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) hereof, or until
it is advised in writ-
<PAGE>
-27-
ing (the "Advice") by the Company that the use of the applicable Prospectus may
------
be resumed, and has received copies of any amendments or supplements thereto. In
the event that the Company shall give any such notice, each of the Effectiveness
Period and the Applicable Period shall be extended by the number of days during
such periods from and including the date of the giving of such notice to and
including the date when each seller of Registrable Notes covered by such
Registration Statement or Exchange Notes to be sold by such Participating
Broker-Dealer, as the case may be, shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) hereof or (y)
the Advice.
6. Registration Expenses
---------------------
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not the Exchange Offer or a Shelf Registration is filed or becomes
effective, including, without limitation, (i) all registration and filing fees
(including, without limitation, (A) fees with respect to filings required to be
made with the NASD in connection with an underwritten offering and (B) fees and
expenses of compliance with state securities or Blue Sky laws (including,
without limitation, reasonable fees and disbursements of counsel in connection
with Blue Sky qualifications of the Registrable Notes or Exchange Notes and
determination of the eligibility of the Registrable Notes or Exchange Notes for
investment under the laws of such jurisdictions (x) where the holders of
Registrable Notes are located, in the case of the Exchange Notes, or (y) as
provided in Section 5(h) hereof, in the case of Registrable Notes or Exchange
Notes to be sold by a Participating Broker-Dealer during the Applicable
Period)), (ii) reasonable printing expenses, including, without limitation,
expenses of printing certificates for Registrable Notes or Exchange Notes in a
form eligible for deposit with The Depository Trust Company and of printing
prospectuses if the printing of prospectuses is requested by the managing
underwriter or underwriters, if any, or by the Holders of a majority in
aggregate principal amount at maturity of the
<PAGE>
-28-
Registrable Notes included in any Registration Statement or sold by any
Participating Broker-Dealer, as the case may be, (iii) messenger, telephone and
delivery expenses, (iv) reasonable fees and disbursements of counsel for the
Company and reasonable fees and disbursements of special counsel for the sellers
of Registrable Notes (subject to the provisions of Section 6(b) hereof), (v)
reasonable fees and disbursements of all independent certified public
accountants referred to in Section 5(n)(iii) hereof (including, without
limitation, the reasonable expenses of any special audit and "cold comfort"
letters required by or incident to such performance), (vi) rating agency fees,
if any, and any fees associated with making the Registrable Notes or Exchange
Notes eligible for trading through The Depository Trust Company, (vii)
Securities Act liability insurance, if the Company desires such insurance,
(viii) reasonable fees and expenses of all other Persons retained by the
Company, (ix) internal expenses of the Company (including, without limitation,
all salaries and expenses of officers and employees of the Company performing
legal or accounting duties), (x) the expense of any annual audit, (xi) the fees
and expenses incurred in connection with the listing of the securities to be
registered on any securities exchange, if applicable, and (xii) the reasonable
expenses relating to printing, word processing and distributing all Registration
Statements, underwriting agreements, securities sales agreements, indentures and
any other documents necessary to comply with this Agreement.
(b) The Company shall (i) reimburse the Holders of the Registrable
Notes being registered in a Shelf Registration for the reasonable fees and
disbursements of not more than one counsel (in addition to appropriate local
counsel) chosen by the Holders of a majority in aggregate principal amount at
maturity of the Registrable Notes to be included in such Registration Statement
and (ii) reimburse reasonable out-of-pocket expenses (other than legal expenses
and other than sales commissions or similar costs) of Holders of Registrable
Notes incurred in connection with the registration and sale of the Registrable
Notes pursuant to a Shelf Registration or in connection with the exchange of
Registrable
<PAGE>
-29-
Notes pursuant to the Exchange Offer. In addition, the Company shall reimburse
the Initial Purchasers for the reasonable fees and expenses of one counsel in
connection with the Exchange Offer, which shall be Cahill Gordon & Reindel, and
shall not be required to pay any other legal expenses in connection therewith.
7. Indemnification
---------------
(a) The Company agrees to indemnify and hold harmless each Holder of
Registrable Notes offered pursuant to a Shelf Registration Statement and each
Participating Broker-Dealer selling Exchange Notes during the Applicable Period,
the directors, officers, agents, and employees of each such Person or its
affiliates, and each other Person, if any, who controls any such Person or its
affiliates within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act (each, a "Participant"), from and against any and
-----------
all losses, claims, damages and liabilities (including, without limitation, the
reasonable legal fees and other expenses actually incurred in connection with
any suit, action or proceeding or any claim asserted) caused by, arising out of
or based upon any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement pursuant to which the offering of
such Registrable Notes or Exchange Notes, as the case may be, is registered (or
any amendment thereto) or related Prospectus (or any amendments or supplements
thereto) or any related preliminary prospectus, or caused by, arising out of or
based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
--------
however, that the Company will not be required to indemnify a Participant if (i)
- -------
such losses, claims, damages or liabilities are caused by any untrue statement
or omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Participant furnished to the Company
in writing by or on behalf of such Participant expressly for use therein or (ii)
such Participant sold to the person asserting the claim the
<PAGE>
-30-
Registrable Notes or Exchange Notes that are the subject of such claim and such
untrue statement or omission or alleged untrue statement or omission was
contained or made in any preliminary prospectus and corrected in the Prospectus
or any amendment or supplement thereto and the Prospectus does not contain any
other untrue statement or omission or alleged untrue statement or omission of a
material fact that was the subject matter of the related proceeding and it is
established by the Company in the related proceeding that such Participant
failed to deliver or provide a copy of the Prospectus (as amended or
supplemented) to such Person with or prior to the confirmation of the sale of
such Registrable Notes or Exchange Notes sold to such Person if required by
applicable law, unless such failure to deliver or provide a copy of the
Prospectus (as amended or supplemented) was a result of noncompliance by the
Company with Section 5 of this Agreement.
(b) Each Participant agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors and officers and each Person who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company to each Participant, but only (i) with reference to information
relating to such Participant furnished to the Company in writing by or on behalf
of such Participant expressly for use in any Registration Statement or
Prospectus, any amendment or supplement thereto or any preliminary prospectus or
(ii) with respect to any untrue statement or representation made by such
Participant in writing to the Company. The liability of any Participant under
this paragraph shall in no event exceed the proceeds received by such
Participant from sales of Registrable Notes or Exchange Notes giving rise to
such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "Indemnified Person") shall promptly
------------------
notify the Person against whom such indemnity
<PAGE>
-31-
may be sought (the "Indemnifying Person") in writing, and the Indemnifying
-------------------
Person, upon request of the Indemnified Person, shall retain counsel reasonably
satisfactory to the Indemnified Person to represent the Indemnified Person and
any others the Indemnifying Person may reasonably designate in such proceeding
and shall pay the reasonable fees and expenses actually incurred by such counsel
related to such proceeding; provided, however, that the failure to so notify the
-------- -------
Indemnifying Person shall not relieve the Indemnifying Person of any obligation
or liability that it may have hereunder or otherwise (unless and only to the
extent that such failure directly results in the loss or compromise of any
material rights or defenses by the Indemnifying Person and the Indemnifying
Person was not otherwise aware of such action or claim). In any such proceeding,
any Indemnified Person shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such Indemnified
Person unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed in writing to the contrary, (ii) the Indemnifying Person shall
have failed within a reasonable period of time to retain counsel reasonably
satisfactory to the Indemnified Person or (iii) the named parties in any such
proceeding (including any impleaded parties) include both the Indemnifying
Person and the Indemnified Person and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that, unless there exists a conflict among
Indemnified Persons, the Indemnifying Person shall not, in connection with any
one such proceeding or separate but substantially similar related proceeding in
the same jurisdiction arising out of the same general allegations, be liable for
the fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed promptly as they are incurred. Any such separate firm for the
Participants and such control Persons of Participants shall be designated in
writing by Participants who sold a majority in interest of Registrable Notes and
Exchange Notes sold by all such Participants and any such separate firm for the
Company, its directors, its officers and such control
<PAGE>
-32-
Persons of the Company shall be designated in writing by the Company. The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its prior written consent (which consent shall not be
unreasonably withheld), but if settled with such consent or if there be a final
non-appealable judgment for the plaintiff for which the Indemnified Person is
entitled to indemnification pursuant to this Agreement, the Indemnifying Person
agrees to indemnify and hold harmless each Indemnified Person from and against
any loss or liability by reason of such settlement or judgment. No Indemnifying
Person shall, without the prior written consent of the Indemnified Person,
effect any settlement or compromise of any pending or threatened proceeding in
respect of which any Indemnified Person is or could have been a party, and
indemnity could have been sought hereunder by such Indemnified Person, unless
such settlement (A) includes an unconditional written release of such
Indemnified Person, in form and substance reasonably satisfactory to such
Indemnified Person, from all liability on claims that are the subject matter of
such proceeding and (B) does not include any statement as to an admission of
fault, culpability or failure to act by or on behalf of any Indemnified Person.
(d) If the indemnification provided for in the first and second
paragraphs of this Section 7 is for any reason unavailable to, or insufficient
to hold harmless, an Indemnified Person in respect of any losses, claims,
damages or liabilities referred to therein, then each Indemnifying Person under
such paragraphs, in lieu of indemnifying such Indemnified Person thereunder and
in order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
(i) the relative benefits received by the Indemnifying Person or Persons on the
one hand and the Indemnified Person or Persons on the other from the offering of
the Notes or (ii) if the allocation provided by the foregoing clause (i) is not
permitted by applicable law, not only such relative benefits but also the
relative fault of the Indemnifying Person or Persons on the one hand and the
<PAGE>
-33-
Indemnified Person or Persons on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof). The relative
fault of the parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or such Participant or such other
Indemnified Person, as the case may be, on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission, and any other equitable considerations appropriate
in the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
--- ----
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant has otherwise been required to pay or has paid by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
<PAGE>
-34-
(f) The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
8. Rule 144 and 144A
-----------------
The Company covenants that it will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder in a timely manner in accordance with
the requirements of the Securities Act and the Exchange Act and, if at any time
the Company is not required to file such reports, it will, upon the request of
any Holder of Registrable Notes, make publicly available annual reports and such
information, documents and other reports of the type specified in Sections 13
and 15(d) of the Exchange Act. The Company further covenants for so long as any
Registrable Notes remain outstanding, to make available to any Holder or
beneficial owner of Registrable Notes in connection with any sale thereof and
any prospective purchaser of such Registrable Notes from such Holder or
beneficial owner the information required by Rule 144A(d)(4) under the
Securities Act in order to permit resales of such Registrable Notes pursuant to
Rule 144A.
9. Underwritten Registrations
--------------------------
If any of the Registrable Notes covered by any Shelf Registration are
to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount at maturity of such
Registrable Notes included in such offering and reasonably acceptable to the
Company.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attor-
<PAGE>
-35-
ney, indemnities, underwriting agreements and other documents required under the
terms of such underwriting arrangements.
10. Miscellaneous
-------------
(a) No Inconsistent Agreements. The Company has not, as of the date
--------------------------
hereof, and shall not, after the date of this Agreement, enter into any
agreement with respect to any of the Company's securities that is inconsistent
with the rights granted to the Holders of Registrable Notes in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's securities under any
agreement in effect on the date hereof.
(b) Adjustments Affecting Registrable Notes. The Company shall not,
---------------------------------------
directly or indirectly, take any action with respect to the Registrable Notes as
a class that would adversely affect the ability of the Holders of Registrable
Notes to include such Registrable Notes in a registration undertaken pursuant to
this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement may not
----------------------
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, otherwise than with the prior written
consent of the Holders of not less than a majority in aggregate principal amount
at maturity of the then outstanding Registrable Notes. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders of Registrable
Notes whose securities are being sold pursuant to a Registration Statement and
that does not directly or indirectly affect, impair, limit or compromise the
rights of other Holders of Registrable Notes may be given by Holders of at least
a majority in aggregate principal amount at maturity of the Registrable Notes
being sold by such Holders pursuant to such Registration Statement; provided,
--------
however, that the provisions of this sentence may not be amended, modified or
- -------
supplemented
<PAGE>
-36-
except in accordance with the provisions of the immediately preceding sentence.
(d) Notices. All notices and other communications (including without
-------
limitation any notices or other communications to the Trustee) provided for or
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, next-day air courier or facsimile:
1. if to a Holder of the Registrable Notes or any Participating
Broker-Dealer, at the most current address of such Holder or Participating
Broker-Dealer, as the case may be, set forth on the records of the
registrar under the Indenture, with a copy in like manner to the Initial
Purchasers as follows:
BT ALEX. BROWN INCORPORATED
LEHMAN BROTHERS INC.
c/o BT Alex. Brown Incorporated
Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Facsimile No.: (212) 250-7200
Attention: Corporate Finance Department
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Facsimile No.: (212) 269-5420
Attention: Michael Becker, Esq.
2. if to the Initial Purchasers, at the addresses specified in
Section 10(d)(1);
3. if to the Company, at the address as follows:
<PAGE>
-37-
SBA Communications Corporation
One Town Center Road
Boca Raton, Florida 33486
Facsimile No.: (561) 995-7626
Attention: Jeffrey A. Stoops, Esq.
Senior Vice President
and General Counsel
with copies to:
Latham & Watkins
885 3rd Avenue, Suite 1000
New York, New York 10022
Facsimile No.: (202) 751-4864
Attention: Kirk Davenport, Esq.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if sent by facsimile.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address and in the manner specified in such Indenture.
(e) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors and assigns of each of the parties hereto;
provided, however, that this Agreement shall not inure to the benefit of or be
- -------- -------
binding upon a successor or assign of a Holder unless and to the extent such
successor or assign holds Registrable Notes.
(f) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
<PAGE>
-38-
(g) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. If any term, provision, covenant or restriction of
------------
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(j) Securities Held by the Company or Its Affiliates. Whenever the
------------------------------------------------
consent or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Company or its affiliates (as
such term is defined in Rule 405 under the Securities Act) shall not be counted
in determining whether such consent or approval was given by the Holders of such
required percentage.
(k) Third Party Beneficiaries. Holders of Registrable Notes and
-------------------------
Participating Broker-Dealers are intended
<PAGE>
-39-
third party beneficiaries of this Agreement and this Agreement may be enforced
by such Persons.
(l) Entire Agreement. This Agreement, together with the Purchase
----------------
Agreement and the Indenture, is intended by the parties as a final and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein and any and all prior oral or
written agreements, representations, or warranties, contracts, understandings,
correspondence, conversations and memoranda between the Initial Purchasers on
the one hand and the Company on the other, or between or among any agents,
representatives, parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof are
merged herein and replaced hereby.
<PAGE>
-40-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
SBA COMMUNICATIONS CORPORATION
By: /s/ Jeffrey A. Stoops
---------------------------
Name: Jeffrey A. Stoops
Title: Sr. Vice President
BT ALEX. BROWN INCORPORATED
By: /s/ Gerry McConnell
---------------------------
Name: Gerry McConnell
Title: Principal
LEHMAN BROTHERS INC.
By: /s/ Edward B. Mc Geough
---------------------------
Name: Edward B. Mc Geough
Title: Managing Director
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF LATHAM & WATKINS APPEARS HERE]
July 6, 1998
SBA Communications Corporation
One Town Center Road
Boca Raton, Florida 33486
Re: Registration Statement on Form S-4
SBA Communications Corporation
File No. 333-50219
------------------
Ladies and Gentlemen:
In connection with the registration of $269,000,000 in aggregate
principal amount at maturity of its 12% Senior Discount Notes due 2008 (the "New
Notes") by SBA Communications Corporation, a company incorporated under the laws
of the State of Florida (the "Company"), pursuant to a registration statement on
Form S-4 (the "Registration Statement") filed with the Securities and Exchange
Commission (the "Commission") on April 15, 1998 (File No. 333-50219), you have
requested our opinion with respect to the matters set forth below. The New
Notes will be issued pursuant to an indenture (the "Indenture"), dated as of
March 2, 1998, among the Company and State Street Bank and Trust Company, as
trustee (the "Trustee"). The New Notes will be issued in exchange for the
Company's outstanding 12% Senior Discount Notes due 2008 (the "Old Notes") on
the terms set forth in the prospectus contained in the Registration Statement
and the Letter of Transmittal filed as an exhibit thereto (the "Exchange
Offer").
In our capacity as your special counsel, we have made such legal and factual
examinations and inquiries as we have deemed necessary or appropriate for
purposes of this opinion.
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals and the
conformity to authentic original documents of all documents submitted to us as
copies. As to facts material to the opinions, statements and assumptions
expressed herein, we
<PAGE>
[LETTERHEAD OF LATHAM & WATKINS APPEARS HERE]
July 6, 1998
Page 2
have, with your consent, relied upon oral or written statements and
representations of officers and other representatives of the Company and others.
We are opining herein as to the effect on the subject transaction only
of the federal laws of the United States, the internal laws of the State of New
York and we express no opinion with respect to the applicability thereto, or the
effect thereon, of the laws of any other jurisdiction or as to any matters of
municipal law or the laws of any other local agencies within any state. Various
issues concerning the laws of the State of Florida are addressed in the opinion
of Gunster, Yoakley, Valdes-Fauli & Stewart, P.A., which has been separately
provided to you, and we express no opinion with respect thereto.
Subject to the foregoing and the other matters set forth herein, it is
our opinion that, as of the date hereof:
When the New Notes to be exchanged for the Old Notes pursuant to the
Exchange Offer have been duly executed, issued and authenticated in accordance
with the terms of the Exchange Offer and the Indenture, the New Notes will be
legally valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms.
The opinion rendered in the forgoing paragraph relating to the
enforceability of the New Notes is subject to the following exceptions,
limitations and qualifications: (i) the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting the rights and remedies of creditors; (ii) the effect
of general principles of equity, whether enforcement is considered in a
proceeding in equity or at law, and the discretion of the court before which any
proceeding therefor may be brought; (iii) we express no opinion concerning the
enforceability of the waiver of rights or defenses contained in Section 4.06 of
the Indenture; and (iv) we express no opinion with respect to whether
acceleration of the New Notes may affect the collectibility of that portion of
the stated principal amount thereof which might be determined to constitute
unearned interest thereon.
To the extent that the obligations of the Company under the Indenture
and the New Notes may be dependent upon such matters, we have assumed for
purposes of this opinion that (i) each of the Company and the Trustee (a) is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization; (b) has the requisite organizational and legal
power and authority to perform its obligations under the Indenture; (c) is duly
qualified to engage in the activities contemplated by the Indenture; and (d) has
duly authorized, executed and delivered the Indenture; (ii) the Indenture is the
legally valid and binding agreement of the Trustee, enforceable against the
Trustee in accordance with its terms; and (iii) that the Trustee is in
compliance, generally and with respect to acting as Trustee under the Indenture,
with all applicable laws and regulations. We have also assumed, with your
consent, that the choice of law provisions in the Indenture would be enforced by
any court in which enforcement thereof might be sought.
We have not been requested to express and, with your knowledge and
consent, do not render any opinion as to the applicability to the obligations of
the Company under the Indenture and the New Notes of Sections 547 and 548 of the
Bankruptcy Code or applicable state law (including, without limitation, Article
10 of the New York Debtor & Creditor Law) relating to preferences and fraudulent
transfers and obligations.
We consent to your filing this opinion as an exhibit to the
Registration Statement and to the reference to our firm contained under the
heading "Legal Matters."
Very truly yours,
/s/ Latham & Watkins
<PAGE>
EXHIBIT 5.2
OUR FILE NUMBER: 17323.09000
WRITER'S DIRECT DIAL NUMBER: (561)650-0624
March 2, 1998
BT ALEX. BROWN INCORPORATED
LEHMAN BROTHERS INC.
c/o BT Alex. Brown Incorporated
130 Liberty Street
New York, NY 10006
Ladies and Gentlemen:
We have acted as special counsel to SBA Communications Corporation (the
"Company"), a Florida corporation, in connection with the issuance and sale by
the Company to you of $269,000,000 principal amount at maturity of the Company's
12% Senior Discount Notes Due 2008 (the "Notes") pursuant to the terms of a
Purchase Agreement, dated as of February 25, 1998 (the "Purchase Agreement"),
between the Company and you, for the limited purpose of addressing the limited
matters addressed in this opinion. As special counsel to the Company, we have
represented it for the purpose set forth above and for the purpose of rendering
this opinion and are not otherwise familiar with its businesses or day-to-day
operations. Capitalized terms used in this opinion letter, unless otherwise
defined, have the meanings specified in the Purchase Agreement.
This opinion has been prepared and is to be construed in accordance with
the Report on Standards for Florida Opinions dated April 8, 1991 issued by the
Business Law Section of The Florida Bar (the "Report"). The Report is
incorporated by reference into this opinion. As to various questions of fact
material to this opinion letter, where relevant facts were not independently
established, we have relied upon certificates and statements of officers of the
Company and certificates of public officials.
We are members of the Bar of the State of Florida and do not herein express
any opinion as to matters governed by the laws of any jurisdiction other than
the internal laws of the State of Florida and the Federal law of the United
States (without reference to the choice-of-law or conflict-of-law provisions,
principles or decisions under Florida or Federal law or under any other state,
federal or foreign law) and we have assumed compliance with all other laws,
including, without limitation, foreign and other states' laws.
<PAGE>
BT ALEX. BROWN INCORPORATED
LEHMAN BROTHERS INC
March 2, 1998
Page 2
In examining the documents and certificates described herein we have
assumed the genuiness of all signatures, the authenticity and completeness of
all documents submitted to us as originals, the authenticity, completeness and
conformity to originals of all documents submitted to us as copies and the
authenticity of the originals of such copies, that all signatories were and are
legally competent to execute and deliver the documents or certificates executed
by each of them and that all certificates, representations and warranties made
as to matters of fact, and such other certificates, records and statements upon
which we have expressed reliance herein, continue to remain accurate insofar as
material to our opinions, from such earlier dates to the date hereof. No
information has come to our attention regarding the unreasonableness of any of
the assumptions set forth in this paragraph.
Based on the foregoing, and subject to the qualifications and limitations
stated in this letter and in the Report, we are of the opinion that:
1. Based solely upon our review of a Certificate of Status from the
Secretary of State, State of Florida, dated February 19, 1998, the Company has
been incorporated under the Florida Business Corporation Act ("FBCA") and its
status is active.
2. Based solely on our review of the articles of incorporation of the
Company certified as true, correct and current by the Secretary of State, State
of Florida, and the secretary of the Company and the by-laws of the Company
certified as true, correct and current by the secretary of the Company, the
Company has the corporate power to execute and deliver the Purchase Agreement,
the Notes, the Exchange Notes, the Private Exchange Notes, the Indenture and the
Registration Rights Agreement (collectively, the "Company Documents") and to
perform its obligations thereunder.
3. Based solely upon our review of law, the articles of incorporation and
by-laws of the Company referred to in Paragraph 2 above and the resolutions of
the Company attached hereto as Exhibit "A", the Company has duly authorized the
-----------
execution, delivery and performance of the Company Documents by all necessary
corporate action.
Our opinions are limited to the specific issues addressed and are limited
in all respects to laws and facts existing on the date hereof. By rendering this
opinion letter, we do not undertake to advise you of any changes in such laws or
facts which may occur or come to our attention after the date hereof.
The foregoing opinions are furnished to you at your request, are solely for
your benefit, and are rendered solely in connection with the transaction to
which these opinions relate. Our opinions in this letter may be relied upon by
you and Latham & Watkins only in connection with this
GUNSTER, YOAKLEY, VALDES-FAULI & STEWART, P.A.
ATTORNEYS AT LAW
<PAGE>
BT ALEX. BROWN INCORPORATED
LEHMAN BROTHERS INC
March 2, 1998
Page 3
transaction and may not be relied upon by any other party without the prior
written consent of a shareholder of this law firm.
Very truly yours,
GUNSTER, YOAKLEY, VALDES-FAULI &
STEWART, P.A.
By: /s/ Thomas P. Hunt
-----------------------------------
Thomas P. Hunt, Vice President
GUNSTER, YOAKLEY, VALDES-FAULI & STEWART, P.A.
ATTORNEYS AT LAW
<PAGE>
EXHIBIT A
---------
RESOLUTIONS OF THE COMPANY
--------------------------
GUNSTER, YOAKLEY, VALDES-FAULI & STEWART, P.A.
ATTORNEYS AT LAW
<PAGE>
EXHIBIT 10.7
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SBA COMMUNICATIONS CORPORATION
CREDIT AGREEMENT
Dated as of August 8, 1997
BANKBOSTON, N.A., Agent
FIRST UNION NATIONAL BANK, Co-Agent
FLEET NATIONAL BANK, Co-Agent
________________________________
BANCBOSTON SECURITIES INC.,
Syndication Agent and Manager
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
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1. DEFINITIONS; CERTAIN RULES OF CONSTRUCTION............................................. 1
2. THE CREDITS............................................................................ 24
2.1. Revolving Credit................................................................. 24
2.1.1. Revolving Loan........................................................... 24
2.1.2. Maximum Amount of Revolving Credit....................................... 25
2.1.3. Borrowing Requests....................................................... 25
2.1.4. Revolving Notes.......................................................... 25
2.2. Term Credit...................................................................... 25
2.2.1. Term Loan................................................................ 25
2.2.2. Maximum Amount of Term Credit............................................ 26
2.2.3. Borrowing Requests....................................................... 26
2.2.4. Term Notes............................................................... 26
2.3. Letters of Credit................................................................ 27
2.3.1. Issuance of Letters of Credit............................................ 27
2.3.2. Requests for Letters of Credit........................................... 27
2.3.3. Form and Expiration of Letters of Credit................................. 27
2.3.4. Lenders' Participation in Letters of Credit.............................. 27
2.3.5. Presentation............................................................. 28
2.3.6. Payment of Drafts........................................................ 28
2.3.7. Uniform Customs and Practice............................................. 28
2.3.8. Subrogation.............................................................. 30
2.3.9. Modification, Consent, etc............................................... 30
2.4. Application of Proceeds.......................................................... 30
2.4.1. Revolving Loan........................................................... 30
2.4.2. Term Loan................................................................ 30
2.4.3. Letters of Credit........................................................ 31
2.4.4. Specifically Prohibited Applications..................................... 31
2.5. Nature of Obligations of Lenders to Make Extensions of Credit.................... 31
3. INTEREST; EURODOLLAR PRICING OPTIONS; FEES............................................. 31
3.1. Interest......................................................................... 31
3.2. Eurodollar Pricing Options....................................................... 32
3.2.1. Election of Eurodollar Pricing Options................................... 32
3.2.2. Notice to Lenders and Company............................................ 33
3.2.3. Selection of Eurodollar Interest Periods................................. 33
3.2.4. Additional Interest...................................................... 33
3.2.5. Violation of Legal Requirements.......................................... 34
3.2.6. Funding Procedure........................................................ 34
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3.3. Commitment Fees.................................................................. 35
3.3.1. Revolving Loan........................................................... 35
3.3.2. Term Loan................................................................ 35
3.4. Letter of Credit Fees............................................................ 35
3.5. Changes in Circumstances; Yield Protection....................................... 35
3.5.1. Reserve Requirements, etc................................................ 35
3.5.2. Taxes.................................................................... 36
3.5.3. Capital Adequacy......................................................... 36
3.5.4. Regulatory Changes....................................................... 37
3.5.5. Compensation Claims...................................................... 37
3.5.6. Mitigation............................................................... 37
3.6. Computations of Interest and Fees................................................ 38
4. PAYMENT................................................................................ 38
4.1. Payment at Maturity.............................................................. 38
4.2. Scheduled Required Prepayments................................................... 38
4.3. Contingent Required Prepayments.................................................. 39
4.3.1. Excess Credit Exposure................................................... 39
4.3.2. Excess Cash Flow......................................................... 39
4.3.3. Net Asset Sale Proceeds.................................................. 39
4.3.4. Net Debt Proceeds........................................................ 39
4.3.5. Net Equity Proceeds...................................................... 40
4.4. Voluntary Prepayments............................................................ 40
4.5. Letters of Credit................................................................ 40
4.6. Reborrowing; Application of Payments, etc........................................ 41
4.6.1. Reborrowing.............................................................. 41
4.6.2. Order of Application..................................................... 41
4.6.3. Payment with Accrued Interest, etc....................................... 41
4.6.4. Payments for Lenders..................................................... 41
5. CONDITIONS TO EXTENDING CREDIT......................................................... 41
5.1. Conditions on Initial Closing Date............................................... 41
5.1.1. Notes.................................................................... 42
5.1.2. Payment of Fees.......................................................... 42
5.1.3. Legal Opinions........................................................... 42
5.1.4. Guarantee and Security Agreement......................................... 42
5.1.5. Perfection of Security................................................... 42
5.1.6. Subordination Agreement.................................................. 42
5.1.7. Solvency................................................................. 43
5.1.8. Proper Proceedings....................................................... 43
5.1.9. General.................................................................. 43
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5.2. Conditions to Each Extension of Credit........................................... 43
5.2.1. Officer's Certificate.................................................... 43
5.2.2. Legality, etc............................................................ 44
6. GENERAL COVENANTS...................................................................... 44
6.1. Taxes and Other Charges; Accounts Payable........................................ 44
6.1.1. Taxes and Other Charges.................................................. 44
6.1.2. Accounts Payable......................................................... 44
6.2. Conduct of Business, etc......................................................... 45
6.2.1. Types of Business........................................................ 45
6.2.2. Maintenance of Properties................................................ 45
6.2.3. Statutory Compliance..................................................... 45
6.2.4. Compliance with Material Agreements...................................... 45
6.3. Insurance........................................................................ 46
6.3.1. Property Insurance....................................................... 46
6.3.2. Liability Insurance...................................................... 46
6.3.3. Key Executive Life Insurance............................................. 46
6.3.4. Flood Insurance.......................................................... 46
6.4. Financial Statements and Reports................................................. 46
6.4.1. Annual Reports........................................................... 47
6.4.2. Quarterly Reports........................................................ 48
6.4.3. Monthly Reports.......................................................... 49
6.4.5. Other Reports............................................................ 50
6.4.6. Notice of Litigation, Defaults, etc...................................... 50
6.4.7. ERISA Reports............................................................ 50
6.4.8. Other Information........................................................ 51
6.5. Certain Financial Tests.......................................................... 51
6.5.1. Consolidated Total Debt to Consolidated Adjusted EBITDA.................. 51
6.5.2. Consolidated EBITDA to Consolidated Pro Forma Interest Expense........... 52
6.5.3. Consolidated Adjusted EBITDA to Consolidated Fixed Charges............... 52
6.5.4. Consolidated EBITDA...................................................... 52
6.5.5. Third Party Tower Construction Costs..................................... 53
6.5.6. Capital Expenditures..................................................... 53
6.5.7. Consolidated Corporate Development Expenses.............................. 53
6.5.8. Senior Management Compensation........................................... 53
6.6. Indebtedness..................................................................... 53
6.7. Guarantees; Letters of Credit.................................................... 55
6.8. Liens............................................................................ 55
6.9. Investments and Acquisitions..................................................... 57
6.10. Distributions.................................................................... 58
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6.11. Asset Dispositions and Mergers................................................... 59
6.12. Issuance of Stock by Subsidiaries; Subsidiary Distributions...................... 60
6.12.1. Issuance of Stock by Subsidiaries........................................ 60
6.12.2. No Restrictions on Subsidiary Distributions.............................. 60
6.13. Voluntary Prepayments of Other Indebtedness...................................... 61
6.14. Derivative Contracts............................................................. 61
6.15. Negative Pledge Clauses.......................................................... 61
6.16. ERISA, etc....................................................................... 61
6.17. Transactions with Affiliates..................................................... 61
6.18. Interest Rate Protection......................................................... 62
6.19. Environmental Laws............................................................... 62
6.19.1. Compliance with Law and Permits.......................................... 62
6.19.2. Notice of Claims, etc.................................................... 62
6.20. Tower Matters.................................................................... 62
6.20.1. Tower Construction Requirements.......................................... 62
6.20.2. No Removal of Towers..................................................... 62
6.20.3. Pledged Towers........................................................... 63
7. REPRESENTATIONS AND WARRANTIES......................................................... 63
7.1. Organization and Business........................................................ 63
7.1.1. The Company.............................................................. 63
7.1.2. Subsidiaries............................................................. 64
7.1.3. Qualification............................................................ 64
7.1.4. Capitalization........................................................... 65
7.2. Financial Statements and Other Information; Material Agreements.................. 65
7.2.1. Financial Statements and Other Information............................... 65
7.2.2. Material Agreements...................................................... 66
7.3. Agreements Relating to Financing Debt, Investments, etc.......................... 66
7.4. Changes in Condition............................................................. 66
7.5. Title to Assets.................................................................. 66
7.6. Operations in Conformity With Law, etc........................................... 67
7.7. Litigation....................................................................... 67
7.8. Authorization and Enforceability................................................. 67
7.9. No Legal Obstacle to Agreements.................................................. 67
7.10. Defaults......................................................................... 68
7.11. Licenses, etc.................................................................... 68
7.12. Tax Returns...................................................................... 69
7.13. Certain Business Representations................................................. 69
7.13.1. Labor Relations.......................................................... 69
7.13.2. Antitrust................................................................ 69
7.13.3. Tower Sites.............................................................. 69
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7.13.4. Real Property Leases..................................................... 70
7.13.5. FCC and FAA Matters...................................................... 70
7.14. Environmental Regulations........................................................ 70
7.14.1. Environmental Compliance................................................. 70
7.14.2. Environmental Litigation................................................. 70
7.14.3. Hazardous Material....................................................... 71
7.14.4. Environmental Condition of Properties.................................... 71
7.15. Pension Plans.................................................................... 71
7.16. Government Regulation; Margin Stock.............................................. 72
7.16.1. Government Regulation.................................................... 72
7.16.2. Margin Stock............................................................. 72
7.17. Disclosure....................................................................... 72
8. DEFAULTS............................................................................... 72
8.1. Events of Default................................................................ 72
8.1.1. Payment.................................................................. 72
8.1.2. Specified Covenants...................................................... 73
8.1.3. Other Covenants.......................................................... 73
8.1.4. Representations and Warranties........................................... 73
8.1.5. Cross Default, etc....................................................... 73
8.1.6. Ownership; Liquidation; etc.............................................. 74
8.1.7. Enforceability, etc...................................................... 74
8.1.8. Judgments................................................................ 74
8.1.9. ERISA.................................................................... 74
8.1.10. Bankruptcy, etc.......................................................... 75
8.2. Certain Actions Following an Event of Default.................................... 75
8.2.1. Terminate Obligation to Extend Credit.................................... 76
8.2.2. Specific Performance; Exercise of Rights................................. 76
8.2.3. Acceleration............................................................. 76
8.2.4. Enforcement of Payment; Credit Security; Setoff.......................... 76
8.2.5. Cumulative Remedies...................................................... 77
8.3. Annulment of Defaults............................................................ 77
8.4. Waivers.......................................................................... 77
9. EXPENSES; INDEMNITY.................................................................... 77
9.1. Expenses......................................................................... 77
9.2. General Indemnity................................................................ 78
9.3. Indemnity With Respect to Letters of Credit...................................... 79
10. OPERATIONS; AGENT...................................................................... 79
10.1. Interests in Credits............................................................. 79
10.2. Agent's Authority to Act, etc.................................................... 79
10.3. Company to Pay Agent, etc........................................................ 79
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10.4. Lender Operations for Advances, Letters of Credit, etc........................... 79
10.4.1. Advances................................................................. 80
10.4.2. Letters of Credit........................................................ 80
10.4.3. Agent to Allocate Payments, etc.......................................... 80
10.4.4. Delinquent Lenders; Nonperforming Lenders................................ 81
10.5. Sharing of Payments, etc......................................................... 81
10.6. Amendments, Consents, Waivers, etc............................................... 82
10.7. Agent's Resignation.............................................................. 83
10.8. Concerning the Agent............................................................. 84
10.8.1. Action in Good Faith, etc................................................ 84
10.8.2. No Implied Duties, etc................................................... 84
10.8.3. Validity, etc............................................................ 84
10.8.4. Compliance............................................................... 85
10.8.5. Employment of Agents and Counsel......................................... 85
10.8.6. Reliance on Documents and Counsel........................................ 85
10.8.7. Agent's Reimbursement.................................................... 85
10.9. Rights as a Lender............................................................... 86
10.10. Independent Credit Decision.................................................... 86
10.11. Indemnification................................................................ 86
11. SUCCESSORS AND ASSIGNS; LENDER ASSIGNMENTS AND PARTICIPATIONS.......................... 87
11.1. Assignments by Lenders........................................................... 87
11.1.1. Assignees and Assignment Procedures...................................... 87
11.1.2. Terms of Assignment and Acceptance....................................... 88
11.1.3. Register................................................................. 89
11.1.4. Acceptance of Assignment and Assumption.................................. 89
11.1.5. Federal Reserve Bank..................................................... 90
11.1.6. Further Assurances....................................................... 90
11.2. Credit Participants.............................................................. 90
11.3. Replacement of Lender............................................................ 91
12. CONFIDENTIALITY........................................................................ 92
13. FOREIGN LENDERS........................................................................ 92
14. NOTICES................................................................................ 93
15. COURSE OF DEALING; AMENDMENTS AND WAIVERS.............................................. 94
16. NO STRICT CONSTRUCTION................................................................. 94
17. DEFEASANCE............................................................................. 94
18. VENUE; SERVICE OF PROCESS.............................................................. 95
19. WAIVER OF JURY TRIAL................................................................... 95
20. GENERAL................................................................................ 96
</TABLE>
-vii-
<PAGE>
EXHIBITS
2.1.4 - Revolving Note
2.2.4 - Term Note
5.1.4 - Guarantee and Security Agreement
5.1.6 - Subordination Agreement
5.2.1 - Officer's Certificate
6.4. - Compliance Certificate
6.6.8 - Seller Subordination Terms
6.20.3A - Mortgage
6.20.3B - Leasehold Mortgage
6.20.3C - Estoppel and Consent Letter
6.20.3D - Local Real Estate Opinion
7.1 - Company and its Subsidiaries
7.2.2 - Material Agreements
7.3 - Financing Debt, Certain Investments, etc.
7.13.3 - Tower Sites
7.14 - Hazardous Material Sites
7.15 - Multi-employer and Defined Benefit Plans
10.1 - Percentage Interests
11.1.1 - Assignment and Acceptance
-viii-
<PAGE>
SBA COMMUNICATIONS CORPORATION
CREDIT AGREEMENT
This Agreement, dated as of August 8, 1997 is among SBA Communications
Corporation, a Florida corporation, the Subsidiaries of SBA Communications
Corporation from time to time party hereto, the Lenders from time to time party
hereto and BankBoston, N.A., both in its capacity as a Lender and in its
capacity as agent for itself and the other Lenders. The parties agree as
follows:
Recitals: Pursuant to this Agreement, the Lenders are extending to the
--------
Company a $10,000,000 revolving credit facility and a $65,000,000 multiple draw
term loan facility, including a $15,000,000 suballotment for letters of credit.
All the credit facilities mature on July 30, 2004. These credit facilities are
guaranteed by the Company's Domestic Subsidiaries and are secured by liens on
substantially all the assets of the Company and its Domestic Subsidiaries
(including the stock of the Company's Subsidiaries and real estate on which
Towers contributing at least 80% of Consolidated Tower Revenues are located.
The proceeds of the revolving credit facility may be used to acquire and
construct Towers, to acquire Tower Companies, for working capital and for
general corporate purposes and the proceeds of the term credit facility may be
used to acquire and construct Towers, to acquire Tower Companies and to
consummate the CSSI Acquisition as provided herein.
1. DEFINITIONS; CERTAIN RULES OF CONSTRUCTION. Certain capitalized terms are
------------------------------------------
used in this Agreement and in the other Credit Documents with the specific
meanings defined below in this Section 1. Except as otherwise explicitly
specified to the contrary or unless the context clearly requires otherwise, (a)
the capitalized term "Section" refers to sections of this Agreement, (b) the
capitalized term "Exhibit" refers to exhibits to this Agreement, (c) references
to a particular Section include all subsections thereof, (d) the word
"including" shall be construed as "including without limitation", (e) accounting
terms not otherwise defined herein have the meaning provided under GAAP, (f)
references to a particular statute or regulation include all rules and
regulations thereunder and any successor statute, regulation or rules, in each
case as from time to time in effect, (g) references to a particular Person
include such Person's successors and assigns to the extent not prohibited by
this Agreement and the other Credit Documents and (h) references to "Dollars" or
"$" mean United States Funds. References to "the date hereof" mean the date
first set forth above.
1.1. "Accumulated Benefit Obligations" means the actuarial present value
-------------------------------
of the accumulated benefit obligations under any Plan, calculated in accordance
with Statement No. 87 of the Financial Accounting Standards Board.
1.2. "Affected Lender" is defined in Section 11.3.
---------------
1.3. "Affiliate" means, with respect to the Company (or any other
---------
specified Person), any other Person directly or indirectly controlling,
controlled by or under direct or
<PAGE>
indirect common control with the Company (or such specified Person), and shall
include (a) any officer or director or general partner of the Company (or such
specified Person), (b) any Person of which the Company (or such specified
Person) or any Affiliate (as defined in clause (a) above) of the Company (or
such specified Person) shall, directly or indirectly, beneficially own either
(i) at least 10% of the outstanding equity securities having the general power
to vote or (ii) at least 10% of all equity interests or (c) any Person directly
or indirectly controlling the Company through a management agreement, voting
agreement or other contract.
1.4. "Agent" means BankBoston in its capacity as agent for the Lenders
-----
hereunder, as well as its successors and assigns in such capacity pursuant to
Section 10.7.
1.5. "Agreement" means this Credit Agreement as from time to time amended,
---------
modified and in effect.
1.6. "Applicable Margin" means, on each day during any month, the
-----------------
percentage in the table below set opposite the ratio which (a) Consolidated
Total Debt as of the end of the most recent period of four consecutive fiscal
quarters for which financial statements have been furnished to the Lenders in
accordance with Sections 6.4.1 and 6.4.2 prior to the first day of such month to
(b) Consolidated Adjusted EBITDA for such period:
<TABLE>
<CAPTION>
Ratio of Consolidated Total Debt Base Rate Eurodollar Rate
to Consolidated Adjusted EBITDA Applicable Margin Applicable Margin
- ----------------------------------- ------------------ ------------------
<S> <C> <C>
Greater than 350% 1.250% 2.250%
Less than or equal to 350% but 0.875% 1.875%
greater than 300%
Less than or equal to 300% but 0.500% 1.500%
greater than 250%
Less than or equal to 250% 0.250% 1.250%
</TABLE>
Changes in the Applicable Margin shall occur on the first day of each month
after quarterly financial statements have been furnished to the Lenders in
accordance with Sections 6.4.1 or 6.4.2 from time to time. In the event that
the financial statements required to be delivered pursuant to Section 6.4.1 or
6.4.2, as applicable, are not delivered by the first day of the month after the
due date, then during the period from such first day of such month until the
date upon which they are actually delivered, the Applicable Margin shall be the
maximum amount set forth in the table above.
-2-
<PAGE>
1.7. "Applicable Rate" means, at any date, the sum of:
---------------
(a) (i) with respect to each portion of the Loan subject to a
Eurodollar Pricing Option, the sum of the Applicable Margin (which
may change during the Eurodollar Interest Period for such Eurodollar
Pricing Option in accordance with the definition of "Applicable
Margin") plus the Eurodollar Rate with respect to such Eurodollar
----
Pricing Option;
(ii) with respect to each other portion of the Loan, the sum of
the Applicable Margin plus the Base Rate;
----
plus (b) an additional 2% per annum effective on the day the Agent
----
notifies the Company that the interest rates hereunder are increasing
as a result of the occurrence and continuance of an Event of Default
until the earlier of such time as (i) such Event of Default is no
longer continuing or (ii) such Event of Default is deemed no longer
to exist, in each case pursuant to Section 8.3.
1.8. "Assignee" is defined in Section 11.1.1.
--------
1.9. "Assignment and Acceptance" is defined in Section 11.1.1.
-------------------------
1.10. "BankBoston" means BankBoston, N.A.
----------
1.11. "Banking Day" means any day other than Saturday, Sunday or a day on
-----------
which banks in Boston, Massachusetts are authorized or required by law or other
governmental action to close and, if such term is used with reference to a
Eurodollar Pricing Option, any day on which dealings are effected in the
Eurodollars in question by first-class banks in the inter-bank Eurodollar
markets in New York, New York.
1.12. "Bankruptcy Code" means Title 11 of the United States Code.
---------------
1.13. "Bankruptcy Default" means an Event of Default referred to in Section
------------------
8.1.10.
1.14. "Base Rate" means, on any date, the greater of (a) the rate of
---------
interest announced by BankBoston at the Boston Office as its Base Rate or (b)
the sum of 1/2% plus the Federal Funds Rate.
----
1.15. "Boston Office" means the principal banking office of BankBoston in
-------------
Boston, Massachusetts.
1.16. "By-laws" means all written by-laws, rules, regulations and all other
-------
documents relating to the management, governance or internal regulation of any
Person other than an individual, or interpretive of the Charter of such Person,
all as from time to time in effect.
-3-
<PAGE>
1.17. "Capital Expenditures" means, for any period, amounts added or
--------------------
required to be added to the property, plant and equipment or other fixed assets
account on the Consolidated balance sheet of the Company and its Subsidiaries,
prepared in accordance with GAAP, in respect of (a) the acquisition,
construction, improvement or replacement of land, buildings, machinery,
equipment, leaseholds and any other real or personal property, (b) to the extent
not included in clause (a) above, materials, contract labor and direct labor
relating thereto (excluding amounts properly expensed as repairs and maintenance
in accordance with GAAP) and (c) software development costs to the extent not
expensed.
1.18. "Capitalized Lease" means any lease which is required to be
-----------------
capitalized on the balance sheet of the lessee in accordance with GAAP,
including Statement Nos. 13 and 98 of the Financial Accounting Standards Board.
1.19. "Capitalized Lease Obligations" means the amount of the liability
-----------------------------
reflecting the aggregate discounted amount of future payments under all
Capitalized Leases calculated in accordance with GAAP, including Statement Nos.
13 and 98 of the Financial Accounting Standards Board.
1.20. "Cash Equivalents" means:
----------------
(a) negotiable certificates of deposit, time deposits (including
sweep accounts), demand deposits and bankers' acceptances having a maturity
of nine months or less and issued by any United States financial
institution having capital and surplus and undivided profits aggregating at
least $100,000,000 and rated at least Prime-1 by Moody's or A-1 by S&P or
issued by any Lender;
(b) corporate obligations having a maturity of nine months or less
and rated at least Prime-1 by Moody's or A-1 by S&P or issued by any
Lender;
(c) any direct obligation of the United States of America or any
agency or instrumentality thereof, or of any state or municipality thereof,
(i) which has a remaining maturity at the time of purchase of not more than
one year or which is subject to a repurchase agreement with any Lender (or
any other financial institution referred to in clause (a) above)
exercisable within one year from the time of purchase and (ii) which, in
the case of obligations of any state or municipality, is rated at least Aaa
by Moody's or AAA by S&P;
(d) any mutual fund or other pooled investment vehicle rated at
least Aa by Moody's or AA by S&P which invests principally in obligations
described above; and
(e) any Investment by a Foreign Subsidiary in its local
jurisdiction comparable to the items described above.
-4-
<PAGE>
1.21. "CERCLA" means the federal Comprehensive Environmental Response,
------
Compensation and Liability Act of 1980.
1.22. "Charter" means the articles of organization, certificate of
-------
incorporation, statute, constitution, joint venture agreement, partnership
agreement, trust indenture, limited liability company agreement or other charter
document of any Person other than an individual, each as from time to time in
effect.
1.23. "Closing Date" means the Initial Closing Date and each other date on
------------
which any extension of credit is made pursuant to Sections 2.1, 2.2 or 2.3.
1.24. "Code" means the federal Internal Revenue Code of 1986.
----
1.25. "Commitment" means, with respect to any Lender, such Lender's
----------
obligations to extend the respective credits contemplated by Section 2. The
original Commitments are set forth in Exhibit 10.1 and the subsequent
Commitments are recorded from time to time in the Register.
1.26. "Commitment Fee Rate" means, with respect to any Payment Date, (a)
-------------------
0.500% in the event that Consolidated Total Debt on the last day of the fiscal
quarter ending approximately three months prior to such Payment Date, equals or
exceeds 300% of Consolidated Adjusted EBITDA for the period of four consecutive
fiscal quarters ending on the last day of the fiscal quarter ending
approximately three months prior to such Payment Date and (b) 0.375% in all
other events.
1.27. "Communications Act" means the federal Communications Act of 1934.
------------------
1.28. "Company" means SBA Communications Corporation, a Florida
-------
corporation.
1.29. "Computation Covenants" means Sections 6.5, 6.6.7, 6.6.8, 6.6.11,
---------------------
6.6.14, 6.6.15, 6.9.5, 6.9.6, 6.10.2, 6.10.5, 6.11.6, 6.11.7, 6.16 and 6.20.3.
1.30. "Consolidated" and "Consolidating", when used with reference to any
------------ -------------
term, mean that term as applied to the accounts of the Company (or other
specified Person) and all of its Subsidiaries (or other specified group of
Persons), or such of its Subsidiaries as may be specified, consolidated (or
combined) or consolidating (or combining), as the case may be, in accordance
with GAAP and with appropriate deductions for minority interests in
Subsidiaries.
1.31. "Consolidated Adjusted EBITDA" means, for any period, the total of
----------------------------
Consolidated EBITDA minus Consolidated Tower Cash Flow plus Consolidated
----- ----
Annualized Tower Cash Flow.
-5-
<PAGE>
1.32. "Consolidated Annualized Tower Cash Flow" means, for any fiscal
---------------------------------------
quarter, the product of (a) Consolidated Tower Cash Flow for such fiscal quarter
multiplied by (b) four.
1.33. "Consolidated Corporate Development Expenses" means, for any period,
-------------------------------------------
general and administrative expenses incurred by the Company and its Subsidiaries
on a Consolidated basis properly allocable to the acquisition or construction of
Towers, but in no event including amounts that constitute Capital Expenditures.
1.34. "Consolidated EBITDA" means, for any period, the sum of:
-------------------
(a) Consolidated Net Income;
plus (b) all amounts deducted in computing such Consolidated Net Income
----
in respect of:
(i) depreciation, amortization and other non-cash charges,
(ii) Consolidated Interest Expense,
(iii) taxes based upon or measured by net income, and
(iv) only for periods ending prior to January 1, 1997, non-
cash compensation expense.
1.35. "Consolidated Excess Cash Flow" means, for any period, the total of:
-----------------------------
(a) Consolidated EBITDA,
minus (b) Capital Expenditures,
-----
minus (c) Consolidated Fixed Charges (but in no event including
-----
contingent prepayments required by Section 4.3),
minus (d) voluntary prepayments of the Term Notes and other term
-----
Financing Debt of the Company and its Subsidiaries permitted by
this Agreement,
minus (e) $2,500,000.
-----
1.36. "Consolidated Fixed Charges" means, for any period, the sum of:
--------------------------
(a) Consolidated Interest Expense,
plus (b) Non-Tower Capital Expenditures,
----
-6-
<PAGE>
plus (c) the aggregate amount of all mandatory scheduled payments,
----
mandatory scheduled prepayments, sinking fund payments and
mandatory reductions in revolving loans as a result of
reductions in revolving credit availability, all with respect
to Consolidated Total Debt, including payments in the nature of
principal under Capitalized Leases, but in no event including
contingent prepayments required by Section 4.3,
plus (d) taxes based upon or measured by net income that are actually
----
paid in cash.
1.37. "Consolidated Interest Expense" means, for any period, the total of:
-----------------------------
(a) the aggregate amount of interest, including commitment fees,
payments in the nature of interest under Capitalized Leases and
net payments under Interest Rate Protection Agreements, accrued
by the Company and its Subsidiaries (whether such interest is
reflected as an item of expense or capitalized, but excluding
PIK Interest) in accordance with GAAP on a Consolidated basis,
minus (b) to the extent otherwise included in clause (a) above, the
-----
amortization of deferred financing fees, original issue
discount relating to Indebtedness and accrued interest on
Indebtedness not paid in cash to the extent permitted by the
terms, including subordination terms, of such Indebtedness
(including PIK Interest)
plus (c) actual cash payments with respect to accrued and unpaid
----
interest (including PIK Interest) that has previously reduced
Consolidated Interest Expense pursuant to clause (b) above.
1.38. "Consolidated Net Income" means, for any period, the net income (or
-----------------------
loss) of the Company and its Subsidiaries, determined in accordance with GAAP on
a Consolidated basis, including (a) the income (or loss) of any Person accrued
prior to the date such Person becomes a Subsidiary or is merged into or
consolidated with the Company or any of its Subsidiaries; and (b) to the extent
not included in clause (a), the income (or loss) properly allocable to a Tower
or group of Towers or other assets accrued prior to the date such Towers or
other assets are acquired by the Company and its Subsidiaries; provided,
--------
however, that Consolidated Net Income shall not include:
- -------
(i) all amounts included in computing such net income (or
loss) in respect of (A) the write-up of any asset on or after
December 31, 1996 or (B) the retirement of any Indebtedness or equity
at less than face value after December 31, 1996;
-7-
<PAGE>
(ii) extraordinary and non-recurring gains;
(iii) the income of any Subsidiary to the extent the payment
of such income in the form of a Distribution or repayment of
Indebtedness to the Company or a Wholly Owned Subsidiary is not
permitted, whether on account of any Charter or By-law restriction,
any agreement, instrument, deed or lease or any law, statute,
judgment, decree or governmental order, rule or regulation applicable
to such Subsidiary;
(iv) non-recurring, non-cash compensation expense of
$7,945,419 in December 1996 on account of the granting of stock
options to employees;
(v) non-recurring, cash compensation expense of $4,909,000
paid prior to January 1, 1997; and
(vi) any after-tax gains or losses attributable to returned
surplus assets of any Plan.
1.39. "Consolidated Pro Forma Interest Expense" means, for any future
---------------------------------------
period, projected Consolidated Interest Expense. For purposes of computing
Consolidated Pro Forma Interest Expense:
(a) the amount of Financing Debt outstanding on the first day of
such period shall be assumed to remain outstanding during the entire
period, except to the extent required to be reduced by mandatory scheduled
payments, reductions in revolving credit availability and other items
included in Consolidated Fixed Charges; and
(b) where interest varies with a floating rate, the rate in effect
on the first day of such period will be assumed to remain constant during
the entire period (giving effect to any applicable Interest Rate Protection
Agreements).
1.40. "Consolidated Revenues" means, for any period:
---------------------
(a) the net operating revenues (after reductions for discounts,
commissions and bad debt reserves) of the Company and its Subsidiaries
determined in accordance with GAAP on a Consolidated basis, minus
-----
(b) any proceeds included in such net operating revenues from the
sale, refinancing, condemnation or destruction of any assets.
1.41. "Consolidated Total Debt" means, at any date, all Financing Debt of
-----------------------
the Company and its Subsidiaries on a Consolidated basis.
-8-
<PAGE>
1.42. "Consolidated Tower Cash Flow" means, for any period, the remainder
----------------------------
of (a) Consolidated Tower Revenues minus (b) the direct cash expenses (but not
-----
Capital Expenditures) associated with the maintenance and operation of Towers.
1.43. "Consolidated Tower Revenues" means, for any period:
---------------------------
(a) the net operating revenues (after reductions for discounts,
commissions and bad debt reserves) of the Company and its Subsidiaries
determined in accordance with GAAP on a Consolidated basis, generated from
acquired or constructed Towers, minus
-----
(b) any proceeds included in such net operating revenues from the
sale, refinancing, condemnation or destruction of any assets.
1.44. "Credit Documents" means:
----------------
(a) this Agreement, the Notes, each Letter of Credit, each draft
presented or accepted under a Letter of Credit, the Guarantee and Security
Agreement, the Subordination Agreement, the fee agreement contemplated by
Section 5.1.2, each Estoppel and Consent Letter, each Mortgage and each
Interest Rate Protection Agreement provided by a Lender (or an Affiliate of
a Lender) to the Company or any of its Subsidiaries, each as from time to
time in effect; and
(b) any other present or future agreement or instrument from time
to time entered into among the Company, any of its Subsidiaries or any
other Obligor, on one hand, and the Agent, any Letter of Credit Issuer or
all the Lenders, on the other hand, relating to, amending or modifying this
Agreement or any other Credit Document referred to above or which is stated
to be a Credit Document, each as from time to time in effect.
1.45. "Credit Obligations" means all present and future liabilities,
------------------
obligations and Indebtedness of the Company, any of its Subsidiaries or any
other Obligor owing to the Agent or any Lender (or any Affiliate of a Lender)
under or in connection with this Agreement or any other Credit Document,
including obligations in respect of principal, interest, reimbursement
obligations under Letters of Credit and Interest Rate Protection Agreements
provided by a Lender (or an Affiliate of a Lender), commitment fees, Letter of
Credit fees, amounts provided for in Sections 3.2.4, 3.5 and 9 and other fees,
charges, indemnities and expenses from time to time owing hereunder or under any
other Credit Document (whether accruing before or after a Bankruptcy Default and
regardless of whether allowed as a claim in bankruptcy or similar proceedings).
1.46. "Credit Participant" is defined in Section 11.2.
------------------
-9-
<PAGE>
1.47. "Credit Security" means all assets now or from time to time hereafter
---------------
subjected to a security interest, mortgage or charge (or intended or required so
to be subjected pursuant to the Guarantee and Security Agreement or any other
Credit Document) to secure the payment or performance of any of the Credit
Obligations on a pari passu basis, including the assets described in section 3.1
of the Guarantee and the Security Agreement.
1.48. "CSSI Acquisition" means the proposed acquisition by certain of the
----------------
Company's Subsidiaries of assets of Segars Communications Group, Inc. and
Communication Site Services, Inc., as contemplated by the Letter of Intent dated
June 16, 1997 among such parties previously furnished to the Lenders.
1.49. "Default" means any Event of Default and any event or condition which
-------
with the passage of time or giving of notice, or both, would become an Event of
Default and the filing against the Company, any of its Subsidiaries or any other
Obligor of a petition commencing an involuntary case under the Bankruptcy Code.
1.50. "Delinquency Period" is defined in Section 10.4.4.
------------------
1.51. "Delinquent Lender" is defined in Section 10.4.4.
-----------------
1.52. "Delinquent Payment" is defined in Section 10.4.4.
------------------
1.53. "Designated Financing Debt" means Financing Debt incurred by the
-------------------------
Company or any of its Subsidiaries after the Initial Closing Date other than
Financing Debt permitted by Sections 6.6.1 (the Loan), 6.6.7 (purchase money
Indebtedness and Capitalized Leases), 6.6.9 (intercompany Indebtedness) and
6.6.11 (subordinated debt).
1.54. "Designated Real Property" means each real property owned or leased
------------------------
by the Company or any of its Subsidiaries upon which any Tower is located and
which must be pledged to the Agent to comply with Section 6.20.3.
1.55. "Distribution" means, with respect to the Company (or other specified
------------
Person):
(a) the declaration or payment of any dividend or distribution on
or in respect of any shares of any class of capital stock of or other
equity interests in the Company (or such specified Person);
(b) the purchase, redemption or other retirement of any shares of
any class of capital stock of or other equity interest in the Company (or
such specified Person) or of options, warrants or other rights for the
purchase of such shares, directly, indirectly through a Subsidiary or
otherwise;
-10-
<PAGE>
(c) any other distribution on or in respect of any shares of any
class of capital stock of or equity or other beneficial interest in the
Company (or such specified Person);
(d) any payment of principal or interest with respect to, or any
purchase, redemption or defeasance of, any Financing Debt of the Company
(or such specified Person) which by its terms or the terms of any agreement
is subordinated to the payment of the Credit Obligations; and
(e) any payment, loan or advance by the Company (or such specified
Person) to, or any other Investment by the Company (or such specified
Person) in, the holder of any shares of any class of capital stock of or
equity interest in the Company (or such specified Person), or any Affiliate
of such holder (including the payment of management fees and transaction
fees and expenses);
provided, however, that the term "Distribution" shall not include (i) dividends
- -------- -------
payable in perpetual common stock of or other similar equity interests in the
Company (or such specified Person) or (ii) payments in the ordinary course of
business in respect of (A) reasonable compensation paid to employees, officers
and directors, (B) advances and reimbursements to employees for travel expenses,
drawing accounts and similar expenditures, or (C) rent paid to, or accounts
payable for services rendered or goods sold by, non-Affiliates that own capital
stock of or other equity interests in the Company (or such specified Person).
1.56. "Domestic Subsidiary" means any Subsidiary that is not a Foreign
-------------------
Subsidiary.
1.57. "Environmental Laws" means all applicable federal, state or local
------------------
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment, including the federal Occupational Health and
Safety Act.
1.58. "Equity Transaction" means any issuance by the Company or any of its
------------------
Subsidiaries after the Initial Closing Date of any shares of its capital stock
(including issuances under any commitments with respect to the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock), other equity interests or options, warrants or other purchase
rights to acquire such capital stock or other equity interests to, or receipt of
a capital contribution from, any Person (other than any Obligors or their
officers, employees and directors).
1.59. "ERISA" means the federal Employee Retirement Income Security Act of
-----
1974.
1.60. "ERISA Group Person" means the Company, any Subsidiary of the Company
------------------
and any Person which is a member of the controlled group or under common control
with the
-11-
<PAGE>
Company or any Subsidiary within the meaning of section 414 of the Code
or section 4001(a)(14) of ERISA.
1.61. "ESMR Operator" means a person licensed by the FCC to operate an
-------------
enhanced specialized mobile radio communications system, which system employs
digital technology with a multi-site configuration that permits frequency re-use
in specialized mobile radio frequencies.
1.62. "Estoppel and Consent Letters" is defined in Section 6.20.3.
----------------------------
1.63. "Eurodollars" means, with respect to any Lender, deposits of United
-----------
States Funds in a non-United States office or an international banking facility
of such Lender.
1.64. "Eurodollar Basic Rate" means, for any Eurodollar Interest Period,
---------------------
the rate of interest at which Eurodollar deposits which have a term
corresponding to such Eurodollar Interest Period are offered to the Agent by
first class banks in the inter-bank Eurodollar market for delivery in
immediately available funds at a Eurodollar Office on the first day of such
Eurodollar Interest Period as determined by the Agent at approximately 10:00
a.m. (Boston time) two Banking Days prior to the date upon which such Eurodollar
Interest Period is to commence (which determination by the Agent shall, in the
absence of manifest error, be conclusive).
1.65. "Eurodollar Interest Period" means any period, selected as provided
--------------------------
in Section 3.2.1, of one, two, three or six months, commencing on any Banking
Day and ending on the corresponding date in the subsequent calendar month so
indicated (or, if such subsequent calendar month has no corresponding date, on
the last day of such subsequent calendar month); provided, however, that subject
-------- -------
to Section 3.2.3, if any Eurodollar Interest Period so selected would otherwise
begin or end on a date which is not a Banking Day, such Eurodollar Interest
Period shall instead begin or end, as the case may be, on the immediately
preceding or succeeding Banking Day as determined by the Agent in accordance
with the then current banking practice in the inter-bank Eurodollar market with
respect to Eurodollar deposits at the applicable Eurodollar Office, which
determination by the Agent shall, in the absence of manifest error, be
conclusive.
1.66. "Eurodollar Office" means such non-United States office or
-----------------
international banking facility of any Lender as the Lender may from time to time
select.
1.67. "Eurodollar Pricing Options" means the options granted pursuant to
--------------------------
Section 3.2.1 to have the interest on any portion of the Loan computed on the
basis of a Eurodollar Rate.
1.68. "Eurodollar Rate" for any Eurodollar Interest Period means the rate,
---------------
rounded upward to the nearest 1/100%, obtained by dividing (a) the Eurodollar
Basic Rate for such
-12-
<PAGE>
Eurodollar Interest Period by (b) an amount equal to 1 minus the Eurodollar
-----
Reserve Rate; provided, however, that if at any time during such Eurodollar
-------- -------
Interest Period the Eurodollar Reserve Rate applicable to any outstanding
Eurodollar Pricing Option changes, the Eurodollar Rate for such Eurodollar
Interest Period shall automatically be adjusted to reflect such change,
effective as of the date of such change to the extent required by the Legal
Requirement implementing such change.
1.69. "Eurodollar Reserve Rate" means the stated maximum rate (expressed as
-----------------------
a decimal) of all reserves (including any basic, supplemental, marginal or
emergency reserve or any reserve asset), if any, as from time to time in effect,
required by any Legal Requirement to be maintained by any Lender against (a)
"Eurocurrency liabilities" as specified in Regulation D of the Board of
Governors of the Federal Reserve System applicable to Eurodollar Pricing
Options, (b) any other category of liabilities that includes Eurodollar deposits
by reference to which the interest rate on portions of the Loan subject to
Eurodollar Pricing Options is determined, (c) the principal amount of or
interest on any portion of the Loan subject to a Eurodollar Pricing Option or
(d) any other category of extensions of credit, or other assets, that includes
loans subject to a Eurodollar Pricing Option by a non-United States office of
any of the Lenders to United States residents, in each case without the benefits
of credits for prorations, exceptions or offsets that may be available to a
Lender.
1.70. "Event of Default" is defined in Section 8.1.
----------------
1.71. "FAA" means the Federal Aviation Authority.
---
1.72. "FCC" means the Federal Communications Commission.
---
1.73. "Federal Funds Rate" means, for any day, the rate equal to the
------------------
weighted average (rounded upward to the nearest 1/8%) of the rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, (a) as such weighted average is published for such day
(or, if such day is not a Banking Day, for the immediately preceding Banking
Day) by the Federal Reserve Bank of New York or (b) if such rate is not so
published for such Banking Day, quotations received by the Agent from three
federal funds brokers of recognized standing selected by the Agent. Each
determination by the Agent of the Federal Funds Rate shall, in the absence of
manifest error, be conclusive.
1.74. "Final Maturity Date" means July 30, 2004.
-------------------
1.75. "Financial Officer" of the Company (or other specified Person) means
-----------------
its chief executive officer, chief financial officer, chairman, president or
treasurer, each of whose incumbency and signatures have been certified to the
Agent by the secretary or other appropriate attesting officer of the Company (or
such specified Person).
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<PAGE>
1.76. "Financing Debt" means each of the items described in clauses (a)
--------------
through (f) of the definition of the term "Indebtedness" and, without
duplication, any Guarantees of such items; provided, however, that in no event
-------- -------
shall Financing Debt include the issuance by the Company of any capital stock
with respect to the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock or Series D Preferred Stock, the proceeds of the issuance
thereof or any mandatory redemption or dividend rights with respect thereto that
are subject to the Subordination Agreement.
1.77. "Foreign Subsidiary" means each Subsidiary that is organized under
------------------
the laws of, and conducting its business primarily in a jurisdiction outside of,
the United States of America.
1.78. "Funding Liability" means (a) any Eurodollar deposit which was used
-----------------
(or deemed by Section 3.2.6 to have been used) to fund any portion of the Loan
subject to a Eurodollar Pricing Option, and (b) any portion of the Loan subject
to a Eurodollar Pricing Option funded (or deemed by Section 3.2.6 to have been
funded) with the proceeds of any such Eurodollar deposit.
1.79. "GAAP" means generally accepted accounting principles as from time to
----
time in effect, including the statements and interpretations of the United
States Financial Accounting Standards Board; provided, however, that for
-------- -------
purposes of compliance with Section 6 (other than Section 6.4) and the related
definitions, "GAAP" means such principles as in effect on December 31, 1996 as
applied by the Company and its Subsidiaries in the preparation of the most
recent annual statements referred to in Section 7.2.1(a), and consistently
followed, without giving effect to any subsequent changes thereto.
1.80. "Guarantee" means, with respect to the Company (or other specified
---------
Person):
(a) any guarantee by the Company (or such specified Person) of the
payment or performance of, or any contingent obligation by the Company (or
such specified Person) in respect of, any Indebtedness or other obligation
of any primary obligor;
(b) any other arrangement whereby credit is extended to a primary
obligor on the basis of any promise or undertaking of the Company (or such
specified Person), including any binding "comfort letter" or "keep well
agreement" written by the Company (or such specified Person), to a creditor
or prospective creditor of such primary obligor, to (i) pay the
Indebtedness of such primary obligor, (ii) purchase an obligation owed by
such primary obligor, (iii) pay for the purchase or lease of assets or
services regardless of the actual delivery thereof or (iv) maintain the
capital, working capital, solvency or general financial condition of such
primary obligor;
(c) any liability of the Company (or such specified Person), as a
general partner of a partnership in respect of Indebtedness or other
obligations of such partnership;
-14-
<PAGE>
(d) any liability of the Company (or such specified Person) as a
joint venturer of a joint venture in respect of Indebtedness or other
obligations of such joint venture;
(e) any liability of the Company (or such specified Person) with
respect to the tax liability of others as a member of a group (other than a
group consisting solely of the Company and its Subsidiaries) that is
consolidated for tax purposes; and
(f) reimbursement obligations, whether contingent or matured, of
the Company (or such specified Person) with respect to letters of credit,
bankers acceptances, surety bonds, other financial guarantees and Interest
Rate Protection Agreements,
in each case whether or not any of the foregoing are reflected on the balance
sheet of the Company (or such specified Person) or in a footnote thereto;
provided, however, that the term "Guarantee" shall not include endorsements for
- -------- -------
collection or deposit in the ordinary course of business. The amount of any
Guarantee and the amount of Indebtedness resulting from such Guarantee shall be
the maximum amount that the guarantor may become obligated to pay in respect of
the obligations (whether or not such obligations are outstanding at the time of
computation).
1.81. "Guarantee and Security Agreement" is defined in Section 5.1.4.
--------------------------------
1.82. "Guarantor" means each Domestic Subsidiary of the Company party to,
---------
or which subsequently becomes party to, the Guarantee and Security Agreement as
a Guarantor.
1.83. "Hazardous Material" means any pollutant, toxic or hazardous material
------------------
or waste, including any "hazardous substance" or "pollutant" or "contaminant" as
defined in section 101(14) of CERCLA or any other Environmental Law or regulated
as toxic or hazardous under RCRA or any other Environmental Law.
1.84. "Indebtedness" means all obligations, contingent or otherwise, which
------------
in accordance with GAAP are required to be classified upon the balance sheet of
the Company (or other specified Person) as liabilities, but in any event
including (without duplication):
(a) borrowed money;
(b) indebtedness evidenced by notes, debentures or similar
instruments;
(c) Capitalized Lease Obligations;
(d) the deferred purchase price of assets, services or securities,
including related noncompetition, consulting and stock repurchase
obligations (other than
-15-
<PAGE>
ordinary trade accounts payable within six months after the incurrence
thereof in the ordinary course of business);
(e) mandatory redemption or dividend rights on capital stock (or
other equity);
(f) reimbursement obligations, whether contingent or matured, with
respect to letters of credit, bankers acceptances, surety bonds, other
financial guarantees and Interest Rate Protection Agreements (without
duplication of other Indebtedness supported or guaranteed thereby);
(g) unfunded pension liabilities;
(h) obligations that are immediately and directly due and payable
out of the proceeds of or production from property;
(i) liabilities secured by any Lien existing on property owned or
acquired by the Company (or such specified Person), whether or not the
liability secured thereby shall have been assumed; and
(j) all Guarantees in respect of Indebtedness of others.
1.85. "Indemnified Party" is defined in Section 9.2.
-----------------
1.86. "Initial Closing Date" means August 8, 1997 or such other date prior
--------------------
to September 30, 1997 agreed to by the Company and the Agent as the first
Closing Date hereunder.
1.87. "Interest Rate Protection Agreement" means any interest rate swap,
----------------------------------
interest rate cap, interest rate hedge or other contractual arrangement that
converts variable interest rates into fixed interest rates, fixed interest rates
into variable interest rates or other similar arrangements.
1.88. "Investment" means, with respect to the Company (or other specified
----------
Person):
(a) any share of capital stock, partnership or other equity
interest, evidence of Indebtedness or other security issued by any other
Person;
(b) any loan, advance or extension of credit to, or contribution
to the capital of, any other Person;
(c) any Guarantee of the Indebtedness of any other Person;
-16-
<PAGE>
(d) any acquisition of all, or any division or similar operating
unit of, the business of any other Person or the assets comprising such
business, division or unit; and
(e) any other similar investment.
The investments described in the foregoing clauses (a) through (e) shall be
included in the term "Investment" whether they are made or acquired by purchase,
exchange, issuance of stock or other securities, merger, reorganization or any
other method; provided, however, that the term "Investment" shall not include
-------- -------
(i) trade and customer accounts receivable for property leased, goods furnished
or services rendered in the ordinary course of business and payable on a current
basis in accordance with customary trade terms, (ii) deposits, advances or
prepayments to suppliers for property leased or licensed, goods furnished and
services rendered in the ordinary course of business, (iii) advances to
employees for relocation and travel expenses, drawing accounts and similar
expenditures, (iv) stock or other securities acquired in connection with the
satisfaction or enforcement of Indebtedness or claims due to the Company (or
such specified Person) or as security for any such Indebtedness or claim or (v)
demand deposits in banks or similar financial institutions.
In determining the amount of outstanding Investments:
(A) the amount of any Investment shall be the cost thereof minus any
-----
returns of capital in cash on such Investment (determined in accordance
with GAAP without regard to amounts realized as income on such Investment);
(B) the amount of any Investment in respect of a purchase described
in clause (d) above shall include the amount of any Financing Debt assumed
in connection with such purchase or secured by any asset acquired in such
purchase (whether or not any Financing Debt is assumed) or for which any
Person that becomes a Subsidiary is liable on the date on which the
securities of such Person are acquired; and
(C) no Investment shall be increased as the result of an increase in
the undistributed retained earnings of the Person in which the Investment
was made or decreased as a result of an equity interest in the losses of
such Person.
1.89. "Leases" means the leases with respect to real property on which
------
Towers are located.
1.90. "Legal Requirement" means any present or future requirement imposed
-----------------
upon any of the Lenders or the Company and its Subsidiaries by any law, statute,
rule, regulation, directive, order, decree or guideline (or any interpretation
thereof by courts or of administrative bodies) of the United States of America,
or any jurisdiction in which any Eurodollar Office is located or any state or
political subdivision of any of the foregoing, or by
-17-
<PAGE>
any board, governmental or administrative agency, central bank or monetary
authority of the United States of America, any jurisdiction in which any
Eurodollar Office is located, or any political subdivision of any of the
foregoing. Any such law, statute, rule, regulation, directive, order, decree,
guideline or interpretation imposed on any of the Lenders not having the force
of law shall be deemed to be a Legal Requirement for purposes of Section 3 if
such Lender reasonably believes that compliance therewith is customary
commercial practice.
1.91. "Lender" means each of the Persons listed as lenders on the signature
------
pages hereto, including BankBoston in its capacity as a Lender and such other
Persons who may from time to time own a Percentage Interest in the Credit
Obligations, but the term "Lender" shall not include any Credit Participant.
1.92. "Lending Officer" means such individuals whom the Agent may designate
---------------
in writing to the Company from time to time as the individual who may receive
telephone requests for extensions of credit under Sections 2.1.3, 2.2.3 and
2.3.2.
1.93. "Letter of Credit" is defined in Section 2.3.1.
----------------
1.94. "Letter of Credit Amortization Amount" is defined in Section 4.2.
------------------------------------
1.95. "Letter of Credit Exposure" means, at any date, the sum of (a) the
-------------------------
aggregate face amount of all drafts that may then or thereafter be presented by
beneficiaries under all Letters of Credit then outstanding, plus (b) the
----
aggregate face amount of all drafts that the Letter of Credit Issuer has
previously accepted under Letters of Credit but has not paid.
1.96. "Letter of Credit Issuer" means, for any Letter of Credit, BankBoston
-----------------------
or, in the event BankBoston does not for any reason issue a requested Letter of
Credit, another Lender designated by the Agent to issue such Letter of Credit,
which designation shall be made promptly by the Agent.
1.97. "License Agreements" means any license or lease agreements between
------------------
the Company or one of its Subsidiaries, on one hand, and its customers, on the
other hand, for the licensing or leasing of space on any Tower.
1.98. "Lien" means, with respect to the Company (or any other specified
----
Person):
(a) any lien, encumbrance, mortgage, pledge, charge or security
interest of any kind upon any property or assets of the Company (or such
specified Person), whether now owned or hereafter acquired, or upon the
income or profits therefrom;
(b) the acquisition of, or the agreement to acquire, any property
or asset upon conditional sale or subject to any other title retention
agreement, device or arrangement (including a Capitalized Lease);
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<PAGE>
(c) the sale, assignment, pledge or transfer for security of any
accounts, general intangibles or chattel paper of the Company (or such
specified Person), with or without recourse; and
(d) the transfer of any tangible property or assets for the
purpose of subjecting such items to the payment of previously outstanding
Indebtedness in priority to payment of the general creditors of the Company
(or such specified Person).
1.99. "Loan" means, collectively, the Revolving Loan and the Term Loan.
----
1.100. "Margin Stock" means "margin stock" within the meaning of
------------
Regulations G, T, U or X of the Board of Governors of the Federal Reserve
System.
1.101. "Material Adverse Change" means, since any specified date or from
-----------------------
the circumstances existing immediately prior to the happening of any specified
event, a material adverse change in (a) the business, assets, financial
condition, income or prospects of the Company and its Subsidiaries (on a
Consolidated basis), whether as a result of (i) general economic conditions
affecting the wireless telecommunications industry, (ii) difficulties in
obtaining supplies and raw materials, (iii) fire, flood or other natural
calamities, (iv) environmental pollution, (v) regulatory changes, judicial
decisions, war or other governmental action or (vi) any other event or
development, whether or not related to those enumerated above or (b) the ability
of the Obligors to perform their obligations under the Credit Documents or (c)
the rights and remedies of the Agent and the Lenders under the Credit Documents
to the extent that the Agent and the Lenders are unable practically to realize
the principal legal benefits of their aggregate rights and remedies under the
Credit Documents.
1.102. "Material Agreements" is defined in Section 7.2.2.
-------------------
1.103. "Maximum Amount of Revolving Credit" is defined in Section 2.1.2.
----------------------------------
1.104. "Maximum Amount of Term Credit" is defined in Section 2.2.2.
-----------------------------
1.105. "Moody's" means Moody's Investors Service, Inc.
-------
1.106. "Mortgages" means the mortgages and the deeds of trust (and the
---------
leasehold mortgages and leasehold deeds of trust) executed by the Company or any
of its Subsidiaries in favor of the Agent for the benefit of the Lenders,
encumbering the real property or leaseholds upon which Towers are located, in
substantially the form of Exhibits 6.20.3A and 6.20.3B, respectively.
1.107. "Multiemployer Plan" means any Plan that is a "multiemployer plan"
------------------
as defined in section 4001(a)(3) of ERISA.
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<PAGE>
1.108. "Net Asset Sale Proceeds" means the cash proceeds of the sale or
-----------------------
disposition of assets (including by way of merger), and the cash proceeds of any
insurance payments on account of the destruction or loss of property, by the
Company or any of its Subsidiaries after the Initial Closing Date, net of (a)
any Indebtedness permitted by Section 6.6.7 (Capitalized Leases and purchase
money indebtedness) secured by assets being sold in such transaction required to
be paid from such proceeds, (b) income taxes that, as estimated by the Company
in good faith, will be required to be paid by the Company or any of its
Subsidiaries in cash as a result of, and within 15 months after, such sale or
disposition, (c) reasonable reserves for liabilities resulting from the sale of
assets and (d) all reasonable expenses of the Company or any of its Subsidiaries
payable in connection with the sale or disposition; provided, however, that "Net
-------- -------
Asset Sale Proceeds" shall not include cash proceeds:
(i) of asset sales permitted by Section 6.11.1,
(ii) of mergers permitted by Section 6.11.2,
(iii) from the sale of Tower assets that will be used to
acquire replacement or other Tower assets within 180 days after such
sale or disposition; provided, however, that if any amount in this
-------- -------
clause (iii) is not actually used to acquire replacement or other
Tower assets within such 180-day period, such amount shall then
automatically become Net Asset Sale Proceeds; or
(iv) in an amount less than $100,000 for each transaction or
series of related transactions, but not to exceed $300,000 in the
aggregate after the Initial Closing Date.
1.109. "Net Debt Proceeds" means cash proceeds of the incurrence of
-----------------
Designated Financing Debt by the Company or any of its Subsidiaries (net of
reasonable out-of-pocket transaction fees and expenses).
1.110. "Net Equity Proceeds" means the cash proceeds received by the
-------------------
Company or any of its Subsidiaries in connection with any Equity Transaction
(net of reasonable out-of-pocket fees and expenses), excluding (a) any such cash
proceeds that are used by the Company or any of its Subsidiaries within 180 days
to acquire or construct Towers; provided, however, that if any amount in this
-------- -------
clause (a) is not actually used to acquire replacement or other Tower assets
within such 180-day period, such amount shall then automatically become Net
Equity Proceeds; and (b) any such cash proceeds from a public offering of the
Company's Common Stock after December 31, 1999 resulting in gross proceeds of at
least $20,000,000 that are applied within 60 days to redeem the Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock or
Series D Preferred Stock.
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1.111. "Nonperforming Lender" is defined in Section 10.4.4.
--------------------
1.112. "Non-Tower Capital Expenditures" means, for any period the remainder
------------------------------
of (a) Capital Expenditures minus (b) amounts included in the foregoing clause
-----
(a) on account of Tower construction and acquisition costs.
1.113. "Notes" means, collectively, the Revolving Notes and the Term Notes.
-----
1.114. "Obligor" means the Company, each Guarantor and each other Person
-------
guaranteeing or providing collateral for the Credit Obligations. As of the
Initial Closing Date the only Obligors are the Company and its Domestic
Subsidiaries.
1.115. "Offering Memorandum" is defined in Section 7.2.1.
-------------------
1.116. "Overdue Reimbursement Rate" means, at any date, the highest
--------------------------
Applicable Rate then in effect.
1.117. "Payment Date" means (a) the last Banking Day of each March, June,
------------
September and December, occurring after the Initial Closing Date and (b) the
Final Maturity Date.
1.118. "PBGC" means the Pension Benefit Guaranty Corporation or any
----
successor entity.
1.119. "PCS A-F Block Provider" means a licensee of personal communications
----------------------
services frequencies who was licensed by the FCC (a) in auctions of the A-block,
B-block, D-block, E-block or F-block frequencies concluded in 1995, 1996 and
1997 or (b) in other auctions for which the field of bidders is not restricted
by size or other economic factors.
1.120. "PCS C-Block Provider" means (a) a licensee of 30 MHz personal
--------------------
communication services frequencies who was licensed by the FCC in the C-block
auction concluded in May 1996 and (b) any other licensee of personal
communications services frequencies who was licensed by the FCC in a special
auction restricted to small businesses.
1.121. "Percentage Interest" means, with respect to any Lender, the
-------------------
Commitment of such Lender with respect to the respective portions of the Loan
and Letter of Credit Exposure. For purposes of determining votes or consents by
the Lenders, the Percentage Interest of any Lender shall be computed as follows:
(a) at all times when no Event of Default under Section 8.1.1 and no Bankruptcy
Default exists, the ratio that the respective Commitments of such Lender bears
to the total Commitments of all Lenders as from time to time in effect and
reflected in the Register, and (b) at all other times, the ratio that the
respective amounts of the outstanding Loan and Letter of Credit Exposure owing
to such Lender bear to the total outstanding Loan and Letter of Credit Exposure
owing to all Lenders.
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1.122. "Performing Lender" is defined in Section 10.4.4.
-----------------
1.123. "Person" means any present or future natural person or any
------
corporation, association, partnership, joint venture, limited liability, joint
stock or other company, business trust, trust, organization, business or
government or any governmental agency or political subdivision thereof.
1.124. "PIK Interest" means any accrued interest payments on Financing Debt
------------
that are postponed, evidenced by book entry accrual or made through the issuance
of "payment-in-kind" notes or other similar securities, all in accordance with
the terms of such Financing Debt; provided, however, that in no event shall PIK
-------- -------
Interest include payments made with cash or Cash Equivalents.
1.125. "Plan" means, at any date, any pension benefit plan subject to Title
----
IV of ERISA maintained, or to which contributions have been made or are required
to be made, by any ERISA Group Person within six years prior to such date.
1.126. "Pledged Towers" means, on any date, Towers with respect to which
--------------
the Lenders hold a perfected, first priority security interest in the Towers and
the real property or leasehold upon which such Towers are located and, in the
case of leaseholds, the Lenders have received an Estoppel and Consent Letter
from the lessor.
1.127. "RCRA" means the federal Resource Conservation and Recovery Act, 42
----
U.S.C. (S) 690, et seq.
-- ---
1.128. "Register" is defined in Section 11.1.3.
--------
1.129. "Related Fund" means, with respect to any Lender that is a fund that
------------
invests in senior bank loans, any other fund that invests in senior bank loans
and is managed by the same investment advisor as such Lender or by an Affiliate
of such investment advisor.
1.130. "Replacement Lender" is defined in Section 11.3.
------------------
1.131. "Required Lenders" means, with respect to any approval, consent,
----------------
modification, waiver or other action to be taken by the Agent or the Lenders
under the Credit Documents which require action by the Required Lenders, such
Lenders as own at least 60% of the Percentage Interests; provided, however, that
-------- -------
with respect to any matters referred to in the proviso to Section 10.6, Required
Lenders means such Lenders as own at least the respective portions of the
Percentage Interests required by Section 10.6.
1.132. "Revolving Loan" is defined in Section 2.1.4.
--------------
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1.133. "Revolving Notes" is defined in Section 2.1.4.
---------------
1.134. "S&P" means Standard & Poor's Ratings Group, a division of McGraw
---
Hill Companies Corporation.
1.135. "Securities Act" means the federal Securities Act of 1933.
--------------
1.136. "Senior Management" means the Company's Chief Executive Officer,
-----------------
Chief Financial Officer, Chief Operating Officer and Senior Vice President-Asset
Ownership and General Counsel.
1.137. "Series A Preferred Stock" means the 4% Series A Convertible
------------------------
Preferred Stock, par value $0.01 per share, of the Company originally issued
pursuant to the Offering Memorandum.
1.138. "Series B Preferred Stock" means the 4% Series B Redeemable
------------------------
Preferred Stock, par value $0.01 per share, of the Company originally issued
upon conversion of the Series A Preferred Stock.
1.139. "Series C Preferred Stock" means the 4% Series C Convertible
------------------------
Preferred Stock, par value $0.01 per share, of the Company originally issued
pursuant to the Series A Convertible Preferred Stock Purchase Agreement dated as
of March 6, 1997 among the Company and the purchasers named therein.
1.140. "Series D Preferred Stock" means the 4% Series D Redeemable
------------------------
Preferred Stock, par value $0.01 per share, of the Company originally issued
upon conversion of the Series C Preferred Stock.
1.141. "Subordination Agreement" is defined in Section 5.1.6.
-----------------------
1.142. "Subsidiary" means any Person of which the Company (or other
----------
specified Person) shall at the time, directly or indirectly through one or more
of its Subsidiaries, (a) own at least 50% of the outstanding capital stock (or
other shares of beneficial interest) entitled to vote generally, (b) hold at
least 50% of the partnership, joint venture or similar interests or (c) be a
general partner or joint venturer.
1.143. "Syndication Agent" means BancBoston Securities Inc.
-----------------
1.144. "Tax" means any present or future tax, levy, duty, impost,
---
deduction, withholding or other charges of whatever nature at any time required
by any Legal Requirement (a) to be paid by any Lender or (b) to be withheld or
deducted from any payment otherwise required hereby to be made to any Lender, in
each case on or with respect to its obligations hereunder, the Loan, any payment
in respect of the Credit Obligations or any
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Funding Liability not included in the foregoing; provided, however, that the
-------- -------
term "Tax" shall not include taxes imposed upon or measured by the net income of
such Lender (other than withholding taxes) or franchise taxes that are imposed
in lieu of income taxes.
1.145. "Term Loan" is defined in Section 2.2.4.
---------
1.146. "Term Note" is defined in Section 2.2.4.
---------
1.147. "Towers" means towers for wireless telecommunications carriers.
------
1.148. "Tower Company" means a corporation or any other entity engaged
-------------
primarily in the business of owning and/or operating Towers and leasing space
thereon to tenants.
1.149. "Tranche" means each of the Revolving Loan and the Term Loan,
-------
considered as a separate credit facility.
1.150. "Uniform Customs and Practice" is defined in Section 2.3.7.
----------------------------
1.151. "United States Funds" means such coin or currency of the United
-------------------
States of America as at the time shall be legal tender therein for the payment
of public and private debts.
1.152. "Wholly Owned Subsidiary" means any Subsidiary of which all of the
-----------------------
outstanding capital stock (or other shares of beneficial interest) entitled to
vote generally (other than directors' qualifying shares and, in the case of
Foreign Subsidiaries, shares required by Legal Requirements to be held by
foreign nationals) is owned by the Company (or other specified Person) directly,
or indirectly through one or more Wholly Owned Subsidiaries.
2. THE CREDITS.
-----------
2.1. Revolving Credit.
----------------
2.1.1. Revolving Loan. Subject to all the terms and conditions of
--------------
this Agreement and so long as no Default exists, from time to time on and
after the Initial Closing Date and prior to the Final Maturity Date the
Lenders will, severally in accordance with their respective Commitments in
the Revolving Loan, make loans to the Company in such amounts as may be
requested by the Company in accordance with Section 2.1.3. The sum of the
aggregate principal amount of loans made under this Section 2.1.1 at any
one time outstanding shall in no event exceed the Maximum Amount of
Revolving Credit. In no event will the principal amount of loans at any one
time outstanding made by any Lender pursuant to this Section 2.1 exceed
such Lender's Commitment with respect to the Revolving Loan.
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<PAGE>
2.1.2. Maximum Amount of Revolving Credit. The term "Maximum Amount of
---------------------------------- -----------------
Revolving Credit" means, on any date, the lesser of (a) $10,000,000 or (b)
----------------
the amount (in an integral multiple of $1,000,000) to which the then
applicable amount set forth in clause (a) above shall have been irrevocably
reduced from time to time by notice from the Company to the Agent.
2.1.3. Borrowing Requests. The Company may from time to time request
------------------
a loan under Section 2.1.1 by providing to the Agent a notice (which may be
given by a telephone call received by a Lending Officer if promptly
confirmed in writing). Such notice must be not later than noon (Boston
time) on the first Banking Day (third Banking Day if any portion of such
loan will be subject to a Eurodollar Pricing Option on the requested
Closing Date) prior to the requested Closing Date for such loan. The notice
must specify (a) the amount of the requested revolving loan (which shall be
not less than $100,000 and an integral multiple of $10,000) and (b) the
requested Closing Date therefor (which shall be a Banking Day). Upon
receipt of such notice, the Agent will promptly inform each other Lender
(by telephone or otherwise). Each such loan will be made at the Boston
Office by depositing the amount thereof to the general account of the
Company with the Agent. In connection with each such loan, the Company
shall furnish to the Agent a certificate in substantially the form of
Exhibit 5.2.1.
2.1.4. Revolving Notes. The aggregate principal amount of the loans
---------------
outstanding from time to time under this Section 2.1 is referred to as the
"Revolving Loan". The Agent shall keep a record of the Revolving Loan as
--------------
part of the Register. The Revolving Loan shall be deemed owed to each
Lender having a Commitment therein severally in accordance with such
Lender's Percentage Interest therein, and all payments thereon shall be for
the account of each Lender in accordance with its Percentage Interest
therein. The Company's obligations to pay each Lender's Percentage Interest
in the Revolving Loan shall be evidenced by a separate note of the Company
in substantially the form of Exhibit 2.1.4 (the "Revolving Notes"), payable
---------------
to each Lender in accordance with such Lender's Percentage Interest in the
Revolving Loan.
2.2. Term Credit.
-----------
2.2.1 Term Loan. Subject to all the terms and conditions of this
---------
Agreement and so long as no Default exists, the Lenders will, severally in
accordance with their respective Commitments in the Term Loan, make loans
to the Company in such amounts as may be requested by the Company pursuant
to Section 2.2.3. Loans may be made under this Section 2.2.1 from time to
time after the Initial Closing Date and prior to September 30, 1999, except
that loans may be made after September 30, 1999 only to reimburse payments
made by the Agent with respect to Letters of Credit issued prior to such
date. The sum of the aggregate principal amount of all loans made
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<PAGE>
pursuant to this Section 2.2.1 plus the Letter of Credit Exposure shall not
----
exceed the Maximum Amount of Term Credit.
2.2.2. Maximum Amount of Term Credit. The term "Maximum Amount of
----------------------------- -----------------
Term Credit" means, on any date, the lesser of (a) (i) $65,000,000 minus
----------- -----
(ii) Net Asset Sale Proceeds described in Section 4.3.3, Net Debt Proceeds
described in Section 4.3.4 and Net Equity Proceeds described in Section
4.3.5 in each case to the extent in excess of the then outstanding Term
Loan minus (iii) 50% of Consolidated Excess Cash Flow as described in
-----
Section 4.3.2 in excess of the then outstanding Term Loan minus (iv)
-----
voluntary prepayments of the Term Loan under Section 4.4 or (b) the amount
(in an integral multiple of $100,000) to which the then applicable amount
set forth in clause (a) above shall have been irrevocably reduced from time
to time by notice from the Company to the Agent.
2.2.3. Borrowing Requests. The Company may from time to time request
------------------
a loan under Section 2.2.1 by providing to the Agent a notice (which may be
given by a telephone call received by a Lending Officer if promptly
confirmed in writing). Such notice must be not later than noon (Boston
time) on the first Banking Day (third Banking Day if any portion of such
loan will be subject to a Eurodollar Pricing Option on the requested
Closing Date) prior to the requested Closing Date for such loan. The notice
must specify (a) the amount of the requested term loan (which shall be not
less than $500,000 and an integral multiple of $100,000 and (b) the
requested Closing Date therefor (which shall be a Banking Day). Upon
receipt of such notice, the Agent will promptly inform each other Lender
(by telephone or otherwise). Each such loan will be made at the Boston
Office by depositing the amount thereof to the general account of the
Company with the Agent. In connection with each such loan, the Company
shall furnish to the Agent a certificate in substantially the form of
Exhibit 5.2.1.
2.2.4. Term Notes. The aggregate principal amount of the loans
----------
outstanding from time to time under this Section 2.2 is referred to as the
"Term Loan". The Agent shall keep a record of the Term Loan as part of the
---------
Register. The Term Loan shall be deemed owed to each Lender having a
Commitment therein severally in accordance with such Lender's Percentage
Interest therein, and all payments thereon shall be for the account of each
Lender in accordance with its Percentage Interest therein. The Company's
obligations to pay each Lender's Percentage Interest in the Term Loan shall
be evidenced by a separate note of the Company in substantially the form of
Exhibit 2.2.4 (the "Term Notes"), payable to each Lender in accordance with
----------
such Lender's Percentage Interest in the Term Loan.
2.3 Letters of Credit.
-----------------
2.3.1. Issuance of Letters of Credit. Subject to all the terms and
-----------------------------
conditions of this Agreement and so long as no Default exists, from time to
time on and after the
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<PAGE>
Initial Closing Date and prior to September 30, 1999, the Letter of Credit
Issuer will issue for the account of the Company one or more irrevocable
documentary or standby letters of credit (the "Letters of Credit"). Letter
-----------------
of Credit Exposure plus the Term Loan shall in no event exceed the Maximum
----
Amount of Term Credit. Letter of Credit Exposure shall in no event exceed
$15,000,000.
2.3.2. Requests for Letters of Credit. The Company may from time to
------------------------------
time request a Letter of Credit to be issued by providing to the Letter of
Credit Issuer (and the Agent if the Letter of Credit Issuer is not the Agent) a
notice (which may be given by a telephone call received by a Lending Officer if
promptly confirmed in writing). Such notice must be not less than three Banking
Days prior to the requested Closing Date for such Letter of Credit specifying
(a) the amount of the requested Letter of Credit, (b) the beneficiary thereof,
(c) the requested Closing Date and (d) the principal terms of the text for such
Letter of Credit. Each Letter of Credit will be issued by forwarding it to the
Company or to such other Person as directed in writing by the Company. In
connection with the issuance of any Letter of Credit, the Company shall furnish
to the Letter of Credit Issuer (and the Agent if the Letter of Credit Issuer is
not the Agent) a certificate in substantially the form of Exhibit 5.2.1 and any
customary application forms required by the Letter of Credit Issuer. In the
event of any inconsistency between such application forms and this Agreement,
this Agreement shall govern.
2.3.3. Form and Expiration of Letters of Credit. Each Letter of Credit
----------------------------------------
issued under this Section 2.3 and each draft accepted or paid under such a
Letter of Credit shall be issued, accepted or paid, as the case may be, by the
Letter of Credit Issuer at its principal office. No Letter of Credit shall
provide for the payment of drafts drawn thereunder, and no draft shall be
payable, at a date which is later than the earlier of (a) the date 12 months
after the date of issuance (which may be extended by the Letter of Credit
Issuer) or (b) the Final Maturity Date. Each Letter of Credit and each draft
accepted under a Letter of Credit shall be in such form and minimum amount, and
shall contain such terms, as the Company may request; provided, however, that
-------- -------
such form, amount and terms shall be subject to the consent of the Letter of
Credit Issuer, which consent shall not be unreasonably withheld.
2.3.4. Lenders' Participation in Letters of Credit. Upon the issuance
-------------------------------------------
of any Letter of Credit, a participation therein, in an amount equal to each
Lender's Percentage Interest in the Term Loan, shall automatically be deemed
granted by the Letter of Credit Issuer to each such Lender on the date of such
issuance and such Lenders shall automatically be obligated, as set forth in
Section 10.4, to reimburse the Letter of Credit Issuer to the extent of their
respective Percentage Interests in the Term Loan for all obligations incurred by
the Letter of Credit Issuer to third parties in respect of such Letter of Credit
not reimbursed by the Company. The Letter of Credit Issuer will send to each
Lender (and the Agent if the Letter of Credit Issuer is not the Agent) a
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<PAGE>
confirmation regarding the participations in Letters of Credit outstanding
during such month. The failure of any Lender to reimburse the Letter of Credit
Issuer as required hereunder shall not relieve the Letter of Credit Issuer from
its obligations to accept or pay any draft properly presented under such Letter
of Credit or to issue any subsequently requested Letter of Credit.
2.3.5. Presentation. The Letter of Credit Issuer may accept or pay any
------------
draft presented to it which appears on its face to be in order if such draft,
the other required documents and any transmittal advice are presented to the
Letter of Credit Issuer and dated on or before the expiration date of the Letter
of Credit under which such draft is drawn. Except insofar as a particular Letter
of Credit contains express, contrary instructions, the Letter of Credit Issuer
may honor as complying with the terms of any Letter of Credit and with this
Agreement any drafts or other documents otherwise in order signed or issued by
an administrator, executor, conservator, trustee in bankruptcy, debtor in
possession, assignee for benefit of creditors, liquidator, receiver or other
legal representative of the party authorized under such Letter of Credit to draw
or issue such drafts or other documents.
2.3.6. Payment of Drafts. At such time as a Letter of Credit Issuer
-----------------
makes any payment on a draft presented or accepted under a Letter of Credit, the
Company will on demand pay to such Letter of Credit Issuer in immediately
available funds the amount of such payment or notify the Letter of Credit Issuer
of its intent to treat such amount as a loan under Section 2.2.1, in which event
such amount shall be considered a loan under Section 2.2.1 and part of the Term
Loan as if the Company had paid in full the amount required with respect to the
Letter of Credit by borrowing such amount under Section 2.2.1 to the extent such
amount does not cause the Term Loan to exceed the Maximum Amount of Term Credit.
To the extent such amount causes the Term Loan to exceed the Maximum Amount of
Term Credit, the Company will on demand pay to such Letter of Credit Issuer in
immediately available funds the amount of such excess.
2.3.7. Uniform Customs and Practice. The Uniform Customs and Practice
----------------------------
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, and any subsequent revisions thereof approved by a Congress
of the International Chamber of Commerce and adhered to by the Letter of Credit
Issuer (the "Uniform Customs and Practice"), shall be binding on the Company and
----------------------------
the Letter of Credit Issuer except to the extent otherwise provided herein, in
any Letter of Credit or in any other Credit Document. Anything in the Uniform
Customs and Practice to the contrary notwithstanding:
(a) Neither the Company nor any beneficiary of any Letter of Credit
shall be deemed an agent of any Letter of Credit Issuer.
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<PAGE>
(b) With respect to each Letter of Credit, neither the Letter of
Credit Issuer nor its correspondents shall be responsible for or shall have
any duty to ascertain (unless the Letter of Credit Issuer or such
correspondent is grossly negligent or willful in failing so to ascertain):
(i) the genuineness of any signature;
(ii) the validity, genuineness or legal effect of any
endorsements;
(iii) delay in giving, or failure to give, notice of arrival,
notice of refusal of documents or of discrepancies in respect of which
any Letter of Credit Issuer refuses the documents or any other notice,
demand or protest;
(iv) the performance by any beneficiary under any Letter of
Credit of such beneficiary's obligations to the Company (other than
such beneficiary's obligation to present such items as are required to
draw on the Letter of Credit);
(v) inaccuracy in any notice or demand that appears on its face
to comply with the requirements of the Letter of Credit received by
the Letter of Credit Issuer;
(vi) the validity, form, sufficiency, accuracy, genuineness or
legal effect of any instrument, draft, certificate or other document
required by such Letter of Credit to be presented before payment of a
draft if such instrument, draft, certificate or other document appears
on its face to comply with the requirements of the Letter of Credit,
or the office held by or the authority of any Person signing any of
the same; or
(vii) failure of any instrument to bear adequate reference to
such Letter of Credit appearing on its face otherwise to be in order,
or failure of any Person to note the amount of any instrument on the
reverse of such Letter of Credit or to surrender such Letter of
Credit.
(c) The occurrence of any of the events referred to in the Uniform
Customs and Practice or in the preceding clauses of this Section 2.3.7
shall not affect or prevent the vesting of any of the Letter of Credit
Issuer's rights or powers hereunder or the Company's obligation to make
reimbursement of amounts paid under any Letter of Credit or any draft
accepted thereunder.
(d) The Company will promptly examine (i) each Letter of Credit (and
any amendments thereof) sent to it by the Letter of Credit Issuer and (ii)
all instruments and documents delivered to it from time to time by the
Letter of Credit Issuer. The Company will notify the Letter of Credit
Issuer of any claim of noncompliance by
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<PAGE>
notice actually received within three Banking Days after receipt of any of
the foregoing documents, the Company being conclusively deemed to have
waived any such claim against such Letter of Credit Issuer and its unless
such notice is given. The Letter of Credit Issuer shall have no obligation
or responsibility to send any such Letter of Credit or any such instrument
or document to the Company.
(e) In the event of any conflict between the provisions of this
Agreement and the Uniform Customs and Practice, the provisions of this
Agreement shall govern.
2.3.8. Subrogation. Upon any payment by a Letter of Credit Issuer
-----------
under any Letter of Credit and until the reimbursement of such Letter of
Credit Issuer by the Company with respect to such payment, the Letter of
Credit Issuer shall be entitled to be subrogated to, and to acquire and
retain, the rights which the Person to whom such payment is made may have
against the Company, all for the benefit of the Lenders. The Company will
take such action as the Letter of Credit Issuer may reasonably request,
including requiring the beneficiary of any Letter of Credit to execute such
documents as the Letter of Credit Issuer may reasonably request, to assure
and confirm to the Letter of Credit Issuer such subrogation and such
rights, including the rights, if any, of the beneficiary to whom such
payment is made in accounts receivable, inventory and other properties and
assets of any Obligor.
2.3.9. Modification, Consent, etc. If the Company requests or
--------------------------
consents in writing to any modification or extension of any Letter of
Credit, or waives in writing any failure of any draft, certificate or other
document to comply with the terms of such Letter of Credit, and if the
Letter of Credit Issuer consents thereto, the Letter of Credit Issuer shall
be entitled to rely on such written request, consent or waiver. This
Agreement shall be binding upon the Company with respect to such Letter of
Credit as so modified or extended, and with respect to any action taken or
omitted by such Letter of Credit Issuer pursuant to any such written
request, consent or waiver.
2.4. Application of Proceeds.
-----------------------
2.4.1. Revolving Loan. Subject to Section 2.4.4, the Company will
--------------
apply the proceeds of the Revolving Loan for the acquisition of Towers and
Tower Companies and construction of Towers, working capital and other
lawful corporate purposes of the Company and its Subsidiaries.
2.4.2. Term Loan. The Company will apply the proceeds of the Term
---------
Loan to acquire Towers and Tower Companies and to construct Towers.
2.4.3. Letters of Credit. Letters of Credit shall be issued only to
-----------------
provide credit support for its payment or performance obligations related
to the acquisition of Towers and Tower Companies or construction of Towers
or for such other lawful
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<PAGE>
corporate purposes as the Company has requested in writing and to which the
Letter of Credit Issuer agrees.
2.4.4. Specifically Prohibited Applications. The Company will not,
------------------------------------
directly or indirectly, apply any part of the proceeds of any extension of
credit made pursuant to the Credit Documents (a) to purchase or to carry
Margin Stock or (b) to engage in any transaction prohibited by Legal
Requirements applicable to the Lenders or by the Credit Documents.
2.5. Nature of Obligations of Lenders to Make Extensions of Credit. The
-------------------------------------------------------------
Lenders' obligations to extend credit under this Agreement are several and are
not joint or joint and several. If on any Closing Date any Lender shall fail to
perform its obligations under this Agreement, the aggregate amount of
Commitments to make the extensions of credit under this Agreement shall be
reduced by the amount of unborrowed Commitment of the Lender so failing to
perform and the Percentage Interests shall be appropriately adjusted. Lenders
that have not failed to perform their obligations to make the extensions of
credit contemplated by Section 2 may, if any such Lender so desires, assume, in
such proportions as such Lenders may agree, the obligations of any Lender who
has so failed and the Percentage Interests shall be appropriately adjusted. The
failure of any Lender to perform its obligations under this Agreement, including
its obligation to make the extensions of credit contemplated by Section 2, shall
not relieve any other Lender from its obligations under this Agreement,
including its obligation to make the extensions of credit contemplated by
Section 2, or relieve any Lender (including the Lender who failed to perform its
obligation) of its obligations to extend credit contemplated by Section 2 as
part of any subsequent extension of credit. A waiver by the Company or any of
its Subsidiaries of the performance by any Lender of any of its obligations
under the Credit Documents, including its obligation to make any extensions of
credit contemplated by Section 2, shall not constitute a waiver by the Company
or any of its Subsidiaries of any obligations of any other Lender of its
obligations under the Credit Documents, including its obligations to make the
extensions of credit contemplated by Section 2, or relieve the Lender who failed
to fulfill its obligations of its obligations with respect to any subsequent
request for an extension of credit under the Credit Documents.
3. INTEREST; EURODOLLAR PRICING OPTIONS; FEES.
------------------------------------------
3.1 Interest. The Loan shall accrue and bear interest at a rate per annum
--------
which shall at all times equal the Applicable Rate. Prior to any stated or
accelerated maturity of the Loan, the Company will, on each Payment Date, pay
the accrued and unpaid interest on the portion of the Loan which was not subject
to a Eurodollar Pricing Option. On the last day of each Eurodollar Interest
Period or on any earlier termination of any Eurodollar Pricing Option, the
Company will pay the accrued and unpaid interest on the portion of the Loan
which was subject to the Eurodollar Pricing Option which expired or terminated
on such date. In the case of any Eurodollar Interest Period longer than three
months, the Company will also pay the accrued and unpaid interest on the portion
of the Loan subject to the Eurodollar Pricing Option
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<PAGE>
having such Eurodollar Interest Period at three-month intervals, the first such
payment to be made on the last Banking Day of the three-month period which
begins on the first day of such Eurodollar Interest Period. On the stated or any
accelerated maturity of the Loan, the Company will pay all accrued and unpaid
interest on the Loan, including any accrued and unpaid interest on any portion
of the Loan which is subject to a Eurodollar Pricing Option. Upon the occurrence
and during the continuance of an Event of Default, the Lenders may require
accrued interest to be payable on demand or at regular intervals more frequent
than each Payment Date. All payments of interest hereunder shall be made to the
Agent for the account of each Lender in accordance with such Lender's Percentage
Interest.
3.2. Eurodollar Pricing Options.
--------------------------
3.2.1. Election of Eurodollar Pricing Options. Subject to all of the
--------------------------------------
terms and conditions hereof and so long as no Default exists, the Company
may from time to time, by irrevocable notice (which notice may be given by
a telephone call received by a Lending Officer if promptly confirmed in
writing) to the Agent actually received by noon (Boston time) not less than
three Banking Days prior to the commencement of the Eurodollar Interest
Period selected in such notice, elect to have such portion of the Loan as
the Company may specify in such notice accrue and bear interest during the
Eurodollar Interest Period so selected at the Applicable Rate computed on
the basis of the Eurodollar Rate. In the event the Company at any time does
not elect a Eurodollar Pricing Option under this Section 3.2.1 for any
portion of the Loan (upon termination of a Eurodollar Pricing Option or
otherwise), then such portion of the Loan will accrue and bear interest at
the Applicable Rate based on the Base Rate. A single Eurodollar Option may
include any portion of the Revolving Loan or Term Loan designated by the
Company in the notice referred to above. No election of a Eurodollar
Pricing Option shall become effective:
(a) if, prior to the commencement of any such Eurodollar Interest
Period, the Agent determines and notifies the Company (which notice may be
given by a telephone call received by a Lending Officer if promptly
confirmed in writing) that (i) the electing or granting of the Eurodollar
Pricing Option in question would violate a Legal Requirement, (ii)
Eurodollar deposits in an amount comparable to the principal amount of the
Loan as to which such Eurodollar Pricing Option has been elected and which
have a term corresponding to the proposed Eurodollar Interest Period are
not readily available in the inter-bank Eurodollar market, or (iii) by
reason of circumstances affecting the inter-bank Eurodollar market,
adequate and reasonable methods do not exist for ascertaining the interest
rate applicable to such deposits for the proposed Eurodollar Interest
Period; or
(b) if the Required Lenders shall have advised the Agent by
telephone or otherwise at or prior to noon (Boston time) on the second
Banking Day prior to the commencement of such proposed Eurodollar Interest
Period (and shall have
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<PAGE>
subsequently confirmed in writing) that, after reasonable efforts to
determine the availability of such Eurodollar deposits, the Required
Lenders reasonably anticipate that Eurodollar deposits in an amount equal
to the Percentage Interest of the Required Lenders in the portion of the
Loan as to which such Eurodollar Pricing Option has been elected and which
have a term corresponding to the Eurodollar Interest Period in question
will not be offered in the Eurodollar market to the Required Lenders at a
rate of interest that does not exceed the anticipated Eurodollar Basic Rate
and the Agent shall have notified the Company thereof (which notice may be
given by a telephone call received by a Financial Officer if promptly
confirmed in writing).
3.2.2. Notice to Lenders and Company. The Agent will promptly inform
-----------------------------
each Lender (by telephone or otherwise) of each notice received by it from
the Company pursuant to Section 3.2.1 and of the Eurodollar Interest Period
specified in such notice. Upon determination by the Agent of the Eurodollar
Rate for such Eurodollar Interest Period or in the event such election
shall not become effective, the Agent will promptly notify the Company and
each Lender (by telephone or otherwise) of the Eurodollar Rate so
determined or why such election did not become effective, as the case may
be.
3.2.3. Selection of Eurodollar Interest Periods. Eurodollar Interest
----------------------------------------
Periods shall be selected so that:
(a) the minimum portion of the Loan subject to any Eurodollar
Pricing Option shall be $500,000 and an integral multiple of $100,000;
(b) no more than 12 Eurodollar Pricing Options shall be outstanding
at any one time;
(c) a portion of the Term Loan equal to or greater than the amount
of the next mandatory prepayment required by Section 4.2 shall not be
subject to a Eurodollar Pricing Option on the date such mandatory
prepayment is required to be made; and
(d) no Eurodollar Interest Period shall expire later than the Final
Maturity Date.
3.2.4. Additional Interest. If any portion of the Loan subject to a
-------------------
Eurodollar Pricing Option is repaid, or any Eurodollar Pricing Option is
terminated for any reason (including acceleration of maturity), on a date
which is prior to the last Banking Day of the Eurodollar Interest Period
applicable to such Eurodollar Pricing Option, the Company will pay to the
Agent for the account of each Lender in accordance with such Lender's
Percentage Interest, in addition to any amounts of interest otherwise
payable hereunder, an amount equal to the present value (calculated in
accordance with this Section 3.2.4) of interest for the unexpired portion
of such Eurodollar Interest Period on the portion of the Loan so repaid, or
as to which a Eurodollar Pricing Option was so
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<PAGE>
terminated, at a per annum rate equal to the excess, if any, of (a) the
rate applicable to such Eurodollar Pricing Option minus (b) the rate of
-----
interest obtainable by the Agent upon the purchase of debt securities
customarily issued by the Treasury of the United States of America which
have a maturity date approximating the last Banking Day of such Eurodollar
Interest Period. The present value of such additional interest shall be
calculated by discounting the amount of such interest for each day in the
unexpired portion of such Eurodollar Interest Period from such day to the
date of such repayment or termination at a per annum interest rate equal to
the interest rate determined pursuant to clause (b) of the preceding
sentence, and by adding all such amounts for all such days during such
period. The determination by the Agent of such amount of interest shall, in
the absence of manifest error, be conclusive. For purposes of this Section
3.2.4, if any portion of the Loan which was to have been subject to a
Eurodollar Pricing Option is not outstanding on the first day of the
Eurodollar Interest Period applicable to such Eurodollar Pricing Option
other than for reasons described in Section 3.2.1 or the failure of one or
more Lenders to fulfill their obligations hereunder, the Company shall be
deemed to have terminated such Eurodollar Pricing Option.
3.2.5. Violation of Legal Requirements. If any Legal Requirement
-------------------------------
shall prevent any Lender from funding or maintaining through the purchase
of deposits in the interbank Eurodollar market any portion of the Loan
subject to a Eurodollar Pricing Option or otherwise from giving effect to
such Lender's obligations as contemplated by Section 3.2, (a) the Agent may
by notice to the Company terminate all of the affected Eurodollar Pricing
Options, (b) the portion of the Loan subject to such terminated Eurodollar
Pricing Options shall immediately bear interest thereafter at the
Applicable Rate computed on the basis of the Base Rate and (c) the Company
shall make any payment required by Section 3.2.4.
3.2.6. Funding Procedure. The Lenders may fund any portion of the
-----------------
Loan subject to a Eurodollar Pricing Option out of any funds available to
the Lenders. Regardless of the source of the funds actually used by any of
the Lenders to fund any portion of the Loan subject to a Eurodollar Pricing
Option, however, all amounts payable hereunder, including the interest rate
applicable to any such portion of the Loan and the amounts payable under
Sections 3.2.4 and 3.5, shall be computed as if each Lender had actually
funded such Lender's Percentage Interest in such portion of the Loan
through the purchase of deposits in such amount of the type by which the
Eurodollar Basic Rate was determined with a maturity the same as the
applicable Eurodollar Interest Period relating thereto and through the
transfer of such deposits from an office of the Lender having the same
location as the applicable Eurodollar Office to one of such Lender's
offices in the United States of America.
3.3. Commitment Fees.
---------------
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<PAGE>
3.3.1. Revolving Loan. In consideration of the Lenders' commitments
--------------
to make the extensions of credit provided for in Section 2.1, while such
commitments are outstanding, the Company will pay to the Agent for the
account of the Lenders in accordance with the Lenders' respective
Commitments in the Revolving Loan, on each Payment Date and on the Final
Maturity Date, an amount equal to interest computed at the Commitment Fee
Rate on the amount by which (a) the average daily Maximum Amount of
Revolving Credit during the three-month period or portion thereof ending on
such Payment Date exceeded (b) the average daily Revolving Loan during such
period or portion thereof; provided, however, that the first such payment
-------- -------
shall be for the period beginning on the Initial Closing Date and ending on
the first Payment Date.
3.3.2. Term Loan. In consideration of the Lenders' commitments to
---------
make the extensions of credit provided for in Section 2.2, while such
commitments are outstanding, the Company will pay to the Agent for the
account of the Lenders in accordance with the Lenders' respective
Commitments in the Term Loan, on each Payment Date and on the Final
Maturity Date, an amount equal to interest computed at the Commitment Fee
Rate on the amount by which (a) the average daily Maximum Amount of Term
Credit during the three-month period or portion thereof ending on such
Payment Date exceeded (b) the sum of (i) the average daily Term Loan during
such period or portion thereof plus (ii) the average daily Letter of Credit
----
Exposure during such period or portion thereof; provided, however, that the
-------- -------
first such payment shall be for the period beginning on the Initial Closing
Date and ending on the first Payment Date.
3.4 Letter of Credit Fees. The Company will pay to the Agent for the
---------------------
account of each of the Lenders, in accordance with the Lenders' respective
Percentage Interests, on each Payment Date, a Letter of Credit fee equal to
interest at a rate per annum equal to the Applicable Margin indicated for the
Eurodollar Rate on the average daily Letter of Credit Exposure during the three-
month period or portion thereof ending on such Payment Date. The Company will
pay to the Letter of Credit Issuer customary service charges and expenses for
its services in connection with the Letters of Credit at the times and in the
amounts from time to time in effect in accordance with its general rate
structure, including fees and expenses relating to issuance, amendment,
negotiation, cancellation and similar operations.
3.5 Changes in Circumstances; Yield Protection.
------------------------------------------
3.5.1. Reserve Requirements, etc. If any Legal Requirement shall (a)
-------------------------
impose, modify, increase or deem applicable any insurance assessment,
reserve, special deposit or similar requirement against any Funding
Liability or the Letters of Credit, (b) impose, modify, increase or deem
applicable any other requirement or condition with respect to any Funding
Liability or the Letters of Credit, or (c) change the basis of taxation of
Funding Liabilities or payments in respect of any Letter of Credit (other
than changes in the rate of taxes measured by the overall net income of
such Lender)
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<PAGE>
and the effect of any of the foregoing shall be to increase the cost to any
Lender of issuing, making, funding or maintaining its respective Percentage
Interest in any portion of the Loan subject to a Eurodollar Pricing Option
or any Letter of Credit, to reduce the amounts received or receivable by
such Lender under this Agreement or to require such Lender to make any
payment or forego any amounts otherwise payable to such Lender under this
Agreement (other than any Tax or any reserves that are included in
computing the Eurodollar Reserve Rate), then such Lender may claim
compensation from the Company under Section 3.5.5.
3.5.2. Taxes. All payments of the Credit Obligations shall be made
-----
without set-off or counterclaim and free and clear of any deductions,
including deductions for Taxes, unless the Company is required by law to
make such deductions. If (a) any Lender shall be subject to any Tax with
respect to any payment of the Credit Obligations or its obligations
hereunder or (b) the Company shall be required to withhold or deduct any
Tax on any payment on the Credit Obligations, then such Lender may claim
compensation from the Company under Section 3.5.5 to the extent such Lender
is then in compliance with any applicable requirements of Section 13.
Whenever Taxes must be withheld by the Company with respect to any payments
of the Credit Obligations, the Company shall promptly furnish to the Agent
for the account of the applicable Lender official receipts (to the extent
that the relevant governmental authority delivers such receipts) evidencing
payment of any such Taxes so withheld. If the Company fails to pay any such
Taxes when due or fails to remit to the Agent for the account of the
applicable Lender the required receipts evidencing payment of any such
Taxes so withheld or deducted, following a written request from the Agent
with respect thereto, the Company shall indemnify the affected Lender for
any incremental Taxes and interest or penalties that may become payable by
such Lender as a result of any such failure. In the event any Lender
receives a refund of any Taxes for which it has received payment from the
Company under this Section 3.5.2, such Lender shall promptly pay the amount
of such refund to the Company, together with any interest thereon actually
earned by such Lender.
3.5.3. Capital Adequacy. If any Lender shall determine that
----------------
compliance by such Lender with any Legal Requirement regarding capital
adequacy of banks or bank holding companies has or would have the effect of
reducing the rate of return on the capital of such Lender and its
Affiliates as a consequence of such Lender's commitment to make the
extensions of credit contemplated hereby, or such Lender's maintenance of
the extensions of credit contemplated hereby, to a level below that which
such Lender could have achieved but for such compliance (taking into
consideration the policies of such Lender and its Affiliates with respect
to capital adequacy immediately before such compliance and assuming that
the capital of such Lender and its Affiliates was fully utilized prior to
such compliance) by an amount deemed by such Lender to be material, then
such Lender may claim compensation from the Company under Section 3.5.5.
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<PAGE>
3.5.4. Regulatory Changes. If any Lender shall determine that (a) any
------------------
change in any Legal Requirement (including any new Legal Requirement) after
the date hereof shall directly or indirectly (i) reduce the amount of any
sum received or receivable by such Lender with respect to the Loan or the
Letters of Credit or the return to be earned by such Lender on the Loan or
the Letters of Credit, (ii) impose a cost on such Lender or any Affiliate
of such Lender that is attributable to the making or maintaining of, or
such Lender's commitment to make, its portion of the Loan or the Letters of
Credit, or (iii) require such Lender or any Affiliate of such Lender to
make any payment on, or calculated by reference to, the gross amount of any
amount received by such Lender under any Credit Document (other than Taxes
or income or franchise taxes), and (b) such reduction, increased cost or
payment shall not be fully compensated for by an adjustment in the
Applicable Rate or the Letter of Credit fees, then such Lender may claim
compensation from the Company under Section 3.5.5.
3.5.5. Compensation Claims. Within 30 days after the receipt by the
-------------------
Company of a certificate from any Lender setting forth why it is claiming
compensation under this Section 3.5 and computations (in reasonable detail)
of the amount thereof, the Company shall pay to such Lender such additional
amounts as such Lender sets forth in such certificate as sufficient fully
to compensate it on account of the foregoing provisions of this Section
3.5, together with interest on such amount from the 15th day after receipt
of such certificate until payment in full thereof at the Overdue
Reimbursement Rate. The determination by such Lender of the amount to be
paid to it and the basis for computation thereof hereunder shall be
conclusive so long as (a) such determination is made in good faith, (b) no
manifest error appears therein and (c) the Lender uses reasonable averaging
and attribution methods. The Company shall be entitled to replace any such
Lender in accordance with Section 11.3. Notwithstanding any provision to
the contrary contained in any Credit Document, no Lender shall be entitled
to compensation hereunder in the event any reduction, increased costs,
payment or the like which serves as the basis for a claim hereunder is
fully compensated for by an adjustment in the Applicable Rate or the Letter
of Credit fees.
3.5.6. Mitigation. Each Lender shall take such commercially
----------
reasonable steps as it may determine are not disadvantageous to it,
including changing lending offices to the extent feasible, in order to
reduce amounts otherwise payable by the Company to such Lender pursuant to
Sections 3.2.4 and 3.5 or to make Eurodollar Pricing Options available
under Sections 3.2.1 and 3.2.5. In addition, the Company shall not be
responsible for costs (a) under Section 3.5 arising more than 90 days prior
to receipt by the Company of the certificate from the affected Lender
pursuant to such Section 3.5 or (b) under Section 3.2.4 arising from the
termination of Eurodollar Pricing Options more than 90 days prior to the
demand by the Agent for payment under Section 3.2.4.
3.6. Computations of Interest and Fees. For purposes of this Agreement,
---------------------------------
interest, commitment fees and Letter of Credit fees (and any other amount
expressed as interest or such
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<PAGE>
fees) shall be computed on the basis of a 365-day year for actual days elapsed;
provided, however, that interest based on the Eurodollar Rate shall be computed
- -------- -------
on the basis of a 360-day year for actual days elapsed. If any payment required
by this Agreement becomes due on any day that is not a Banking Day, such payment
shall, except as otherwise provided in the Eurodollar Interest Period, be made
on the next succeeding Banking Day. If the due date for any payment of principal
is extended as a result of the immediately preceding sentence, interest shall be
payable for the time during which payment is extended at the Applicable Rate.
4. PAYMENT.
-------
4.1. Payment at Maturity. On the Final Maturity Date or any accelerated
-------------------
maturity of the Loan, the Company will pay to the Agent an amount equal to the
Loan then due, together with all accrued and unpaid interest and fees with
respect thereto and all other Credit Obligations then outstanding.
4.2. Scheduled Required Prepayments. On each Payment Date set forth below,
------------------------------
the Company will pay to the Agent as a prepayment of the Term Loan the lesser of
(a) the sum of (i) an amount equal to the percentage indicated in the table
below of the Term Loan outstanding at the opening of business on September 30,
1999 plus (ii) the Letter of Credit Amortization Amount as of such Payment Date
----
and (b) the amount of the Term Loan then outstanding.
Payment Date Percentage
------------ ----------
September 30, 1999 5%
December 31, 1999 5%
March 31, 2000 4%
June 30, 2000 4%
September 30, 2000 4%
December 31, 2000 4%
March 31, 2001 4%
June 30, 2001 4%
September 30, 2001 4%
December 31, 2001 4%
March 31, 2002 5%
June 30, 2002 5%
September 30, 2002 5%
December 31, 2002 5%
March 31, 2003 5%
June 30, 2003 5%
September 30, 2003 5%
December 31, 2003 5%
March 31, 2004 9%
Final Maturity Date 9%
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<PAGE>
For purposes of calculating the scheduled required prepayments of the Term
Loan under this Section 4.2, any amount added to the Term Loan after September
30, 1999 on account of payments made by the Letter of Credit Issuer under
Letters of Credit shall be amortized over the then-remaining installments
indicated in the table above in the same relative proportions as the then-
remaining percentage installments indicated in such table. The "Letter of
---------
Credit Amortization Amount" on any Payment Date means the sum of the Letter of
- --------------------------
Credit reimbursement installments due on such Payment Date determined as
provided above.
4.3. Contingent Required Prepayments.
-------------------------------
4.3.1. Excess Credit Exposure. If at any time the Revolving Loan
----------------------
exceeds the limits set forth in Section 2.1, the Company shall within one
Banking Day pay the amount of such excess to the Agent as a prepayment of
the Revolving Loan. If at any time the Letter of Credit Exposure exceeds
the limits set forth in Section 2.3, the Company shall within one Banking
Day pay the amount of such excess to the Agent to be applied as provided in
Section 4.5.
4.3.2. Excess Cash Flow. Within 120 days after the end of each fiscal
----------------
year of the Company, commencing on the date 120 days after the end of the
fiscal year ending December 31, 1999, the Company shall pay to the Agent as
a prepayment of the Term Loan, to be applied as provided in Section 4.6.2
in an amount equal to the lesser of (a) 50% of Consolidated Excess Cash
Flow for its then most recently completed fiscal year or (b) the amount of
the Term Loan.
4.3.3. Net Asset Sale Proceeds. Within five days prior to the sale or
-----------------------
other disposition of any assets by the Company or its Subsidiaries that
would result in Net Asset Sale Proceeds, the Company shall provide written
notice to the Lenders of the anticipated closing date for such asset sale
or disposition and the amount of such Net Asset Sale Proceeds. Upon receipt
of Net Asset Sale Proceeds by any Obligor, the Company shall within one
Banking Day pay to the Agent as a prepayment of the Term Loan to be applied
as provided in Section 4.6.2 the lesser of (a) the amount of such Net Asset
Sale Proceeds or (b) the amount of the Term Loan.
4.3.4. Net Debt Proceeds. Within five days prior to the incurrence of
-----------------
Designated Financing Debt by any Obligor, the Company shall provide written
notice to the Lenders of the anticipated closing date for such Designated
Financing Debt and the amount of the Net Debt Proceeds. Within one Banking
Day after the incurrence of Designated Financing Debt, the Company shall
pay to the Agent as a prepayment of the Term Loan to be applied as provided
in Section 4.6.2 the lesser of (a) the amount of such Net Debt Proceeds or
(b) the amount of the Term Loan.
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<PAGE>
4.3.5. Net Equity Proceeds. Within five days prior to the
-------------------
consummation of any Equity Transaction that would result in Net Equity
Proceeds, the Company shall provide written notice to the Lenders of the
anticipated closing date for such Equity Transaction and the amount of the
Net Equity Proceeds. Within one Banking Day after the receipt of Net Equity
Proceeds by any Obligor, the Company shall pay to the Agent as a prepayment
of the Term Loan to be applied as provided in Section 4.6.2 the lesser of
(a) the amount of such Net Equity Proceeds or (b) the amount of the Term
Loan.
4.4. Voluntary Prepayments. In addition to the prepayments required by
---------------------
Sections 4.2 and 4.3, the Company may from time to time prepay all or any
portion of the Loan (in a minimum amount of $100,000 and an integral multiple of
$10,000, or such lesser amount as is then outstanding), without premium or
penalty of any type (except as provided in Section 3.2.4 with respect to the
early termination of Eurodollar Pricing Options). The Company shall give the
Agent at least one Banking Day prior notice of its intention to prepay the
Revolving Loan under this Section 4.4, specifying the date of payment and the
total amount of the Revolving Loan to be paid on such date. The Company shall
give the Agent at least three Banking Day's prior notice of its intention to
prepay the Term Loan under this Section 4.4, specifying the date of payment, the
total amount of the Term Loan to be paid on such date and the amount of interest
to be paid with such prepayment.
4.5. Letters of Credit. If on the Final Maturity Date or any accelerated
-----------------
maturity of the Credit Obligations the Lenders shall be obligated in respect of
a Letter of Credit or a draft accepted under a Letter of Credit, the Company
will either:
(a) prepay such obligation by depositing cash with the Agent, or
(b) deliver to the Agent a standby letter of credit (designating
the Agent as beneficiary and issued by a bank and on terms
reasonably acceptable to the Agent),
in each case in an amount equal to the portion of the then Letter of Credit
Exposure issued for the account of the Company. Any such cash so deposited and
the cash proceeds of any draw under any standby Letter of Credit so furnished,
including any interest thereon, shall be returned by the Agent to the Company
only when, and to the extent that, the amount of such cash held by the Agent
exceeds the Letter of Credit Exposure at such time and no Default then exists;
provided, however, that if an Event of Default occurs and the Credit Obligations
- -------- -------
become or are declared immediately due and payable, the Agent may apply such
cash, including any interest thereon, to the payment of any of the Credit
Obligations as provided in section 3.5.6 of the Guarantee and Security
Agreement.
4.6 Reborrowing; Application of Payments, etc.
------------------------------------------
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<PAGE>
4.6.1. Reborrowing. The amounts of the Revolving Loan prepaid
-----------
pursuant to Section 4.4 may be reborrowed from time to time prior to the
Final Maturity Date in accordance with Section 2.1, subject to the limits
set forth therein. No portion of the Term Loan prepaid hereunder may be
reborrowed.
4.6.2. Order of Application. Prepayments of the Term Loan made
--------------------
pursuant to Sections 4.3.2, 4.3.3, 4.3.4, 4.3.5 or 4.4 shall be applied
first to the principal amount of the Term Note which is due on the Final
Maturity Date and then to the installments required to be made on the Term
Loan pursuant to Section 4.2 in the inverse order of the maturity thereof
so that no partial prepayment of the Term Loan shall affect the obligation
of the Company to make the prepayments required by Section 4.2. Subject to
the foregoing, any prepayment of the Revolving Loan or Term Loan, as the
case may be, shall be applied first to the portion of the Revolving Loan or
Term Loan, as the case may be, not then subject to Eurodollar Pricing
Options, then the balance of any such prepayment shall be applied to the
portion of the Revolving Loan or Term Loan, as the case may be, then
subject to Eurodollar Pricing Options, in chronological order of the
respective maturities thereof (or as the Company may otherwise specify in
writing), together with any payments required by Section 3.2.4.
4.6.3. Payment with Accrued Interest, etc. Upon all prepayments of
----------------------------------
the Term Loan, the Company shall pay to the Agent the principal amount to
be prepaid, together with unpaid interest in respect thereof accrued to the
date of prepayment. Notice of prepayment having been given in accordance
with Section 4.4, and whether or not notice is given of prepayments
pursuant to Sections 4.2 and 4.3, the amount specified to be prepaid shall
become due and payable on the date specified for prepayment.
4.6.4. Payments for Lenders. All payments of principal hereunder
--------------------
shall be made to the Agent for the account of the Lenders in accordance
with the Lenders' respective Percentage Interests.
5. CONDITIONS TO EXTENDING CREDIT.
------------------------------
5.1. Conditions on Initial Closing Date. The obligations of the Lenders to
----------------------------------
make any extension of credit pursuant to Section 2 shall be subject to the
satisfaction, on or before the Initial Closing Date, of the conditions set forth
in this Section 5.1 as well as the further conditions in Section 5.2. If the
conditions set forth in this Section 5.1 are not met on or prior to the Initial
Closing Date, the Lenders shall have no obligation to make any extensions of
credit hereunder.
5.1.1. Notes. The Company shall have duly executed and delivered to
-----
the Agent a Revolving Note and a Term Note for each Lender having a
Commitment with respect thereto.
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<PAGE>
5.1.2. Payment of Fees. The Company shall have paid to the Agent and
---------------
to the Syndication Agent the fees contemplated by separate agreements
between the Company and each of the Agent and the Syndication Agent, dated
on or prior to the date hereof.
5.1.3. Legal Opinions. On the Initial Closing Date, the Lenders shall
--------------
have received from the following counsel their respective opinions with
respect to the transactions contemplated by the Credit Documents, which
opinions shall be in form and substance reasonably satisfactory to the
Required Lenders:
(a) Gunster, Yoakley, Valdes-Fauli & Stewart, P.A., special counsel
for the Company and its Subsidiaries.
(b) Ropes & Gray, special counsel for the Agent.
The Company authorizes and directs its special counsel to furnish the
foregoing opinions.
5.1.4. Guarantee and Security Agreement. Each of the Company and the
--------------------------------
Guarantors shall have duly authorized, executed and delivered to the Agent
a Guarantee and Security Agreement in substantially the form of Exhibit
5.1.4 (the "Guarantee and Security Agreement"), as well as the patent and
--------------------------------
trademark security agreements and copyright security agreements
contemplated therein.
5.1.5. Perfection of Security. Each Obligor shall have duly
----------------------
authorized, executed, acknowledged, delivered, filed, registered and
recorded such security agreements, notices, financing statements and other
instruments as the Agent may have reasonably requested in order to perfect
the Liens purported or required pursuant to the Credit Documents to be
created in the Credit Security and shall have paid all filing or recording
fees or taxes required to be paid in connection therewith, including any
recording, mortgage, documentary, transfer or intangible taxes.
5.1.6. Subordination Agreement. Each holder of Series A Preferred
-----------------------
Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock shall be bound by, and the holders of at least two thirds
of such Preferred Stock then outstanding shall have duly authorized,
executed and delivered to the Agent, a Subordination Agreement in
substantially the form of Exhibit 5.1.6 (the "Subordination Agreement").
------------- ----------
5.1.7. Solvency. After giving effect to the incurrence of the Credit
--------
Obligations, the Company and its Subsidiaries, taken as a whole:
(a) will be solvent;
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<PAGE>
(b) will have assets having a fair saleable value in excess of the
amount required to pay their probable liability on their existing debts as
such debts become absolute and mature;
(c) will have access to adequate capital for the conduct of their
business; and
(d) will have the ability to pay their debts from time to time
incurred as such debts mature.
The Company shall have furnished to the Lenders a certificate of a
Financial Officer to such effect, together with calculations of the
Computation Covenants as of June 30, 1997, in each case giving pro forma
effect to the incurrence of the Credit Obligations.
5.1.8. Proper Proceedings. This Agreement, each other Credit Document
------------------
and the transactions contemplated hereby and thereby shall have been
authorized by all necessary corporate or other proceedings. All necessary
consents, approvals and authorizations of any governmental or
administrative agency or any other Person of any of the transactions
contemplated hereby or by any other Credit Document shall have been
obtained and shall be in full force and effect.
5.1.9. General. All legal and corporate proceedings in connection
-------
with the transactions contemplated by this Agreement shall be reasonably
satisfactory in form and substance to the Agent and the Agent shall have
received copies of all documents, including certified copies of the Charter
and By-Laws of the Company and the other Obligors, records of corporate
proceedings, certificates as to signatures and incumbency of officers and
opinions of counsel, which the Agent may have reasonably requested in
connection therewith, such documents where appropriate to be certified by
proper corporate or governmental authorities.
5.2. Conditions to Each Extension of Credit. The obligations of the
--------------------------------------
Lenders to make any extension of credit pursuant to Section 2 shall be subject
to the satisfaction, on or before the Closing Date for such extension of credit,
of the following conditions:
5.2.1. Officer's Certificate. The representations and warranties
---------------------
contained in Section 7 shall be true and correct on and as of such Closing
Date with the same force and effect as though made on and as of such date
(except as to any representation or warranty which refers to a specific
earlier date); no Default shall exist on such Closing Date prior to or
immediately after giving effect to the requested extension of credit;
except as otherwise disclosed in writing to the Lenders prior to the date
hereof, no Material Adverse Change shall have occurred since December 31,
1996; and the Company shall have furnished to the Agent in connection with
the requested extension
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<PAGE>
of credit a certificate to these effects, in substantially the form of
Exhibit 5.2.1, signed by a Financial Officer.
5.2.2. Legality, etc. The making of the requested extension of credit
-------------
shall not (a) subject any Lender to any penalty or special tax (other than
a Tax for which the Company is required to reimburse the Lenders under
Section 3.5), (b) be prohibited by any Legal Requirement or (c) violate any
credit restraint program of the executive branch of the government of the
United States of America, the Board of Governors of the Federal Reserve
System or any other governmental or administrative agency so long as any
Lender reasonably believes that compliance therewith is customary
commercial practice.
6. GENERAL COVENANTS. Each of the Company and the Guarantors covenants that,
-----------------
until all of the Credit Obligations shall have been paid in full and until the
Lenders' commitments to extend credit under this Agreement and any other Credit
Document shall have been irrevocably terminated, the Company and its
Subsidiaries will comply with the following provisions:
6.1 Taxes and Other Charges; Accounts Payable.
-----------------------------------------
6.1.1. Taxes and Other Charges. Each of the Company and its
-----------------------
Subsidiaries shall duly pay and discharge, or cause to be paid and
discharged, before the same becomes in arrears, all taxes, assessments and
other governmental charges imposed upon such Person and its properties,
sales or activities, or upon the income or profits therefrom, as well as
all claims for labor, materials or supplies which if unpaid might by law
become a Lien upon any of its property; provided, however, that any such
-------- -------
tax, assessment, charge or claim need not be paid if the validity or amount
thereof shall at the time be contested in good faith by appropriate
proceedings and if such Person shall, in accordance with GAAP, have set
aside on its books adequate reserves with respect thereto; and provided,
--------
further, that each of the Company and its Subsidiaries shall pay or bond,
-------
or cause to be paid or bonded, all such taxes, assessments, charges or
other governmental claims immediately upon the commencement of proceedings
to foreclose any Lien which may have attached as security therefor (except
to the extent such proceedings have been dismissed or stayed).
6.1.2. Accounts Payable. Each of the Company and its Subsidiaries
----------------
shall promptly pay when due, or in conformity with customary trade terms,
all accounts payable incident to the operations of such Person not referred
to in Section 6.1.1; provided, however, that any such accounts payable need
-------- -------
not be paid if the validity or amount thereof shall at the time be
contested in good faith and if such Person shall, in accordance with GAAP,
have set aside on its books adequate reserves with respect thereto.
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<PAGE>
6.2. Conduct of Business, etc.
------------------------
6.2.1. Types of Business. The Company and its Subsidiaries shall
-----------------
engage only in the business of (a) constructing, owning, operating and
acquiring Towers (including rooftop Towers) and Tower Companies, leasing
space on such Towers to tenants, managing the construction of, ownership of
and leasing of space on Towers for third parties, and providing site
administration and development services to wireless telecommunications
carriers and (b) other activities related thereto.
6.2.2. Maintenance of Properties. Each of the Company and its
-------------------------
Subsidiaries:
(a) shall keep its properties in such repair, working order and
condition, and shall from time to time make such repairs, replacements,
additions and improvements thereto, as are necessary for the efficient
operation of its businesses and shall comply at all times in all material
respects with all material franchises, licenses and leases to which it is
party so as to prevent any loss or forfeiture thereof or thereunder, except
where (i) compliance is at the time being contested in good faith by
appropriate proceedings and (ii) failure to comply with the provisions
being contested has not resulted, and does not create a reasonable risk of
resulting, in the aggregate in any Material Adverse Change; and
(b) shall do all things necessary to preserve, renew and keep in
full force and effect and in good standing its legal existence and
authority necessary to continue its business; provided, however, that this
-------- -------
Section 6.2.2(b) shall not prevent the merger, consolidation or liquidation
of Subsidiaries permitted by Section 6.11.
6.2.3. Statutory Compliance. Each of the Company and its Subsidiaries
--------------------
shall comply in all material respects with all valid and applicable
statutes, laws, ordinances, zoning and building codes and other rules and
regulations of the United States of America, of the states and territories
thereof and their counties, municipalities and other subdivisions and of
any foreign country or other jurisdictions applicable to such Person,
except where (a) compliance therewith shall at the time be contested in
good faith by appropriate proceedings and (b) failure so to comply with the
provisions being contested has not resulted, and does not create a
reasonable risk of resulting, in the aggregate in any Material Adverse
Change.
6.2.4. Compliance with Material Agreements. Each of the Company and
-----------------------------------
its Subsidiaries shall comply in all material respects with the Material
Agreements (to the extent not in violation of the other provisions of this
Agreement or any other Credit Document). Without the prior written consent
of the Required Lenders, no Material Agreement shall be amended, modified,
waived or terminated in any manner that would have in any material respect
an adverse effect on the interests of the Lenders under the Credit
Documents.
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<PAGE>
6.3. Insurance.
---------
6.3.1. Property Insurance. Each of the Company and its Subsidiaries
------------------
shall keep its assets which are of an insurable character insured by
financially sound and reputable insurers against theft and fraud and
against loss or damage by fire, explosion and hazards insured against by
extended coverage to the extent, in amounts and with deductibles at least
as favorable as those generally maintained by businesses of similar size
engaged in similar activities.
6.3.2. Liability Insurance. Each of the Company and its Subsidiaries
-------------------
shall maintain with financially sound and reputable insurers insurance
against liability for hazards, risks and liability to persons and property
to the extent, in amounts and with deductibles at least as favorable as
those generally maintained by businesses of similar size engaged in similar
activities; provided, however, that it may effect workers' compensation
-------- -------
insurance or similar coverage with respect to operations in any particular
state or other jurisdiction through an insurance fund operated by such
state or jurisdiction or by meeting the self-insurance requirements of such
state or jurisdiction.
6.3.3. Key Executive Life Insurance. The Company shall maintain with
----------------------------
financially sound and reputable insurers life insurance policies on Steven
E. Bernstein and Ronald G. Bizick, II in an amount of at least $3,000,000
and $2,000,000, respectively, in form reasonably satisfactory to the Agent.
6.3.4. Flood Insurance. To the extent necessary to ensure that the
---------------
Lenders are in compliance with all applicable banking regulations, each of
the Company and its Subsidiaries shall at all times keep each parcel of
real property owned or leased by it which is (a) encumbered by a lien in
favor of the Lenders, (b) in an area determined by the Director of the
Federal Emergency Management Agency to be subject to special flood hazard
and (c) in a community participating in the National Flood Insurance
Program, insured against such special flood hazards in an amount equal to
the lesser of the value of the insurable improvements located upon such
real property or the maximum limit of coverage available for the particular
type of property under the federal National Flood Insurance Act of 1968.
6.4. Financial Statements and Reports. Each of the Company and its
--------------------------------
Subsidiaries shall maintain a system of accounting in which correct entries
shall be made of all transactions in relation to their business and affairs in
accordance with generally accepted accounting practice. The fiscal year of the
Company and its Subsidiaries shall end on December 31 in each year and the
fiscal quarters of the Company and its Subsidiaries shall end on March 31, June
30, September 30 and December 31 in each year.
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6.4.1. Annual Reports. The Company shall furnish to the Lenders as
--------------
soon as available, and in any event within 120 days after the end of each
fiscal year, the Consolidated and Consolidating balance sheets of the
Company and its Subsidiaries as at the end of such fiscal year, the
Consolidated and Consolidating statements of income and Consolidated
statements of changes in shareholders' equity and of cash flows of the
Company and its Subsidiaries for such fiscal year (all in reasonable
detail) and together, in the case of Consolidated financial statements,
with comparative figures for the immediately preceding fiscal year, all
accompanied by:
(a) Reports of Arthur Andersen LLP (or, if they cease to be auditors
of the Company and its Subsidiaries, other independent certified public
accountants of recognized national standing reasonably satisfactory to the
Required Lenders), containing no material qualification, to the effect that
they have audited the foregoing Consolidated financial statements in
accordance with GAAP and that such Consolidated financial statements
present fairly, in all material respects, the financial position of the
Company and its Subsidiaries covered thereby at the dates thereof and the
results of their operations for the periods covered thereby in conformity
with GAAP.
(b) The statement of such accountants that they have caused this
Agreement to be reviewed and that in the course of their audit of the
Company and its Subsidiaries no facts have come to their attention that
cause them to believe that any Default exists under Section 6.5 or, if such
is not the case, specifying such Default and the nature thereof. This
statement is furnished by such accountants with the understanding that the
examination of such accountants cannot be relied upon to give such
accountants knowledge of any such Default except as it relates to
accounting or auditing matters within the scope of their audit.
(c) A certificate of the Company signed by a Financial Officer to
the effect that such officer has caused this Agreement to be reviewed and
has no knowledge of any Default, or if such officer has such knowledge,
specifying such Default and the nature thereof, and what action the Company
has taken, is taking or proposes to take with respect thereto.
(d) Computations by the Company comparing the financial statements
referred to above with the most recent budget for such fiscal year
furnished to the Lenders in accordance with Section 6.4.5.
(e) Computations by the Company in substantially the form of Exhibit
6.4 demonstrating, as of the end of such fiscal year, compliance with the
Computation Covenants, certified by a Financial Officer.
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(f) Calculations, as at the end of such fiscal year, of (i) the
Accumulated Benefit Obligations for each Plan (other than Multiemployer
Plans) and (ii) the fair market value of the assets of such Plan allocable
to such benefits.
(g) A schedule, certified by a Financial Officer, showing as of the
end of such fiscal year (i) the location of all Towers, the ownership of
the real property on which each Tower is located, which Towers are capable
of being moved from their present location, and the contribution by each
Tower to Consolidated Tower Revenues as then estimated in good faith by the
Company and (ii) an open bid summary report and a site development backlog
report.
(h) Supplements to Exhibits 7.1 and 7.3 hereof and Exhibit 3.3 to
the Guarantee and Security Agreement showing any changes in the information
set forth in such exhibits not previously furnished to the Lenders in
writing, as well as any changes in the Charter, By-laws or incumbency of
officers of the Obligors from those previously certified to the Agent.
(i) In the event of a change in GAAP after December 31, 1996,
computations by the Company, certified by a Financial Officer, reconciling
the financial statements referred to above with financial statements
prepared in accordance with GAAP as applied to the other covenants in
Section 6 and related definitions.
6.4.2. Quarterly Reports. The Company shall furnish to the Lenders as
-----------------
soon as available and, in any event, within 45 days after the end of each
of the first three fiscal quarters of the Company, the internally prepared
Consolidated balance sheets of the Company and its Subsidiaries as of the
end of such fiscal quarter, the Consolidated statements of income and
Consolidated statements of changes in shareholders' equity and of cash
flows of the Company and its Subsidiaries for such fiscal quarter and for
the portion of the fiscal year then ended (all in reasonable detail) and
together, in the case of Consolidated statements, with comparative figures
for the same period in the preceding fiscal year, all accompanied by:
(a) A certificate of the Company signed by a Financial Officer to
the effect that such Consolidated financial statements have been prepared
in accordance with GAAP and present fairly, in all material respects, the
financial position of the Company and its Subsidiaries covered thereby at
the dates thereof and the results of their operations for the periods
covered thereby, subject only to normal year-end audit adjustments and the
addition of footnotes.
(b) A certificate of the Company signed by a Financial Officer to
the effect that such officer has caused this Agreement to be reviewed and
has no knowledge of any Default, or if such officer has such knowledge,
specifying such Default and the nature
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thereof and what action the Company has taken, is taking or proposes to
take with respect thereto.
(c) Computations by the Company comparing the financial statements
referred to above with the most recent budget for the period covered
thereby furnished to the Lenders in accordance with Section 6.4.5.
(d) Computations by the Company in substantially the form of Exhibit
6.4 demonstrating, as of the end of such quarter, compliance with the
Computation Covenants, certified by a Financial Officer.
(e) A schedule, certified by a Financial Officer, showing as of the
end of such fiscal quarter (i) the location of all Towers, which Towers are
capable of being moved from their present location, the ownership of the
real property on which each Tower is located and the contribution by each
Tower to Consolidated Tower Revenues as then estimated in good faith by the
Company and (ii) an open bid summary report and a site development backlog
report.
(f) Supplements to Exhibits 7.1 and 7.3 hereof and Exhibit 3.3 to
the Guarantee and Security Agreement showing any changes in the information
set forth in such exhibits not previously furnished to the Lenders in
writing, as well as any changes in the Charter, By-laws or incumbency of
officers of the Obligors from those previously certified to the Agent.
6.4.3. Monthly Reports. The Company shall furnish to the Lenders as
---------------
soon as available and, in any event, within 30 days after the end of each
month, the monthly management report of the Company and its Subsidiaries in
the form prepared by the Company's management for its own internal
purposes, which report shall include at least an income statement and
balance sheet for such month.
6.4.4. Tower Acquisition Reports. The Company will deliver to the
-------------------------
Agent 15 Banking Days' (seven Banking Days' if the proposed cost is less
than $2,500,000 for any acquisition or series of related acquisitions)
prior written notice of the proposed acquisition of any new Towers
(including real property sites for Towers) or construction of any new
Towers and the proposed cost and projected revenue thereof (whether or not
the costs of such acquisition or construction are to be funded by the
Company from its own sources or from the proceeds of the Loan). Such notice
shall specify a description and the locations of the new Towers (including
Towers owned by Tower Companies), the name and address of the owner or
lessee, as appropriate, of the real property on which they are located,
and, if the proposed cost exceeds $2,500,000 for any acquisition or series
of related acquisitions, a memorandum summarizing the results of the due
diligence review of such acquisition or series of related acquisitions
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and such other documents or information owned or within the control of the
Company and its Subsidiaries as the Required Lenders may reasonably
require.
6.4.5. Other Reports. The Company shall promptly furnish to the
-------------
Lenders:
(a) As soon as prepared and in any event within 30 days after the
beginning of each fiscal year, an annual budget and operating projections
for such fiscal year of the Company and its Subsidiaries, prepared in a
manner consistent with the manner in which the financial projections
described in Section 7.2.1 were prepared.
(b) Any material updates of such budget and projections.
(c) Any management letters furnished to the Company or any of its
Subsidiaries by the Company's auditors.
(d) All budgets, projections, statements of operations and other
reports furnished generally to the shareholders of the Company.
(e) Such registration statements, proxy statements and reports,
including Forms S-1, S-2, S-3, S-4, 10-K, 10-Q and 8-K, as may be filed by
the Company or any of its Subsidiaries with the Securities and Exchange
Commission.
(f) Any 90-day letter or 30-day letter from the federal Internal
Revenue Service (or the equivalent notice received from state or other
taxing authorities) asserting tax deficiencies against the Company or any
of its Subsidiaries.
6.4.6. Notice of Litigation, Defaults, etc. The Company shall
-----------------------------------
promptly furnish to the Lenders notice of any litigation or any
administrative or arbitration proceeding (a) which creates a reasonable
risk of resulting, after giving effect to any applicable insurance, in the
payment by the Company and its Subsidiaries of more than $500,000 or (b)
which results, or creates a reasonable risk of resulting, in a Material
Adverse Change. Promptly upon acquiring knowledge thereof, the Company
shall notify the Lenders of the existence of any Default or Material
Adverse Change, specifying the nature thereof and what action the Company
or any Subsidiary has taken, is taking or proposes to take with respect
thereto.
6.4.7. ERISA Reports. The Company shall furnish to the Lenders as
-------------
soon as available the following items with respect to any Plan:
(a) any request for a waiver of the funding standards or an
extension of the amortization period,
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(b) any reportable event (as defined in section 4043 of ERISA),
unless the notice requirement with respect thereto has been waived by
regulation,
(c) any notice received by any ERISA Group Person that the PBGC has
instituted or intends to institute proceedings to terminate any Plan, or
that any Multiemployer Plan is insolvent or in reorganization,
(d) notice of the possibility of the termination of any Plan by its
administrator pursuant to section 4041 of ERISA, and
(e) notice of the intention of any ERISA Group Person to withdraw,
in whole or in part, from any Multiemployer Plan.
6.4.8. Other Information. From time to time at reasonable intervals
-----------------
(but in no event more often than quarterly, unless an Event of Default has
occurred and is continuing) upon written request of any authorized officer
of any Lender, each of the Company and its Subsidiaries shall furnish to
the Lenders such other information regarding the business, assets,
financial condition, income or prospects of the Company and its
Subsidiaries as such officer may reasonably request, including copies of
all tax returns, licenses, agreements, leases and instruments to which any
of the Company or its Subsidiaries is party. The Lenders' authorized
officers and representatives shall have the right during normal business
hours upon reasonable notice and at reasonable intervals (but in no event
more often than quarterly, unless an Event of Default has occurred and is
continuing) to examine the books and records of the Company and its
Subsidiaries, to make copies and notes therefrom for the purpose of
ascertaining compliance with or obtaining enforcement of this Agreement or
any other Credit Document. The Lenders shall take reasonable steps to
coordinate any such visits to the Company and its Subsidiaries so as to
minimize disruption to the Company's operations.
6.5. Certain Financial Tests.
-----------------------
6.5.1. Consolidated Total Debt to Consolidated Adjusted EBITDA.
-------------------------------------------------------
Consolidated Total Debt shall not on any date set forth in the table below
exceed the percentage set forth in the table below of Consolidated Adjusted
EBITDA for the most recently completed period of four consecutive fiscal
quarters for which financial reports have been (or are required to have
been) furnished to the Lenders in accordance with Section 6.4.1 or 6.4.2.
Period Percentage
------ ----------
Initial Closing Date through March 31, 1998 350%
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April 1, 1998 through June 30, 1999 400%
July 1, 1999 through June 30, 2000 350%
July 1, 2000 through June 30, 2001 300%
July 1, 2001 and thereafter 250%
6.5.2. Consolidated EBITDA to Consolidated Pro Forma Interest
------------------------------------------------------
Expense. As of the last day of each fiscal quarter of the Company during
-------
the periods set forth in the table below, Consolidated EBITDA for the
period of four consecutive fiscal quarters then ending shall exceed the
percentage of Consolidated Pro Forma Interest Expense set forth in the
table below for the period of four consecutive fiscal quarters commencing
immediately after such date.
Period Percentage
------ ----------
Initial Closing Date through June 30, 1998 250%
July 1, 1998 and thereafter 300%
6.5.3 Consolidated Adjusted EBITDA to Consolidated Fixed Charges.
----------------------------------------------------------
For each period of four consecutive fiscal quarters of the Company set
forth in the table below, Consolidated Adjusted EBITDA shall exceed the
percentage of Consolidated Fixed Charges specified in the table below:
Period Percentage
------ ----------
Initial Closing Date through June 30, 1999 120%
July 1, 1999 and thereafter 110%
6.5.4 Consolidated EBITDA. For each period of four consecutive
-------------------
fiscal quarters of the Company, commencing with the year ending December
31, 1997, Consolidated EBITDA shall equal or exceed the amount specified in
the table below.
Period Ending Amount
------------- ------
December 31, 1997 $8,500,000
March 31, 1998 and $8,500,000
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Thereafter plus 85% of Consolidated
Annualized Tower Cash Flow for
Towers acquired on or after
January 1, 1998, calculated for
the most recently completed
fiscal quarter prior to such
acquisition
6.5.5. Third Party Tower Construction Costs. Out-of-pocket costs
------------------------------------
incurred by the Company and its Subsidiaries on behalf of other Persons for
material, prepaid costs and other expenses in connection with Towers
(including real property sites for Towers) owned (or to be owned) by such
other Persons that have not been reimbursed by such other Persons shall not
exceed $1,500,000 in the aggregate at any one time outstanding.
6.5.6. Capital Expenditures. Capital Expenditures budgeted and/or
--------------------
committed by the Company and its Subsidiaries with respect to Towers to be
constructed and owned by (or to be owned by) the Company and its
Subsidiaries shall not exceed $10,000,000 in the aggregate at any one time
outstanding; provided, however, that in no event shall this limitation
-------- -------
apply to Capital Expenditures with respect to repairing, replacing or
maintaining Towers following their completion or which are acquired with
all construction complete. Capital Expenditures shall not exceed (a)
$20,000,000 in the aggregate for the fiscal year ending December 31, 1997
and (b) $25,000,000 in the aggregate for any fiscal year thereafter.
6.5.7. Consolidated Corporate Development Expenses. For any
-------------------------------------------
period of four consecutive fiscal quarters of the Company, Consolidated
Corporate Development Expenses shall not exceed 2% of Consolidated
Revenues.
6.5.8. Senior Management Compensation. Salaries, cash bonuses,
------------------------------
management and consulting fees and other compensation expenses payable by
the Company and its Subsidiaries to Senior Management shall not exceed (a)
$2,250,000 in fiscal year 1997, and (b) in any fiscal year thereafter, 115%
of the maximum amount permitted by this Section 6.5.8 for the then previous
fiscal year.
6.6. Indebtedness. Neither the Company nor any of its Subsidiaries shall
------------
create, incur, assume or otherwise become or remain liable with respect to any
Indebtedness (or become contractually committed to do so), except the following:
6.6.1. Indebtedness in respect of the Credit Obligations.
6.6.2. Guarantees permitted by Section 6.7.
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6.6.3. Current liabilities, other than Financing Debt, incurred in
the ordinary course of business.
6.6.4. To the extent that payment thereof shall not at the time be
required by Section 6.1, Indebtedness in respect of taxes, assessments,
governmental charges and claims for labor, materials and supplies.
6.6.5. Indebtedness secured by Liens of carriers, warehouses,
mechanics and landlords permitted by Sections 6.8.5 and 6.8.6.
6.6.6. Indebtedness in respect of judgments or awards (a) which have
been in force for less than the applicable appeal period or (b) in respect
of which the Company or any Subsidiary shall at the time in good faith be
prosecuting an appeal or proceedings for review and, in the case of each of
clauses (a) and (b), the Company or such Subsidiary shall have taken
appropriate reserves therefor in accordance with GAAP or such liability
shall be covered by insurance and execution of such judgment or award shall
not be levied.
6.6.7. To the extent permitted by Section 6.8.7, Indebtedness in
respect of Capitalized Lease Obligations or secured by purchase money
security interests; provided, however, that the aggregate principal amount
-------- -------
of all Indebtedness under this Section 6.6.7 plus Indebtedness under
Sections 6.6.8(a), 6.6.14 and 6.6.15 at any one time outstanding shall not
exceed $5,000,000.
6.6.8. Unsecured Indebtedness owing to sellers of Towers and Tower
Companies so long as either (a) such Indebtedness is subordinated to the
Credit Obligations on substantially the terms of Exhibit 6.6.8 and the
aggregate principal amount of all Indebtedness under this clause (a) plus
Indebtedness under Sections 6.6.7, 6.6.14 and 6.6.15 at any one time
outstanding shall not exceed $5,000,000 or (b) the aggregate principal
amount of Indebtedness owing to such sellers is covered by Letters of
Credit.
6.6.9. Indebtedness in respect of deferred taxes arising in the
ordinary course of business and deferred insurance expense financed for a
period not to exceed 12 months.
6.6.10. Indebtedness in respect of inter-company loans and advances
among the Company and its Subsidiaries which are not prohibited by Section
6.9.
6.6.11. Unsecured Indebtedness of the Company subordinated to the
prior payment of the Credit Obligations upon customary terms reasonably
satisfactory to the Lenders, including a final maturity date of at least
one year after the Final Maturity Date, covenants less restrictive on the
Company and its Subsidiaries other than the
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covenants contained in this Agreement and customary subordination
provisions; provided, however, that the proceeds of such Indebtedness are
-------- -------
used to fund the acquisition or construction of Towers; and provided
--------
further, that the aggregate principal amount of all Indebtedness permitted
-------
by this Section 6.6.11 at any one time outstanding shall not exceed
$100,000,000.
6.6.12. Unfunded pension liabilities and obligations with respect to
Plans so long as the Company and all other ERISA Group Persons are in
compliance with Section 6.16.
6.6.13. Indebtedness (in addition to the foregoing) outstanding on
the date hereof and described in Exhibit 7.3 and all renewals and
extensions thereof not in excess of the amount thereof outstanding
immediately prior to such renewal or extension.
6.6.14. Indebtedness of Foreign Subsidiaries in an aggregate
principal amount not exceeding $1,000,000 at any one time outstanding in an
equivalent amount of United States Funds; provided, however, that the
-------- -------
aggregate principal amount of all Indebtedness under this Section 6.6.14
plus Indebtedness under Sections 6.6.7, 6.6.8(a) and 6.6.15 at any one time
outstanding shall not exceed $5,000,000.
6.6.15. Indebtedness (other than Financing Debt) in addition to the
foregoing; provided, however, that the aggregate amount of all Indebtedness
-------- -------
under this Section 6.6.15 plus Indebtedness under Sections 6.6.7, 6.6.8(a)
and 6.6.14 at any one time outstanding shall not exceed $5,000,000.
6.7. Guarantees; Letters of Credit. Neither the Company nor any of its
-----------------------------
Subsidiaries shall become or remain liable with respect to any Guarantee,
including reimbursement obligations, whether contingent or matured, under
letters of credit or other financial guarantees by third parties (or become
contractually committed do to so), except the following:
6.7.1. Letters of Credit and Guarantees of the Credit Obligations.
6.7.2. Guarantees by the Company of Indebtedness and other
obligations incurred by its Subsidiaries and permitted by Section 6.6.
6.8. Liens. Neither the Company nor any of its Subsidiaries shall create,
-----
incur or enter into, or suffer to be created or incurred or to exist, any Lien
(or become contractually committed to do so), except the following:
6.8.1. Liens on the Credit Security that secure the Credit
Obligations.
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6.8.2. Liens to secure taxes, assessments and other governmental
charges, to the extent that payment thereof shall not at the time be
required by Section 6.1.
6.8.3. Deposits or pledges made (a) in connection with, or to secure
payment of, workers' compensation, unemployment insurance, old age pensions
or other social security, (b) in connection with casualty insurance
maintained in accordance with Section 6.3, (c) to secure the performance of
bids, tenders, contracts (other than contracts relating to Financing Debt)
or leases, (d) to secure statutory obligations or surety or appeal bonds,
(e) to secure indemnity, performance or other similar bonds or guarantees
in the ordinary course of business or (f) in connection with contested
amounts to the extent that payment thereof shall not at that time be
required by Section 6.1.
6.8.4. Liens in respect of judgments or awards, to the extent that
such judgments or awards are permitted by Section 6.6.6 but only to the
extent that such Liens are junior to the Liens on the Credit Security
granted to secure the Credit Obligations.
6.8.5. Liens of carriers, warehouses, mechanics and similar Liens,
in each case (a) in existence less than 90 days from the date of creation
thereof or (b) being contested in good faith by the Company or any
Subsidiary in appropriate proceedings (so long as the Company or such
Subsidiary shall, in accordance with GAAP, have set aside on its books
adequate reserves with respect thereto).
6.8.6. Encumbrances in the nature of (a) zoning restrictions, (b)
easements and reservations of mineral rights, (c) restrictions of record on
the use of real property, (d) landlords' and lessors' Liens on rented
premises and (e) restrictions on transfers or assignment of leases and (f)
title irregularities, in all such cases that do not in the aggregate
materially detract from the value of the Towers taken as a whole and that
do not result, or create a reasonable risk of resulting, in a Material
Adverse Change.
6.8.7. Liens constituting (a) purchase money security interests
(including mortgages, conditional sales, Capitalized Leases and any other
title retention or deferred purchase devices) in real property, interests
in leases or tangible personal property (other than inventory) existing or
created on the date on which such property is acquired, and (b) the
renewal, extension or refunding of any security interest referred to in the
foregoing clause (a) in an amount not to exceed the amount thereof
remaining unpaid immediately prior to such renewal, extension or refunding;
provided, however, that (i) each such security interest shall attach solely
-------- -------
to the particular item of property so acquired, and the principal amount of
Indebtedness (including Indebtedness in respect of Capitalized Lease
Obligations) secured thereby shall not exceed the cost (including all such
Indebtedness secured thereby, whether or not assumed) of such item of
property; and (ii) the aggregate principal amount of all Indebtedness
secured by
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Liens permitted by this Section 6.8.7 shall not exceed the amount permitted
by Section 6.6.7.
6.8.8. Restrictions under federal and state securities laws on the
transfer of securities.
6.8.9. Liens as in effect on the date hereof described in Exhibit
7.3 and securing Indebtedness permitted by Section 6.6.13.
6.9 Investments and Acquisitions. Neither the Company nor any of its
----------------------------
Subsidiaries shall have outstanding, acquire or hold any Investment (including
any Investment consisting of the acquisition of any business) (or become
contractually committed to do so), except the following:
6.9.1. Investments of the Company and its Subsidiaries in (a) Wholly
Owned Subsidiaries which are Guarantors as of the date hereof and (b)
Persons that have become Wholly Owned Subsidiaries and Guarantors after the
date hereof in accordance with Section 6.9.5; provided, however, that (i)
-------- -------
no such Investment shall involve the transfer by the Company of any
material assets other than cash and (ii) Investments in Foreign
Subsidiaries are subject to Section 6.9.6.
6.9.2. Intercompany loans and advances from any Wholly Owned
Subsidiary to the Company but in each case only to the extent reasonably
necessary for Consolidated tax planning and working capital management;
provided, however, that loans and advances from a Foreign Subsidiary to the
-------- -------
Company or a Domestic Subsidiary must be subordinated to the Credit
Obligations pursuant to a subordination agreement in substantially the same
form as the Subordination Agreement provided for in Section 5.1.6.
6.9.3. Investments in Cash Equivalents.
6.9.4. Guarantees permitted by Section 6.7.
6.9.5. So long as immediately before and after giving effect thereto
no Default exists, Investments of the Company and its Wholly Owned
Subsidiaries consisting of the acquisition of Towers and at least 80% of
the equity of Tower Companies; provided, however, that:
-------- -------
(a) at least 15 Banking Days (seven Banking Days in the case of
acquisitions or series of related acquisitions with a cost to the Company
and its Subsidiaries less than $2,500,000) prior to any such acquisition,
the Lenders shall receive computations provided by a Financial Officer
demonstrating pro forma compliance with the Computation Covenants after
giving effect to such acquisition and, in the case of any
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acquisition (or series of related acquisitions) involving consideration
exceeding $2,500,000 by the Company and its Subsidiaries, the materials
required by Section 6.4.4,
(b) the Company shall take all necessary action to cause any such
newly acquired Tower Company to become a Guarantor and to perfect the
Lenders' security interests in the newly acquired Towers and Designated
Real Properties to the extent necessary to comply with Section 6.20.3,
(c) no more than 25% of the revenues anticipated to be derived from
such acquired Towers or Tower Companies shall derive from PCS C-Block
Providers, and
(d) in the case of any acquisition (or series of related
acquisitions) involving consideration exceeding $6,000,000 by the Company
and its Subsidiaries, the Lenders holding at least a majority of the
Percentage Interests shall have provided their prior written consent.
6.9.6. Investments by the Company and its Subsidiaries to fund
operating losses with respect to international operations or to acquire
assets in international markets; provided, however, that the aggregate
-------- -------
amount of all such Investments may not exceed $2,500,000 in the equivalent
amount of United States Funds at any one time outstanding.
6.9.7. $3,500,000 loan from the Company to Steven E. Bernstein
evidenced by a note dated March 8, 1997.
6.9.8. So long as immediately before and after giving effect
thereto no Default exists, the Company and its Subsidiaries may consummate
the CSSI Acquisition.
6.1 Distributions. Neither the Company nor any of its Subsidiaries shall
-------------
make any Distribution (or become contractually committed to do so), except the
following:
6.10.1. So long as immediately before and after giving effect
thereto no Default exists, Subsidiaries of the Company may make
Distributions to the Company or any Wholly Owned Subsidiary of the Company
and the Company and its Subsidiaries may make Investments permitted by
Sections 6.9.1 and 6.9.2.
6.10.2. So long as immediately before and after giving effect
thereto no Default exists, and so long as immediately after giving effect
thereto the Company and its Subsidiaries are in pro forma compliance with
the Computation Covenants, the Company may redeem outstanding shares of its
Series A, Series B, Series C and Series D Preferred Stock after the fifth
anniversary of the date of the initial closing of the private placement of
Series A Preferred Stock pursuant to the Offering Memorandum;
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provided, however, that during any single fiscal year (a) any such
-------- -------
redemption by the Company shall occur after the date upon which the Company
makes any prepayment to the Lenders pursuant to Section 4.3.2 (Excess Cash
Flow); and (b) all such redemptions made during such fiscal year shall be
in an aggregate amount no greater than the amount of any prepayment
pursuant to Section 4.3.2 (Excess Cash Flow) made to the Lenders in such
fiscal years; and provided, further, that the number of shares redeemed
-------- -------
pursuant to this Section 6.10.2 during any such fiscal year shall not
exceed 25% of the shares outstanding on March 31, 2002.
6.10.3. So long as immediately before and after giving effect
thereto no Default exists, the Company may redeem outstanding shares of its
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock and Series D Preferred Stock after December 31, 1999 from the
proceeds of a public offering of the Company's Common Stock raising gross
proceeds of at least $20,000,000.
6.10.4. To the extent permitted by the applicable subordination
terms, the Company may make regularly scheduled, mandatory payments of
interest on and principal of the subordinated Indebtedness permitted by
Sections 6.6.8 and 6.6.11.
6.10.5. So long as immediately before and after giving effect
thereto no Default exists, the Company may make Distributions up to
$500,000 per year to repurchase Company stock and options to acquire such
stock owned by employees whose employment with the Company and its
Subsidiaries has then terminated.
6.11. Asset Dispositions and Mergers. Neither the Company nor any of its
------------------------------
Subsidiaries shall merge or enter into a consolidation or sell, lease, exchange,
sell and lease back, sublease or otherwise dispose of any of its assets (or
become contractually committed to do so), except the following:
6.11.1. The Company and any of its Subsidiaries may sell or
otherwise dispose of (a) inventory and Cash Equivalents in the ordinary
course of business and (b) tangible assets to be replaced in the ordinary
course of business within 12 months by other tangible assets of equal or
greater value or (c) tangible assets (other than Towers) that are no longer
used or useful in the business of the Company or such Subsidiary.
6.11.2. Any Wholly Owned Subsidiary of the Company may merge or be
liquidated into the Company or any other Wholly Owned Subsidiary of the
Company so long as after giving effect to any such merger to which the
Company is a party the Company shall be the surviving or resulting Person.
6.11.3. Mergers constituting Investments permitted by Section 6.9.5.
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6.11.4. Licensing of and leasing of Tower space and intangible
assets for fair value in the ordinary course of business.
6.11.5. So long as immediately before and after giving effect
thereto no Default exists, transfers for fair value to any Person who sells
or leases a Tower or Tower Company to the Company or one of its
Subsidiaries of such portions of the real property on which the applicable
Towers are located as are not necessary for the operation of the Towers.
6.11.6. So long as the Net Asset Sale Proceeds thereof are applied
to repay the Loan as required by Section 4.3.3 and so long as immediately
before and after giving effect thereto no Default exists, the Company and
its Subsidiaries may sell for fair value during any year Towers
contributing not more than 5% of Consolidated Tower Revenues for the
Company's most recently completed fiscal year; provided, however, that the
-------- -------
sum of the foregoing percentages of Consolidated Tower Revenues for all
Towers sold pursuant to this Section 6.11.6 since the date hereof shall not
exceed 15%.
6.11.7. So long as immediately before and after giving effect
thereto no Default exists, the Company and its Subsidiaries may enter into
sale and leaseback transactions with respect to the real property upon
which the Towers are located (but not with respect to the Towers
themselves) in an aggregate amount not to exceed $200,000.
6.12. Issuance of Stock by Subsidiaries; Subsidiary Distributions.
-----------------------------------------------------------
6.12.1. Issuance of Stock by Subsidiaries. No Subsidiary shall
---------------------------------
issue or sell any shares of its capital stock or other evidence of beneficial
ownership to any Person other than (a) the Company or any Wholly Owned
Subsidiary of the Company, which shares shall have been pledged to the Agent as
part of the Credit Security to the extent required by the Guarantee and Security
Agreement and (b) directors of Subsidiaries as qualifying shares to the extent
required by Legal Requirements and, in the case of Foreign Subsidiaries, shares
required by Legal Requirements to be held by foreign nationals.
6.12.2. No Restrictions on Subsidiary Distributions. Except for
-------------------------------------------
this Agreement and the Credit Documents, neither the Company nor any Subsidiary
shall enter into or be bound by any agreement (including covenants requiring the
maintenance of specified amounts of net worth or working capital) restricting
the right of any Subsidiary to make Distributions or extensions of credit to the
Company (directly or indirectly through another Subsidiary); provided, however,
-------- -------
that Foreign Subsidiaries may become subject to such restrictions pursuant to
loan agreements with respect to Indebtedness permitted by Section 6.6.14.
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6.13. Voluntary Prepayments of Other Indebtedness. Neither the Company
-------------------------------------------
nor any of its Subsidiaries shall make any voluntary prepayment of principal of
or interest on any Financing Debt (other than the Credit Obligations) or make
any voluntary redemptions or repurchases of Financing Debt (other than the
Credit Obligations); provided, however, that Company may make the payments
-------- -------
permitted by Section 6.10.4 on subordinated Indebtedness permitted by Sections
6.6.8 and 6.6.11.
6.14. Derivative Contracts. Neither the Company nor any of its
--------------------
Subsidiaries shall enter into any Interest Rate Protection Agreement, foreign
currency exchange contract or other financial or commodity derivative contracts
except to provide hedge protection for an underlying economic transaction in the
ordinary course of business.
6.15. Negative Pledge Clauses. Neither the Company nor any of its
-----------------------
Subsidiaries shall enter into any agreement, instrument, deed or lease which
prohibits or limits the ability of the Company or any of its Subsidiaries to
create, incur, assume or suffer to exist any Lien upon any of their respective
properties, assets or revenues, whether now owned or hereafter acquired, or
which requires the grant of any collateral for such obligation if collateral is
granted for another obligation, except the following:
6.15.1. This Agreement and the other Credit Documents.
6.15.2. Covenants in documents creating Liens permitted by Section
6.8 prohibiting further Liens on the assets encumbered thereby.
6.16. ERISA, etc. Each of the Company and its Subsidiaries shall comply,
----------
and shall cause all ERISA Group Persons to comply, in all material respects,
with the provisions of ERISA and the Code applicable to each Plan. Each of the
Company and its Subsidiaries shall meet, and shall cause all ERISA Group Persons
to meet, all minimum funding requirements applicable to them with respect to any
Plan pursuant to section 302 of ERISA or section 412 of the Code, without giving
effect to any waivers of such requirements or extensions of the related
amortization periods which may be granted. At no time shall the Accumulated
Benefit Obligations under any Plan that is not a Multiemployer Plan exceed the
fair market value of the assets of such Plan allocable to such benefits by more
than $1,000,000. The Company and its Subsidiaries shall not withdraw, and shall
cause all other ERISA Group Persons not to withdraw, in whole or in part, from
any Multiemployer Plan so as to give rise to withdrawal liability exceeding
$1,000,000 in the aggregate. At no time shall the actuarial present value of
unfunded liabilities for post-employment health care benefits (other than COBRA
continuation coverage benefits), whether or not provided under a Plan,
calculated in a manner consistent with Statement No. 106 of the Financial
Accounting Standards Board, exceed $1,000,000.
6.17. Transactions with Affiliates. Neither the Company nor any of its
----------------------------
Subsidiaries shall effect any transaction with any of their respective
Affiliates (except for the Company and
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its Subsidiaries) on a basis less favorable to the Company and its Subsidiaries
than would be the case if such transaction had been effected with a non-
Affiliate.
6.18. Interest Rate Protection. At such time as the amount of the Term
------------------------
Loan outstanding equals or exceeds $32,500,000, the Company shall obtain and
thereafter keep in effect one or more Interest Rate Protection Agreements
conforming to International Securities Dealers Association standards, each in
form and substance reasonably satisfactory to the Agent, covering a notional
amount of at least $32,500,000 in each case for an aggregate period of not less
than three years.
6.19. Environmental Laws.
------------------
6.19.1. Compliance with Law and Permits. Each of the Company and
-------------------------------
its Subsidiaries shall use and operate all of its facilities and properties
in material compliance with all Environmental Laws, keep in effect all
necessary permits, approvals, certificates, licenses and other
authorizations relating to environmental matters and remain in material
compliance therewith, and handle all Hazardous Materials in material
compliance with all applicable Environmental Laws.
6.19.2. Notice of Claims, etc. Each of the Company and its
---------------------
Subsidiaries shall immediately notify the Agent, and provide copies upon
receipt, of all written claims, complaints, notices or inquiries from
governmental authorities relating to the condition of its facilities and
properties or compliance with Environmental Laws, and shall promptly cure
and have dismissed with prejudice to the reasonable satisfaction of the
Agent any actions and proceedings relating to compliance with Environmental
Laws.
6.20. Tower Matters.
-------------
6.20.1. Tower Construction Requirements. Prior to commencement of
-------------------------------
construction of any Tower to be owned by the Company or any of its
Subsidiaries, the Company shall enter into a standard lease agreement with
respect to such Tower with a licensed cellular operator, PCS A-F Block
Provider or ESMR Operator as the anchor tenant. The anchor tenant shall be
reasonably acceptable to the Agent.
6.20.2. No Removal of Towers. None of the Towers located on
--------------------
Designated Real Property shall be removed from their locations without the
prior written consent of the Required Lenders, which consent shall not be
unreasonably withheld or delayed, unless: (a) (i) such removal is in the
ordinary course of business, (ii) such actions and filings of record as may
be necessary to continue the first priority perfected Lien of the Lenders
in the real property or leasehold upon which such Tower is finally located
have been taken and (iii) in the case of leaseholds, the Agent has received
Estoppel and Consent Letters relating to the new locations, or (b) such
removal is necessary to satisfy any Legal Requirement or a properly issued
order or mandate of any governmental
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authority or (c) any Tower so removed has been damaged and the Lenders have
required the insurance proceeds relating thereto be applied to repayment of
the Loan in accordance with Section 4.3.3.
6.20.3. Pledged Towers. For each period of four consecutive fiscal
--------------
quarters of the Company, commencing with the fiscal quarter ending
September 30, 1997, Pledged Towers as of the end of such period shall have
contributed at least 80% of Consolidated Tower Revenues.
The Company and its Subsidiaries shall have the right to obtain
releases and discharges of any Mortgages and Estoppel and Consent Letters
with respect to Pledged Towers upon 10 Banking Days prior notice to the
Agent so long as after giving effect to any such releases and discharges
Pledged Towers shall have contributed at least 80% of Consolidated Tower
Revenues for the period of four consecutive fiscal quarters of the Company
then most recently ended.
With respect to each Pledged Tower, the Obligors shall have duly
authorized, executed, acknowledged and delivered to the Agent a mortgage
(or deed of trust) on each real property on which such Pledged Tower is
located in substantially the form of Exhibit 6.20.3A and a leasehold
mortgage (or leasehold deed of trust) on each real property leased by the
Company and its Subsidiaries on which such Pledged Tower is located in
substantially the form of Exhibit 6.20.3B, with Estoppel and Consent
Letters from the lessors in substantially the form of Exhibit 6.20.3C
(each, an "Estoppel and Consent Letter"), lessor waivers and any other
---------------------------
documents required to allow for the recording or filing of a leasehold
mortgage, in each case in form and substance reasonably satisfactory to the
Agent, together with, for each such real property: (a) copies of title
insurance policies to the extent obtained by the Company or any of its
Subsidiaries, (b) to the extent obtained by the Company or any of its
Subsidiaries, an environmental site assessment report in such form, with
such conclusions and from such environmental engineering firm as are
reasonably satisfactory to the Agent, (c) to the extent obtained by the
Company or any of its Subsidiaries, a survey on such real property that is
reasonably satisfactory to the Agent and (d) a legal opinion of local
counsel with respect to the recording and enforceability of such mortgages
and leasehold mortgages in substantially the form of Exhibit 6.20.3D.
7. REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders to extend
------------------------------
credit to the Company hereunder, each of the Company and the Guarantors jointly
and severally represents and warrants as follows:
7.1. Organization and Business.
-------------------------
7.1.1 The Company. The Company is a duly organized and validly
-----------
existing corporation, in good standing under the laws of Florida, with all
corporate power and
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authority necessary to (a) enter into and perform this Agreement and each
other Credit Document to which it is party, (b) guarantee the Credit
Obligations, (c) grant the Agent for the benefit of the Lenders the
security interests in the Credit Security owned by it to secure the Credit
Obligations and (d) own its properties and carry on the business now
conducted or proposed to be conducted by it. Certified copies of the
Charter and By-laws of the Company have been previously delivered to the
Agent and are correct and complete. Exhibit 7.1, as from time to time
hereafter supplemented in accordance with Sections 6.4.1 and 6.4.2, sets
forth, as of the later of the date hereof or the end of the most recent
fiscal quarter for which financial statements are required to be furnished
in accordance with such Sections, (i) the jurisdiction of incorporation of
the Company, (ii) the address of the Company's principal executive office
and chief place of business, (iii) each name, including any trade name,
under which the Company conducts its business and (iv) the jurisdictions in
which the Company keeps tangible personal property.
7.1.2. Subsidiaries. Each Subsidiary of the Company is duly
------------
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized, with all corporate power and
authority necessary to (a) enter into and perform this Agreement and each
other Credit Document to which it is party, (b) guarantee the Credit
Obligations, (c) grant the Agent for the benefit of the Lenders the
security interest in the Credit Security owned by such Subsidiary to secure
the Credit Obligations and (d) own its properties and carry on the business
now conducted or proposed to be conducted by it. Certified copies of the
Charter and By-laws of each Subsidiary of the Company have been previously
delivered to the Agent and are correct and complete. Exhibit 7.1, as from
time to time hereafter supplemented in accordance with Sections 6.4.1 and
6.4.2, sets forth, as of the later of the date hereof or the end of the
most recent fiscal quarter for which financial statements are required to
be furnished in accordance with such Sections, (i) the name and
jurisdiction of organization of each Subsidiary of the Company, (ii) the
address of the chief executive office and principal place of business of
each such Subsidiary, (iii) each name under which each such Subsidiary
conducts its business, (iv) each jurisdiction in which each such Subsidiary
keeps tangible personal property, and (v) the number of authorized and
issued shares and ownership of each such Subsidiary.
7.1.3. Qualification. Each of the Company and its Subsidiaries is
-------------
duly and legally qualified to do business as a foreign corporation or other
entity and is in good standing in each state or jurisdiction in which such
qualification is required and is duly authorized, qualified and licensed
under all laws, regulations, ordinances or orders of public authorities, or
otherwise, to carry on its business in the places and in the manner in
which it is conducted, except for failures to be so qualified, authorized
or licensed which would not in the aggregate result, or create a material
risk of resulting, in any Material Adverse Change.
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7.1.4. Capitalization. No options, warrants, conversion rights,
--------------
preemptive rights or other statutory or contractual rights to purchase
shares of capital stock or other securities of any Subsidiary now exist,
nor has any Subsidiary authorized any such right, nor is any Subsidiary
obligated in any other manner to issue shares of its capital stock or other
securities.
7.2. Financial Statements and Other Information; Material Agreements.
---------------------------------------------------------------
7.2.1. Financial Statements and Other Information. The Company has
------------------------------------------
previously furnished to the Lenders copies of the following:
(a) The audited Consolidated balance sheets of the Company's
Subsidiaries as at December 31 in each of 1994, 1995 and 1996 and the
audited Consolidated statements of income, of changes in shareholders'
equity and of cash flows of the Company's Subsidiaries for the fiscal years
then ended.
(b) The unaudited Consolidated balance sheet of the Company and
its Subsidiaries as at March 31, 1997 and the unaudited Consolidated
statements of income, of changes in shareholders' equity and of cash flows
of the Company and its Subsidiaries for the portion of the fiscal year then
ended.
(c) The five-year financial and operational projections for the
Company and its Subsidiaries dated June 1997.
(d) Private Placement Offering Memorandum for the Series A
Preferred Stock dated as of February 28, 1997, as updated as of May 15,
1997 (the "Offering Memorandum").
-------------------
The audited financial statements (including the notes thereto)
referred to in clause (a) above were prepared in accordance with GAAP and
fairly present in all material respects the financial position of the
Company's Subsidiaries on a Consolidated basis at the respective dates
thereof and the results of their operations for the periods covered
thereby. The unaudited financial statements referred to in clause (b)
above were prepared in accordance with GAAP and fairly present in all
material respects the financial position of the Company and its
Subsidiaries at the respective dates thereof and the results of their
operations for the periods covered thereby, subject to normal year-end
audit adjustments and the addition of footnotes in the case of interim
financial statements. Neither the Company nor any of its Subsidiaries has
any known contingent liability material to the Company and its Subsidiaries
on a Consolidated basis which is not reflected in the balance sheets
referred to in clauses (a) or (b) above (or delivered pursuant to Sections
6.4.1 or 6.4.2) or in the notes thereto.
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In the Company's judgment, the financial and operational projections
referred to in clause (c) above constitute a reasonable basis as of the
Initial Closing Date for the assessment of the future performance of the
Company and its Subsidiaries during the periods indicated therein, it being
understood that any projected financial information represents an estimate,
based on various assumptions, of future results of operations which may or
may not in fact occur.
As of the date thereof, the Offering Memorandum did not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not misleading
in light of the circumstances under which they were made; provided,
--------
however, that the descriptions in the Offering Memorandum of other
-------
documents and agreements are intended to be summaries only and do not
provide comprehensive descriptions of the terms and conditions contained in
such documents and agreements.
7.2.2. Material Agreements. The Company has previously furnished
-------------------
to the Lenders correct and complete copies, including all exhibits,
schedules and amendments thereto, of the agreements and instruments, each
as in effect on the date hereof, listed in Exhibit 7.2.2, which constitute
all agreements and instruments material to the Company and its Subsidiaries
on a Consolidated basis (the "Material Agreements").
-------------------
7.3. Agreements Relating to Financing Debt, Investments, etc. Exhibit
--------------------------------------------------------
7.3, as from time to time hereafter supplemented in accordance with Sections
6.4.1 and 6.4.2, sets forth (a) the amounts (as of the dates indicated in
Exhibit 7.3, as so supplemented) of all Financing Debt of the Company and its
Subsidiaries and all agreements which relate to such Financing Debt, (b) all
Liens and Guarantees with respect to such Financing Debt, (c) all agreements
which directly or indirectly require the Company or any Subsidiary to make any
Investment, (d) material license agreements with respect to the products of the
Company and its Subsidiaries, including the parties thereto and the expiration
dates thereof and (e) all trademarks, tradenames, service marks, service names
and patents registered with the federal Patent and Trademark Office (or with
respect to which applications for such registration have been filed). The
Company has furnished the Lenders with correct and complete copies of any
agreements described in clauses (a) through (e) above requested by the Required
Lenders.
7.4. Changes in Condition. Except as otherwise disclosed in writing to
--------------------
the Lenders prior to the date hereof, since December 31, 1996, no Material
Adverse Change has occurred and between December 31, 1996 and the date hereof,
neither the Company nor any Subsidiary of the Company has entered into any
material transaction outside the ordinary course of business except for the
transactions contemplated by this Agreement and the Material Agreements.
7.5. Title to Assets. The Company and its Subsidiaries have good title
---------------
to all assets necessary for or used in the operations of their business as now
conducted by them and
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reflected in the most recent balance sheet referred to in Section 7.2.1 (or the
balance sheet most recently furnished to the Lenders pursuant to Sections 6.4.1
or 6.4.2), and to all assets acquired subsequent to the date of such balance
sheet, subject to no Liens except for Liens permitted by Section 6.8 and except
for assets disposed of as permitted by Section 6.11.
7.6. Operations in Conformity With Law, etc. The operations of the
--------------------------------------
Company and its Subsidiaries as now conducted or proposed to be conducted are
not in violation of, nor is the Company or its Subsidiaries in default under,
any Legal Requirement presently in effect, except for such violations and
defaults as do not and will not, in the aggregate, result, or create a material
risk of resulting, in any Material Adverse Change. The Company has received no
notice of any such violation or default and has no knowledge of any basis on
which the operations of the Company or its Subsidiaries, as now conducted and as
currently proposed to be conducted after the date hereof, would be held so as to
violate or to give rise to any such violation or default.
7.7. Litigation. No litigation, at law or in equity, or any proceeding
----------
before any court, board or other governmental or administrative agency or any
arbitrator is pending or, to the knowledge of the Company or any Guarantor,
threatened which involves any material risk of any final judgment, order or
liability which, after giving effect to any applicable insurance, has resulted,
or creates a material risk of resulting, in any Material Adverse Change or which
seeks to enjoin the consummation, or which questions the validity, of any of the
transactions contemplated by this Agreement or any other Credit Document. No
judgment, decree or order of any court, board or other governmental or
administrative agency or any arbitrator has been issued against or binds the
Company or any of its Subsidiaries which has resulted, or creates a material
risk of resulting, in any Material Adverse Change.
7.8. Authorization and Enforceability. Each of the Company and each
--------------------------------
other Obligor has taken all corporate action required to execute, deliver and
perform this Agreement and each other Credit Document to which it is party. No
consent of stockholders of the Company which has not been obtained is necessary
in order to authorize the execution, delivery or performance of this Agreement
or any other Credit Document to which the Company is party. Each of this
Agreement and each other Credit Document constitutes the legal, valid and
binding obligation of each Obligor party thereto and is enforceable against such
Obligor in accordance with its terms.
7.9. No Legal Obstacle to Agreements. Neither the execution and delivery
-------------------------------
of this Agreement or any other Credit Document, nor the making of any borrowings
hereunder, nor the guaranteeing of the Credit Obligations, nor the securing of
the Credit Obligations with the Credit Security, nor the consummation of any
transaction referred to in or contemplated by this Agreement or any other Credit
Document, nor the fulfillment of the terms hereof or thereof or of any other
agreement, instrument, deed or lease contemplated by this Agreement or any other
Credit Document, has constituted or resulted in or will constitute or result in:
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(a) any breach or termination of the provisions of any agreement,
instrument, deed or lease to which the Company, any of its Subsidiaries or
any other Obligor is a party or by which it is bound, or of the Charter or
By-laws of the Company, any of its Subsidiaries or any other Obligor;
(b) the violation of any law, statute, judgment, decree or
governmental order, rule or regulation applicable to the Company, any of
its Subsidiaries or any other Obligor;
(c) the creation under any agreement, instrument, deed or lease of
any Lien (other than Liens on the Credit Security which secure the Credit
Obligations) upon any of the assets of the Company, any of its Subsidiaries
or any other Obligor; or
(d) any redemption, retirement or other repurchase obligation of
the Company, any of its Subsidiaries or any other Obligor under any
Charter, By-law, agreement, instrument, deed or lease.
No approval, authorization or other action by, or declaration to or filing with,
any governmental or administrative authority or any other Person which has not
been obtained is required to be obtained or made by the Company, any of its
Subsidiaries or any other Obligor in connection with the execution, delivery and
performance of this Agreement, the Notes or any other Credit Document, the
transactions contemplated hereby or thereby, the making of any borrowing
hereunder, the guaranteeing of the Credit Obligations or the securing of the
Credit Obligations with the Credit Security (other than filings necessary to
perfect the Agent's security interest in the Credit Security).
7.10. Defaults. Neither the Company nor any of its Subsidiaries is in
--------
default under any provision of its Charter or By-laws or of this Agreement or
any other Credit Document. Neither the Company nor any of its Subsidiaries is in
default under any provision of any agreement, instrument, deed or lease to which
it is party or by which it or its property is bound so as to result, or create a
material risk of resulting, in any Material Adverse Change. Neither the Company
nor any of its Subsidiaries has violated any law, judgment, decree or
governmental order, rule or regulation, in each case so as to result, or create
a material risk of resulting, in any Material Adverse Change.
7.11. Licenses, etc. The Company and its Subsidiaries have all patents,
-------------
patent applications, patent licenses, patent rights, trademarks, trademark
rights, trade names, trade name rights, copyrights, licenses, franchises,
permits, authorizations and other rights as are necessary for the conduct of the
business of the Company and its Subsidiaries as now conducted by them and the
lack of which would result, or create a material risk of resulting, in any
Material Adverse Change. All of the foregoing are in full force and effect in
all material respects, and each of the Company and its Subsidiaries is in
substantial compliance with the foregoing without any known conflict with the
valid rights of others which has resulted, or
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creates a material risk of resulting, in any Material Adverse Change. No event
has occurred which permits, or after notice or lapse of time or both would
permit, the revocation or termination of any such license, franchise or other
right or which affects the rights of any of the Company and its Subsidiaries
thereunder so as to result, or to create a material risk of resulting, in any
Material Adverse Change. No litigation or other proceeding or dispute exists
with respect to the validity or, where applicable, the extension or renewal, of
any of the foregoing which has resulted, or creates a material risk of
resulting, in any Material Adverse Change.
7.12. Tax Returns. Each of the Company and its Subsidiaries has filed all
-----------
material tax and information returns which are required to be filed by it and
has paid, or made adequate provision for the payment of, all taxes which have or
may become due pursuant to such returns or to any assessment received by it,
other than taxes and assessments being contested by the Company and its
Subsidiaries in good faith by appropriate proceedings and for which adequate
reserves have been taken in accordance with GAAP. Neither the Company nor any
of its Subsidiaries knows of any material additional assessments or any basis
therefor. The Company reasonably believes that the charges, accruals and
reserves on the books of the Company and its Subsidiaries in respect of taxes or
other governmental charges are adequate.
7.13. Certain Business Representations.
--------------------------------
7.13.1. Labor Relations. No dispute or controversy between the
---------------
Company or any of its Subsidiaries and any of their respective employees
has resulted, or is reasonably likely to result, in any Material Adverse
Change, and neither the Company nor any of its Subsidiaries anticipates
that its relationships with its unions or employees will result, or are
reasonably likely to result, in any Material Adverse Change. The Company
and each of its Subsidiaries is in compliance in all material respects with
all federal and state laws with respect to (a) non-discrimination in
employment with which the failure to comply, in the aggregate, has
resulted, or creates a material risk of resulting, in a Material Adverse
Change and (b) the payment of wages.
7.13.2. Antitrust. Each of the Company and its Subsidiaries is in
---------
compliance in all material respects with all federal and state antitrust
laws relating to its business and the geographic concentration of its
business.
7.13.3. Tower Sites. At least a majority of the Towers that do not
-----------
constitute Pledged Towers are constructed so as to be capable of being
moved from their present locations and except to the extent recordation of
any renewal, extension, amendment, assignment or other instrument in
connection with any lease of real property in the applicable public records
may be required in order to permit removal of a Tower, the Company and its
Subsidiaries have the right to remove such Towers from their present
locations.
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7.13.4. Real Property Leases. The present and contemplated use of
--------------------
the real property owned or leased by the Company for the operation of
Towers is in compliance in all material respects with all applicable zoning
ordinances and regulations and other laws and regulations where failure so
to comply would result, or create reasonable risk of resulting, in a
Material Adverse Change. Each Lease is in full force and effect, the
Company or one of its Subsidiaries has all rights of the lessee thereunder,
there has been no default in the performance of any of its terms or
conditions by any party thereto, and no claims of default have been
asserted with respect thereto where such default would result, or create a
reasonable risk of resulting, in a Material Adverse Change.
7.13.5. FCC and FAA Matters. The Company (a) has duly and timely
-------------------
filed all material reports, registrations and other material filings, if
any, which are required to be filed by it or any of its Subsidiaries under
the Communications Act or any other applicable law, rule or regulation of
any governmental authority, including the FCC and the FAA, the non-filing
of which would not result, or be reasonably likely to result, in a Material
Adverse Change, and (b) is in compliance with all such laws, rules,
regulations and ordinances, including those promulgated by the FCC and the
FAA, to the extent the noncompliance with which would result, or be
reasonably likely to result, in a Material Adverse Change. All information
provided by or on behalf of the Company or any Affiliate in any material
filing, if any, with the FCC and the FAA relating to the business of the
Company and its Subsidiaries was, to the knowledge of such Person at the
time of filing, complete and correct in all material respects when made,
and the FCC and the FAA have been notified of any substantial or
significant changes in such information as may be required in accordance
with applicable Legal Requirements.
7.14. Environmental Regulations.
-------------------------
7.14.1. Environmental Compliance. To the knowledge of the Company
------------------------
and its Subsidiaries, each of the Company and its Subsidiaries is in
compliance in all material respects with the Clean Air Act, the Federal
Water Pollution Control Act, the Marine Protection Research and Sanctuaries
Act, RCRA, CERCLA and any other Environmental Law in effect in any
jurisdiction in which any properties of the Company or any of its
Subsidiaries are located or where any of them conducts its business, and
with all applicable published rules and regulations (and applicable
standards and requirements) of the federal Environmental Protection Agency
and of any similar agencies in states or foreign countries in which the
Company or its Subsidiaries conducts its business other than those which in
the aggregate have not resulted, and do not create a material risk of
resulting, in a Material Adverse Change.
7.14.2. Environmental Litigation. No suit, claim, action or
------------------------
proceeding of which the Company or any of its Subsidiaries has been given
notice or otherwise has
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knowledge is now pending before any court, governmental agency or board or
other forum, or to the Company's or any of its Subsidiaries knowledge,
threatened by any Person (nor to the Company's or any of its Subsidiaries'
knowledge, does any factual basis exist therefor) for, and neither the
Company nor any of its Subsidiaries have received written correspondence
from any federal, state or local governmental authority with respect to:
(a) noncompliance by the Company or any of its Subsidiaries with
any Environmental Law;
(b) personal injury, wrongful death or other tortious conduct
relating to materials, commodities or products used, generated, sold,
transferred or manufactured by the Company or any of its Subsidiaries
(including products made of, containing or incorporating asbestos, lead or
other Hazardous Material, commodities or toxic substances); or
(c) the release into the environment by the Company or any of its
Subsidiaries of any Hazardous Material generated by the Company or any of
its Subsidiaries whether or not occurring at or on a site owned, leased or
operated by the Company or any of its Subsidiaries.
7.14.3. Hazardous Material. To the knowledge of the Company and
------------------
its Subsidiaries, any waste disposal or dump sites at which Hazardous
Material generated by either the Company or any of its Subsidiaries has
been disposed of directly by the Company or any of its Subsidiaries and all
independent contractors to whom the Company or any of its Subsidiaries have
delivered Hazardous Material, or to the Company's or any of its
Subsidiaries' knowledge, where Hazardous Material finally came to be
located, has not resulted, and does not create a material risk of
resulting, in a Material Adverse Change.
7.14.4. Environmental Condition of Properties. To the knowledge
-------------------------------------
of the Company and its Subsidiaries, none of the properties owned or leased
by the Company or any of its Subsidiaries has been used as a treatment,
storage or disposal site, other than as disclosed in Exhibit 7.14. To the
knowledge of the Company and its Subsidiaries, no Hazardous Material is
present in any real property currently or formerly owned or operated by the
Company or any of its Subsidiaries except that which has not resulted, and
does not create a material risk of resulting, in a Material Adverse Change.
7.15. Pension Plans. Each Plan (other than a Multiemployer Plan) and, to
-------------
the knowledge of the Company and its Subsidiaries, each Multiemployer Plan is in
material compliance with the applicable provisions of ERISA and the Code. Each
Multiemployer Plan and each Plan that constitutes a "defined benefit plan" (as
defined in ERISA) are set forth in
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Exhibit 7.15. Each ERISA Group Person has met all of the funding standards
applicable to all Plans that are not Multiemployer Plans, and no condition
exists which would permit the institution of proceedings to terminate any Plan
that is not a Multiemployer Plan under section 4042 of ERISA. To the best
knowledge of the Company and each Subsidiary, no Plan that is a Multiemployer
Plan is currently insolvent or in reorganization or has been terminated within
the meaning of ERISA.
7.16. Government Regulation; Margin Stock.
-----------------------------------
7.16.1. Government Regulation. Neither the Company nor any of its
---------------------
Subsidiaries, nor any Person controlling the Company or any of its
Subsidiaries or under common control with the Company or any of its
Subsidiaries, is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Investment Company Act, the
Interstate Commerce Act or any statute or regulation which regulates the
incurring by the Company or any of its Subsidiaries of Financing Debt as
contemplated by this Agreement and the other Credit Documents.
7.16.2. Margin Stock. Neither the Company nor any of its
------------
Subsidiaries owns any Margin Stock.
7.17. Disclosure. Neither this Agreement nor any other Credit Document to
----------
be furnished to the Lenders by or on behalf of the Company or any of its
Subsidiaries in connection with the transactions contemplated hereby or by such
Credit Document contains any untrue statement of material fact or omits to state
a material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.
No fact is actually known to the Company or any of its Subsidiaries which has
resulted, or in the future (so far as the Company or any of its Subsidiaries can
reasonably foresee) will result, or creates a material risk of resulting, in any
Material Adverse Change, except to the extent that present or future general
economic conditions may result in a Material Adverse Change.
8. DEFAULTS.
--------
8.1. Events of Default. The following events are referred to as "Events
----------------- ------
of Default":
- ----------
8.1.1. Payment. The Company shall fail to make any payment in
-------
respect of: (a) interest or any fee on or in respect of any of the Credit
Obligations owed by it as the same shall become due and payable, and such
failure shall continue for a period of three Banking Days, or (b) any
Credit Obligation with respect to payments made by any Letter of Credit
Issuer under any Letter of Credit or any draft drawn thereunder within
three Banking Days after demand therefor by such Letter of Credit Issuer or
(c) principal of any of the Credit Obligations owed by it as the same shall
become due, whether at maturity or by acceleration or otherwise.
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8.1.2. Specified Covenants. The Company or any of its
-------------------
Subsidiaries shall fail to perform or observe any of the provisions of
Section 6.4.6 or Sections 6.5 through 6.20.
8.1.3. Other Covenants. The Company, any of its Subsidiaries or
---------------
any other Obligor shall fail to perform or observe any other covenant,
agreement or provision to be performed or observed by it under this
Agreement or any other Credit Document, and such failure shall not be
rectified or cured to the satisfaction of the Required Lenders within 30
days after the earlier of (a) notice thereof by the Agent to the Company or
(b) a Financial Officer shall have actual knowledge thereof.
8.1.4. Representations and Warranties. Any representation or
------------------------------
warranty of or with respect to the Company, any of its Subsidiaries or any
other Obligor made to the Lenders or the Agent in or pursuant to this
Agreement or any other Credit Document, or in any financial statement,
report, notice, mortgage, assignment, UCC financing statement or
certificate delivered to the Agent or any of the Lenders by the Company,
any of its Subsidiaries or any other Obligor in connection herewith or
therewith, shall be false in any material respect on the date as of which
it was made.
8.1.5. Cross Default, etc.
------------------
(a) The Company or any of its Subsidiaries shall fail to make any
payment when due (after giving effect to any applicable grace periods) in
respect of any Financing Debt (other than the Credit Obligations)
outstanding in an aggregate amount of principal (whether or not due) and
accrued interest exceeding $1,000,000;
(b) the Company or any of its Subsidiaries shall fail to perform
or observe the terms of any agreement or instrument relating to such
Financing Debt, and such failure shall continue, without having been duly
cured, waived or consented to, beyond the period of grace, if any,
specified in such agreement or instrument, and such failure shall permit
the acceleration of such Financing Debt;
(c) all or any part of such Financing Debt of the Company or any
of its Subsidiaries shall be accelerated or shall become due or payable
prior to its stated maturity (except with respect to voluntary prepayments
thereof) for any reason whatsoever;
(d) any Lien on any property of the Company or any of its
Subsidiaries securing any such Financing Debt shall be enforced by
foreclosure or similar action; or
(e) any holder of any such Financing Debt shall exercise any right
of rescission with respect to the issuance thereof or put, mandatory
prepayment or repurchase rights
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against any Obligor with respect to such Financing Debt (other than any
such rights that may be satisfied with "payment in kind" notes or other
similar securities).
8.1.6. Ownership; Liquidation; etc. Except as permitted by
---------------------------
Section 6.11:
(a) the Company shall cease to own, directly or indirectly, all
the capital stock of its Subsidiaries, except to the extent permitted by
Section 6.12.1; or
(b) Steven E. Bernstein, ABS Capital Partners II, L.P., ABS
Employees' Venture Fund Limited Partnership, TA Venture Investors Limited
Partnership, Advent VII, L.P., Advent Atlantic and Pacific III, LP and
various members of the Hillman family (or trusts established for their
benefit) shall cease to own, beneficially and of record, at least a
majority of the voting stock and of the total equity capital of the
Company; or
(c) Steven E. Bernstein shall cease to be actively involved in the
executive management of the Company and a replacement reasonably
satisfactory to the Required Lenders has not been hired within six months
thereof; or
(d) the Company or any of its Subsidiaries or any other Obligor
shall initiate any action to dissolve, liquidate or otherwise terminate its
existence.
8.1.7. Enforceability, etc. Any Credit Document shall cease for
-------------------
any reason (other than the scheduled termination thereof in accordance with
its terms) to be enforceable in accordance with its terms or in full force
and effect; or any party to any Credit Document shall so assert in a
judicial or similar proceeding; or the security interests created by this
Agreement or any other Credit Documents shall cease to be enforceable and
of the same effect and priority purported to be created hereby.
8.1.8. Judgments. A final judgment (a) which, with other
---------
outstanding final judgments against the Company and its Subsidiaries,
exceeds an aggregate of $1,000,000 in excess of applicable insurance
coverage shall be rendered against the Company or any of its Subsidiaries,
or (b) which grants injunctive relief that results, or creates a material
risk of resulting, in a Material Adverse Change and in either case if (i)
within 60 days after entry thereof, such judgment shall not have been
discharged or execution thereof stayed pending appeal or (ii) within 60
days after the expiration of any such stay, such judgment shall not have
been discharged.
8.1.9. ERISA. Any "reportable event" (as defined in section 4043
-----
of ERISA) shall have occurred that reasonably could be expected to result
in termination of a Plan or the appointment by the appropriate United
States District Court of a trustee to administer any Plan or the imposition
of a Lien in favor of a Plan; or any ERISA Group Person shall fail to pay
when due amounts aggregating in excess of $1,000,000 which it
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shall have become liable to pay to the PBGC or to a Plan under Title IV of
ERISA; or notice of intent to terminate a Plan shall be filed under Title
IV of ERISA by any ERISA Group Person or administrator; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate or to cause a
trustee to be appointed to administer any Plan or a proceeding shall be
instituted by a fiduciary of any Plan against any ERISA Group Person to
enforce section 515 or 4219(c)(5) of ERISA and such proceeding shall not
have been dismissed within 30 days thereafter; or a condition shall exist
by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Plan must be terminated.
8.1.10. Bankruptcy, etc. The Company, any of its Subsidiaries or
---------------
any other Obligor shall:
(a) commence a voluntary case under the Bankruptcy Code or
authorize, by appropriate proceedings of its board of directors or other
governing body, the commencement of such a voluntary case;
(b) (i) have filed against it a petition commencing an involuntary
case under the Bankruptcy Code that shall not have been dismissed within 60
days after the date on which such petition is filed, or (ii) file an answer
or other pleading within such 60-day period admitting or failing to deny
the material allegations of such a petition or seeking, consenting to or
acquiescing in the relief therein provided, or (iii) have entered against
it an order for relief in any involuntary case commenced under the
Bankruptcy Code;
(c) seek relief as a debtor under any applicable law, other than
the Bankruptcy Code, of any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or alteration of the
rights of creditors, or consent to or acquiesce in such relief;
(d) have entered against it an order by a court of competent
jurisdiction (i) finding it to be bankrupt or insolvent, (ii) ordering or
approving its liquidation or reorganization as a debtor or any modification
or alteration of the rights of its creditors or (iii) assuming custody of,
or appointing a receiver or other custodian for, all or a substantial
portion of its property; or
(e) make an assignment for the benefit of, or enter into a
composition with, its creditors, or appoint, or consent to the appointment
of, or suffer to exist a receiver or other custodian for, all or a
substantial portion of its property.
8.2. Certain Actions Following an Event of Default. If any one or more
---------------------------------------------
Events of Default shall occur, then in each and every such case:
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8.2.1. Terminate Obligation to Extend Credit. Upon written
-------------------------------------
request of the Required Lenders, the Agent shall terminate the obligations
of the Lenders to make any further extensions of credit under the Credit
Documents by furnishing notice of such termination to the Company.
8.2.2. Specific Performance; Exercise of Rights. Upon written
----------------------------------------
request of the Required Lenders, the Agent shall proceed to protect and
enforce the Lenders' rights by suit in equity, action at law and/or other
appropriate proceeding, either for specific performance of any covenant or
condition contained in this Agreement or any other Credit Document (other
than Interest Rate Protection Agreements) or in any instrument or
assignment delivered to the Lenders pursuant to this Agreement or any other
Credit Document (other than Interest Rate Protection Agreements), or in aid
of the exercise of any power granted in this Agreement or any other Credit
Document (other than Interest Rate Protection Agreements) or any such
instrument or assignment.
8.2.3. Acceleration. Upon written request of the Required
------------
Lenders, the Agent shall by notice in writing to the Company (a) declare
all or any part of the unpaid balance of the Credit Obligations (other than
amounts under Interest Rate Protection Agreements) then outstanding to be
immediately due and payable, and (b) require the Company immediately to
deposit with the Agent in cash an amount equal to the then Letter of Credit
Exposure (which cash shall be held and applied as provided in Section 4.5),
and thereupon such unpaid balance or part thereof and such amount equal to
the Letter of Credit Exposure shall become so due and payable without
presentation, protest or further demand or notice of any kind, all of which
are hereby expressly waived; provided, however, that if a Bankruptcy
-------- -------
Default shall have occurred, the unpaid balance of the Credit Obligations
(other than amounts under Interest Rate Protection Agreements) shall
automatically become immediately due and payable.
8.2.4. Enforcement of Payment; Credit Security; Setoff. Upon
-----------------------------------------------
written request of the Required Lenders, the Agent shall proceed to enforce
payment of the Credit Obligations in such manner as it may elect, to
cancel, or instruct other Letter of Credit Issuers to cancel, any
outstanding Letters of Credit which permit the cancellation thereof and to
realize upon any and all rights in the Credit Security. The Lenders may
offset and apply toward the payment of the Credit Obligations (and/or
toward the curing of any Event of Default) any Indebtedness from the
Lenders to the respective Obligors, including any Indebtedness represented
by deposits in any account maintained with the Lenders, regardless of the
adequacy of any security for the Credit Obligations. The Lenders shall have
no duty to determine the adequacy of any such security in connection with
any such offset.
8.2.5. Cumulative Remedies. To the extent not prohibited by
-------------------
applicable law which cannot be waived, all of the Lenders' rights hereunder
and under each other Credit Document shall be cumulative.
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<PAGE>
8.3. Annulment of Defaults. Once an Event of Default has occurred, such
---------------------
Event of Default shall be deemed to exist and be continuing for all purposes of
the Credit Documents (other than Interest Rate Protection Agreements) until the
Required Lenders or the Agent (with the consent of the Required Lenders) shall
have waived such Event of Default in writing, stated in writing that the same
has been cured to such Lenders' reasonable satisfaction or entered into an
amendment to this Agreement which by its express terms cures such Event of
Default, at which time such Event of Default shall no longer be deemed to exist
or to have continued. No such action by the Lenders or the Agent shall extend
to or affect any subsequent Event of Default or impair any rights of the Lenders
upon the occurrence thereof. The making of any extension of credit during the
existence of any Default or Event of Default shall not constitute a waiver
thereof.
8.4. Waivers. To the extent that such waiver is not prohibited by the
-------
provisions of applicable law that cannot be waived, each of the Company and the
other Obligors waives:
(a) all presentments, demands for performance, notices of
nonperformance (except to the extent required by this Agreement or any
other Credit Document), protests, notices of protest and notices of
dishonor;
(b) any requirement of diligence or promptness on the part of the
Agent or any Lender in the enforcement of its rights under this Agreement,
the Notes or any other Credit Document;
(c) any and all notices of every kind and description which may be
required to be given by any statute or rule of law; and
(d) any defense (other than indefeasible payment in full) which it
may now or hereafter have with respect to its liability under this
Agreement, the Notes or any other Credit Document or with respect to the
Credit Obligations.
9. EXPENSES; INDEMNITY.
-------------------
9.1. Expenses. Whether or not the transactions contemplated hereby shall
--------
be consummated, the Company will pay:
(a) all reasonable expenses of the Agent and the Syndication Agent
(including the out-of-pocket expenses related to forming the group of
Lenders and reasonable fees and disbursements of the counsel to the Agent
and the Syndication Agent) in connection with the negotiation, preparation
and duplication of this Agreement and each other Credit Document,
examinations by and reports of the Agent's commercial financial examiners,
fixed asset appraisers and environmental consultants, the transactions
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contemplated hereby and thereby and amendments, waivers, consents and other
operations hereunder and thereunder;
(b) all recording and filing fees and transfer and documentary
stamp and similar taxes at any time payable in respect of this Agreement,
any other Credit Document, any Credit Security or the incurrence of the
Credit Obligations; and
(c) all other reasonable expenses incurred by the Lenders or the
holder of any Credit Obligation in connection with the enforcement of any
rights hereunder or under any other Credit Document or any work-out
negotiations relating to the Credit Obligations, including costs of
collection and reasonable attorneys' fees and expenses.
9.2. General Indemnity. The Company shall indemnify the Lenders and the
-----------------
Agent and hold them harmless from any liability, loss or damage resulting from
the violation by the Company of Section 2.4. In addition, the Company shall
indemnify each Lender, the Agent, the Syndication Agent, each of the Lenders' or
the Agent's or the Syndication Agent's directors, officers, employees, agents,
attorneys, accountants, consultants and each Person, if any, who controls any
Lender or the Agent or the Syndication Agent (each Lender, the Agent, the
Syndication Agent and each of such directors, officers, employees, agents,
attorneys, accountants, consultants and control Persons is referred to as an
"Indemnified Party") and hold each of them harmless from and against any and all
-----------------
claims, damages, liabilities and reasonable expenses (including reasonable fees
and disbursements of counsel with whom any Indemnified Party may consult in
connection therewith and all reasonable expenses of litigation or preparation
therefor) which any Indemnified Party may incur or which may be asserted against
any Indemnified Party in connection with (a) the Indemnified Party's compliance
with or contest of any subpoena or other process issued against it in any
proceeding involving the Company or any of its Subsidiaries or their Affiliates,
(b) any litigation or investigation involving the Company, any of its
Subsidiaries or their Affiliates, or any officer, director or employee thereof,
(c) the existence or exercise of any security rights with respect to the Credit
Security in accordance with the Credit Documents, or (d) this Agreement, any
other Credit Document or any transaction contemplated hereby or thereby;
provided, however, that the foregoing indemnity shall not apply to litigation
- -------- -------
commenced by the Company against the Lenders or the Agent or the Syndication
Agent which seeks enforcement of any of the rights of the Company hereunder or
under any other Credit Document and is determined adversely to the Lenders or
the Agent or the Syndication Agent in a final nonappealable judgment or to the
extent such claims, damages, liabilities and expenses result from a Lender's or
the Agent's or the Syndication Agent's gross negligence or willful misconduct.
9.3. Indemnity With Respect to Letters of Credit. The Company shall
-------------------------------------------
indemnify each Letter of Credit Issuer and its correspondents and hold each of
them harmless from and against any and all claims, losses, liabilities, damages
and reasonable expenses (including reasonable attorneys' fees) arising from or
in connection with any Letter of Credit, including any such claim, loss,
liability, damage or expense arising out of any transfer, sale, delivery,
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surrender or endorsement of any invoice, bill of lading, warehouse receipt or
other document at any time held by the Agent, any other Letter of Credit Issuer
or held for their respective accounts by any of their correspondents, in
connection with any Letter of Credit, except to the extent such claims, losses,
liabilities, damages and expenses result from gross negligence or willful
misconduct on the part of the Agent or any other Letter of Credit Issuer.
10. OPERATIONS; AGENT.
-----------------
10.1. Interests in Credits. The Percentage Interest of each Lender in the
--------------------
Loan and Letters of Credit, and the related Commitments, shall be computed based
on the maximum principal amount for each Lender as set forth in the Register, as
from time to time in effect. The current Percentage Interests are set forth in
Exhibit 10.1, which may be updated by the Agent from time to time to conform to
the Register.
10.2. Agent's Authority to Act, etc. Each of the Lenders appoints and
-----------------------------
authorizes BankBoston to act for the Lenders as the Lenders' Agent in connection
with the transactions contemplated by this Agreement and the other Credit
Documents (other than Interest Rate Protection Agreements) on the terms set
forth herein and therein. In acting hereunder, the Agent is acting for its own
account to the extent of its Percentage Interest and for the account of each
other Lender to the extent of the Lenders' respective Percentage Interests, and
all action in connection with the enforcement of, or the exercise of any
remedies (other than the Lenders' rights of set-off as provided in Section 8.2.4
or in any Credit Document) in respect of the Credit Obligations and Credit
Documents shall be taken by the Agent.
10.3. Company to Pay Agent, etc. The Company and each Guarantor shall be
-------------------------
fully protected in making all payments in respect of the Credit Obligations
(other than payments under Interest Rate Protection Agreements) to the Agent, in
relying upon consents, modifications and amendments executed by the Agent
purportedly on the Lenders' behalf, and in dealing with the Agent as herein
provided. The Agent may charge the accounts of the Company, on the dates when
the amounts thereof become due and payable, with the amounts of the principal of
and interest on the Loan, any amounts paid by the Letter of Credit Issuers to
third parties under Letters of Credit or drafts presented thereunder, commitment
fees, Letter of Credit fees and all other fees and amounts owing under any
Credit Document (other than Interest Rate Protection Agreements).
10.4. Lender Operations for Advances, Letters of Credit, etc.
------------------------------------------------------
10.4.1. Advances. On each Closing Date, each Lender shall
--------
advance to the Agent in immediately available funds such Lender's
Percentage Interest in the portion of the Loan advanced on such Closing
Date prior to 12:00 noon (Boston time). If such funds are not received at
such time, but all applicable conditions set forth in Section 5 have been
satisfied, each Lender authorizes and requests the Agent to advance for the
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Lender's account, pursuant to the terms hereof, the Lender's respective
Percentage Interest in such portion of the Loan and agrees to reimburse the
Agent in immediately available funds for the amount thereof prior to 2:00
p.m. (Boston time) on the day any portion of the Loan is advanced
hereunder; provided, however, that the Agent is not authorized to make any
-------- -------
such advance for the account of any Lender who has previously notified the
Agent in writing that such Lender will not be performing its obligations to
make further advances hereunder; and provided, further, that the Agent
-------- -------
shall be under no obligation to make any such advance.
10.4.2. Letters of Credit. Each of the Lenders authorizes and
-----------------
requests each Letter of Credit Issuer to issue the Letters of Credit
provided for in Section 2.3 and to grant each Lender a participation in
each of such Letters of Credit in an amount equal to its Percentage
Interest in the amount of each such Letter of Credit. Promptly upon the
request of the Letter of Credit Issuer, each Lender shall reimburse the
Letter of Credit Issuer in immediately available funds for such Lender's
Percentage Interest in the amount of all obligations to third parties
incurred by the Letter of Credit Issuer in respect of each Letter of Credit
and each draft accepted under a Letter of Credit to the extent not
reimbursed by the Company by 2:00 p.m. (Boston time) on the Banking Day
when due. The Letter of Credit Issuer will notify each Lender of the
issuance of any Letter of Credit, the amount and date of payment of any
draft drawn or accepted under a Letter of Credit and whether in connection
with the payment of any such draft the amount thereof was added to the
Revolving Loan or was reimbursed by the Company.
10.4.3. Agent to Allocate Payments, etc. All payments of
--------------------------------
principal and interest in respect of the extensions of credit made pursuant
to this Agreement, reimbursement of amounts paid by any Letter of Credit
Issuer to third parties under Letters of Credit or drafts presented
thereunder, commitment fees, Letter of Credit fees and other fees under
this Agreement shall, as a matter of convenience, be made by the Company
and the Guarantors to the Agent in immediately available funds by noon
(Boston time) on any Banking Day. The share of each Lender shall be
credited to such Lender by the Agent in immediately available funds by 2:00
p.m. (Boston time) on such Banking Day in such manner that the principal
amount of the Credit Obligations to be paid shall be paid proportionately
in accordance with the Lenders' respective Percentage Interests in such
Credit Obligations, except as otherwise provided in this Agreement. Under
no circumstances shall any Lender be required to produce or present its
Notes as evidence of its interests in the Credit Obligations in any action
or proceeding relating to the Credit Obligations.
10.4.4. Delinquent Lenders; Nonperforming Lenders. In the event
-----------------------------------------
that any Lender fails to reimburse the Agent pursuant to Sections 10.4.1
and 10.4.2 for the Percentage Interest of such lender (a "Delinquent
----------
Lender") in any credit advanced by the Agent pursuant hereto, overdue
------
amounts (the "Delinquent Payment") due from the Delinquent Lender to the
------------------
Agent shall bear interest, payable by the Delinquent Lender
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on demand, at a per annum rate equal to (a) the Federal Funds Rate for the
first three days overdue and (b) the sum of 2% plus the Federal Funds Rate
----
for any longer period. Such interest shall be payable to the Agent for its
own account for the period commencing on the date of the Delinquent Payment
and ending on the date the Delinquent Lender reimburses the Agent on
account of the Delinquent Payment (to the extent not paid by any Obligor as
provided below) and the accrued interest thereon (the "Delinquency
-----------
Period"), whether pursuant to the assignments referred to below or
-------
otherwise. Upon notice by the Agent after any such Delinquent Payment is
more than three days overdue, the Company will pay to the Agent the
principal (but not the interest) portion of the Delinquent Payment. During
the Delinquency Period, in order to make reimbursements for the Delinquent
Payment and accrued interest thereon, the Delinquent Lender shall be deemed
to have assigned to the Agent all interest, commitment fees and other
payments made by the Company under Section 3 that would have thereafter
otherwise been payable under the Credit Documents to the Delinquent Lender.
During any other period in which any Lender is not performing its
obligations to extend credit under Section 2 (a "Nonperforming Lender"),
--------------------
the Nonperforming Lender shall be deemed to have assigned to each Lender
that is not a Nonperforming Lender (a "Performing Lender") all principal
-----------------
and other payments made by the Company under Section 4 that would have
thereafter otherwise been payable under the Credit Documents to the
Nonperforming Lender. The Agent shall credit a portion of such payments to
each Performing Lender in an amount equal to the Percentage Interest of
such Performing Lender in an amount equal to the Percentage Interest of
such Performing Lender divided by one minus the Percentage Interest of the
-----
Nonperforming Lender until the respective portions of the Loan owed to all
the Lenders are the same as the Percentage Interests of the Lenders
immediately prior to the failure of the Nonperforming Lender to perform its
obligations under Section 2. The foregoing provisions shall be in addition
to any other remedies the Agent, the Performing Lenders or the Company may
have under law or equity against the Delinquent Lender as a result of the
Delinquent Payment or against the Nonperforming Lender as a result of its
failure to perform its obligations under Section 2.
10.5. Sharing of Payments, etc. Each Lender agrees that (a) if by
-------------------------
exercising any right of set-off or counterclaim or otherwise, it shall receive
payment of (i) a proportion of the aggregate amount due with respect to its
Percentage Interest in the Loan and Letter of Credit Exposure which is greater
than (ii) the proportion received by any other Lender in respect of the
aggregate amount due with respect to such other Lender's Percentage Interest in
the Loan and Letter of Credit Exposure and (b) if such inequality shall continue
for more than 10 days, the Lender receiving such proportionately greater payment
shall purchase participations in the Percentage Interests in the Loan and Letter
of Credit Exposure held by the other Lenders, and such other adjustments shall
be made from time to time (including rescission of such purchases of
participations in the event the unequal payment originally received is recovered
from such Lender through bankruptcy proceedings or otherwise), as may be
required so that all such payments of principal and interest with respect to the
Loan and Letter of Credit Exposure held
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by the Lenders shall be shared by the Lenders pro rata in accordance with their
respective Percentage Interests; provided, however, that this Section 10.5 shall
-------- -------
not impair the right of any Lender to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to such exercise to the
payment of Indebtedness of any Obligor other than such Obligor's Indebtedness
with respect to the Loan and Letter of Credit Exposure. Each Lender that grants
a participation in the Credit Obligations to a Credit Participant shall require
as a condition to the granting of such participation that such Credit
Participant agree to share payments received in respect of the Credit
Obligations as provided in this Section 10.5. The provisions of this Section
10.5 are for the sole and exclusive benefit of the Lenders and no failure of any
Lender to comply with the terms hereof shall be available to any Obligor as a
defense to the payment of the Credit Obligations.
10.6. Amendments, Consents, Waivers, etc. Except as otherwise set forth
----------------------------------
herein, the Agent may (and upon the written request of the Required Lenders the
Agent shall) take or refrain from taking any action under this Agreement or any
other Credit Document, including giving its written consent to any modification
of or amendment to and waiving in writing compliance with any covenant or
condition in this Agreement or any other Credit Document (other than an Interest
Rate Protection Agreement) or any Default or Event of Default, all of which
actions shall be binding upon all of the Lenders; provided, however, that:
-------- -------
(a) Except as provided below, without the written consent of the
Lenders owning at least 60% of the Percentage Interests (disregarding the
Percentage Interest of any Delinquent Lender during the existence of a
Delinquency Period or of any Nonperforming Lender so long as such Lender is
treated equally with the other Lenders with respect to any actions
enumerated below), no written modification of, amendment to, consent with
respect to, waiver of compliance with or waiver of a Default under, any of
the Credit Documents (other than an Interest Rate Protection Agreement)
shall be made.
(b) Without the written consent of such Lenders as own 100% of the
Percentage Interests (disregarding the Percentage Interest of any
Delinquent Lender during the existence of a Delinquency Period or of any
Nonperforming Lender so long as such Lender is treated equally with the
other Lenders with respect to any actions enumerated below):
(i) No reduction shall be made in (A) the amount of
principal of the Loan or reimbursement obligations for payments made
under Letters of Credit, (B) the interest rate on the Loan (other
than amendments and waivers approved by the Required Lenders that
modify defined terms used in calculating the Applicable Margin or
Consolidated Excess Cash Flow or that waive an increase in the
Applicable Rate as a result of an Event of Default) or (C) the
Letter of Credit fees or commitment fees with respect to the credit
facility provided herein.
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(ii) No change shall be made in the stated, scheduled time of
payment of all or any portion of the Loan (other than amendments and
waivers approved by the Required Lenders that modify defined terms
used in calculating the Applicable Margin or Consolidated Excess
Cash Flow) or interest thereon or reimbursement of payments made
under Letters of Credit or fees relating to any of the foregoing
payable to all of the Lenders and no waiver shall be made of any
Default under Section 8.1.1.
(iii) No increase shall be made in the amount, or extension of
the term, of the stated Commitments beyond that provided for under
Section 2.
(iv) No alteration shall be made of the Lenders' rights of
set-off contained in Section 8.2.4.
(v) No release of all or a material portion of the Credit
Security or of the Guarantors shall be made (in any event the Agent
may release particular items of Credit Security or particular
Guarantors in dispositions permitted by Section 6.11 or releases
permitted by Section 6.20.3, including amendments thereto approved
by the Required Lenders, and may release all Credit Security
pursuant to Section 17 upon payment in full of the Credit
Obligations and termination of the Commitments without the written
consent of the Lenders).
(vi) No amendment to or modification of this Section 10.6(b)
shall be made.
(c) Without the written consent of such Lenders owning at least
60% of the Percentage Interests in a particular Tranche (disregarding the
Percentage Interest of any Delinquent Lender during the existence of a
Delinquency Period or of any Nonperforming Lender so long as such Lender is
treated equally with the other Lenders with respect to any actions
enumerated below) voting as a separate class, no change may be made in the
allocation of mandatory prepayments under Section 4.3 between the Term Loan
and the Revolving Loan.
10.7. Agent's Resignation. The Agent may resign at any time by giving at
-------------------
least 60 days' prior written notice of its intention to do so to each of the
Lenders and the Company and upon the appointment by the Required Lenders of a
successor Agent satisfactory to the Company. If no successor Agent shall have
been so appointed and shall have accepted such appointment within 45 days after
the retiring Agent's giving of such notice of resignation, then the retiring
Agent may with the consent of the Company, which shall not be unreasonably
withheld, appoint a successor Agent which shall be a bank or a trust company
organized under the laws of the United States of America or any state thereof
and having a combined capital, surplus and undivided profit of at least
$200,000,000; provided, however, that any successor
-------- -------
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Agent appointed under this sentence may be removed upon the written request of
the Required Lenders, which request shall also appoint a successor Agent
reasonably satisfactory to the Company. Upon the appointment of a new Agent
hereunder, the term "Agent" shall for all purposes of this Agreement thereafter
mean such successor. After any retiring Agent's resignation hereunder as Agent,
or the removal hereunder of any successor Agent, the provisions of this
Agreement shall continue to inure to the benefit of such retiring or removed
Agent as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement.
10.8. Concerning the Agent.
--------------------
10.8.1. Action in Good Faith, etc. The Agent and its officers,
-------------------------
directors, employees and agents shall be under no liability to any of the
Lenders or to any future holder of any interest in the Credit Obligations
for any action or failure to act taken or suffered in good faith, and any
action or failure to act in accordance with an opinion of its counsel shall
conclusively be deemed to be in good faith. The Agent shall in all cases be
entitled to rely, and shall be fully protected in relying, on instructions
given to the Agent by the Required Lenders.
10.8.2. No Implied Duties, etc. The Agent shall have and may
----------------------
exercise such powers as are specifically delegated to the Agent under this
Agreement or any other Credit Document together with all other powers
incidental thereto. The Agent shall have no implied duties to any Person or
any obligation to take any action under this Agreement or any other Credit
Document except for action specifically provided for in this Agreement or
any other Credit Document to be taken by the Agent. Before taking any
action under this Agreement or any other Credit Document, the Agent may
request an appropriate specific indemnity reasonably satisfactory to it
from each Lender in addition to the general indemnity provided for in
Section 10.11 (but not extending to actions or omissions by the Agent
constituting gross negligence or willful misconduct). Until the Agent has
received such specific indemnity, the Agent shall not be obligated to take
(although it may in its sole discretion take) any such action under this
Agreement or any other Credit Document. Each Lender confirms that the Agent
does not have a fiduciary relationship to it under the Credit Documents.
Each of the Company and each Guarantor confirms that neither the Agent nor
any other Lender has a fiduciary relationship to it under the Credit
Documents.
10.8.3. Validity, etc. The Agent shall not be responsible to any
-------------
Lender or any future holder of any interest in the Credit Obligations (a)
for the legality, validity, enforceability or effectiveness of this
Agreement or any other Credit Document, (b) for any recitals, reports,
representations, warranties or statements contained in or made in
connection with this Agreement or any other Credit Document, (c) for the
existence or value of any assets included in any security for the Credit
Obligations, (d) for the effectiveness of any Lien purported to be included
in the Credit Security, (e) for the
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specification or failure to specify any particular assets to be included in
the Credit Security, or (f) unless the Agent shall have failed to comply
with Section 10.8.1, for the perfection of the security interests in the
Credit Security.
10.8.4. Compliance. The Agent shall not be obligated to ascertain
----------
or inquire as to the performance or observance of any of the terms of this
Agreement or any other Credit Document; and in connection with any
extension of credit under this Agreement or any other Credit Document, the
Agent shall be fully protected in relying on a certificate of the Company
as to the fulfillment by the Company of any conditions to such extension of
credit.
10.8.5. Employment of Agents and Counsel. The Agent may execute any
--------------------------------
of its duties as Agent under this Agreement or any other Credit Document by
or through employees, agents and attorneys-in-fact and shall not be
responsible to any of the Lenders, the Company or any other Obligor for the
default or misconduct of any such agents or attorneys-in-fact selected by
the Agent acting in good faith. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and
its duties hereunder or under any other Credit Document.
10.8.6. Reliance on Documents and Counsel. The Agent shall be
---------------------------------
entitled to rely, and shall be fully protected in relying, upon any
affidavit, certificate, cablegram, consent, instrument, letter, notice,
order, document, statement, telecopy, telegram, telex or teletype message
or writing reasonably believed in good faith by the Agent to be genuine and
correct and to have been signed, sent or made by the Person in question,
including any telephonic or oral statement made by such Person, and, with
respect to legal matters, upon an opinion or the advice of counsel selected
by the Agent.
10.8.7. Agent's Reimbursement. Each of the Lenders severally agrees
---------------------
to reimburse the Agent, pro rata in accordance with such Lender's
Percentage Interest, for any reasonable expenses not reimbursed by the
Company or the Guarantors (without limiting the obligation of the Company
or the Guarantors to make such reimbursement): (a) for which the Agent is
entitled to reimbursement by the Company or the Guarantors under this
Agreement or any other Credit Document, and (b) after the occurrence of a
Default, for any other reasonable expenses incurred by the Agent on the
Lenders' behalf in connection with the enforcement of the Lenders' rights
under this Agreement or any other Credit Document; provided, however, that
-------- -------
the Agent shall not be reimbursed for any such expenses arising as a result
of its gross negligence or willful misconduct.
10.9. Rights as a Lender. With respect to any credit extended by it
------------------
hereunder, BankBoston shall have the same rights, obligations and powers
hereunder as any other Lender and may exercise such rights and powers as though
it were not the Agent, and unless the context otherwise specifies, BankBoston
shall be treated in its individual capacity as though it
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were not the Agent hereunder. Without limiting the generality of the foregoing,
the Percentage Interest of BankBoston shall be included in any computations of
Percentage Interests. BankBoston and its Affiliates may accept deposits from,
lend money to, act as trustee for and generally engage in any kind of banking or
trust business with the Company, any of its Subsidiaries or any Affiliate of any
of them and any Person who may do business with or own an equity interest in the
Company, any of its Subsidiaries or any Affiliate of any of them, all as if
BankBoston were not the Agent and without any duty to account therefor to the
other Lenders.
10.10. Independent Credit Decision. Each of the Lenders acknowledges that
---------------------------
it has independently and without reliance upon the Agent, based on the financial
statements and other documents referred to in Section 7.2, on the other
representations and warranties contained herein and on such other information
with respect to the Company and its Subsidiaries as such Lender deemed
appropriate, made such Lender's own credit analysis and decision to enter into
this Agreement and to make the extensions of credit provided for hereunder. Each
Lender represents to the Agent that such Lender will continue to make its own
independent credit and other decisions in taking or not taking action under this
Agreement or any other Credit Document. Each Lender expressly acknowledges that
neither the Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates has made any representations or warranties to
such Lender, and no act by the Agent taken under this Agreement or any other
Credit Document, including any review of the affairs of the Company and its
Subsidiaries, shall be deemed to constitute any representation or warranty by
the Agent. Except for notices, reports and other documents expressly required to
be furnished to each Lender by the Agent under this Agreement or any other
Credit Document, the Agent shall not have any duty or responsibility to provide
any Lender with any credit or other information concerning the business,
operations, property, condition, financial or otherwise, or creditworthiness of
the Company or any Subsidiary which may come into the possession of the Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
10.11. Indemnification. The Lenders shall severally indemnify the Agent
---------------
and its officers, directors, employees, agents, attorneys, accountants,
consultants and controlling Persons (to the extent not reimbursed by the
Obligors and without limiting the obligation of any of the Obligors to do so),
pro rata in accordance with their respective Percentage Interests, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time be imposed on, incurred by or asserted against
the Agent or such Persons relating to or arising out of this Agreement, any
other Credit Document, the transactions contemplated hereby or thereby, or any
action taken or omitted by the Agent in connection with any of the foregoing;
provided, however, that the foregoing shall not extend to actions or omissions
- -------- -------
which are taken by the Agent with gross negligence or willful misconduct.
11. SUCCESSORS AND ASSIGNS; LENDER ASSIGNMENTS AND PARTICIPATIONS. Any
-------------------------------------------------------------
reference in this Agreement or any other Credit Document to any of
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the parties hereto shall be deemed to include the successors and assigns of such
party, and all covenants and agreements by or on behalf of the Company, the
other Obligors, the Agent or the Lenders that are contained in this Agreement or
any other Credit Document shall bind and inure to the benefit of their
respective successors and assigns; provided, however, that (a) the Company and
-------- -------
its Subsidiaries may not assign their rights or obligations under this Agreement
or any other Credit Document except for mergers or liquidations permitted by
Section 6.11, and (b) the Lenders shall be not entitled to assign their
respective Percentage Interests in the credits extended hereunder or their
Commitments except as set forth below in this Section 11.
11.1. Assignments by Lenders.
----------------------
11.1.1. Assignees and Assignment Procedures. Each Lender may (a)
-----------------------------------
without the consent of the Agent or the Company if the proposed assignee is
already a Lender hereunder, a Related Fund or a Wholly Owned Subsidiary of
the same corporate parent of which the assigning Lender or any other Lender
is a Subsidiary, or (b) otherwise with the consent of the Agent and, so
long as no Event of Default exists, with the consent of the Company (which
consent shall not be unreasonably withheld), in compliance with applicable
laws in connection with such assignment, assign to one or more commercial
banks, investment companies other financial institutions or mutual funds
(each, an "Assignee") all or a portion of its interests, rights and
--------
obligations under this Agreement and the other Credit Documents, including
all or a portion, which need not be pro rata between the Revolving Loan,
Term Loan and the Letter of Credit Exposure, of its Commitment, the portion
of the Loan and Letter of Credit Exposure at the time owing to it and the
Notes held by it, but excluding its rights and obligations as a Letter of
Credit Issuer; provided, however, that:
-------- -------
(i) the aggregate amount of the Commitment of the
assigning Lender subject to each such assignment to any Assignee
other than another Lender, a Related Fund or a Wholly Owned
Subsidiary of the same corporate parent of which the assigning
Lender or any other Lender is a Subsidiary (determined as of the
date the Assignment and Acceptance with respect to such assignment
is delivered to the Agent) shall be not less than $5,000,000 and in
increments of $1,000,000 (or, if less, the entire remaining amount
of the assigning Lender's Commitment); and
(ii) the parties to each such assignment shall execute and
deliver to the Agent an Assignment and Acceptance (the "Assignment
----------
and Acceptance") substantially in the form of Exhibit 11.1.1,
--------------
together with the Note subject to such assignment and, except in the
event of a transfer pursuant to Section 11.3, a processing and
recordation fee of $3,000 payable to the Agent by the assigning
Lender or the Assignee.
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Upon acceptance and recording pursuant to Section 11.1.4, from and after
the effective date specified in each Assignment and Acceptance (which
effective date shall be at least five Banking Days after the execution
thereof unless waived by the Agent):
(A) the Assignee shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement and
(B) the assigning Lender shall, to the extent provided in such
assignment, be released from its obligations (but not its
accrued liabilities) under this Agreement (and, in the case of
an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto
but shall continue to be entitled to the benefits of Sections
3.2.4, 3.5 and 9, as well as to any fees accrued for its
account hereunder and not yet paid).
11.1.2. Terms of Assignment and Acceptance. By executing and
----------------------------------
delivering an Assignment and Acceptance, the assigning Lender and Assignee
shall be deemed to confirm to and agree with each other and the other
parties hereto as follows:
(a) other than the representation and warranty that it is the legal
and beneficial owner of the interest being assigned thereby free and clear
of any adverse claim, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement
or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, any other Credit Document or any
other instrument or document furnished pursuant hereto;
(b) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Company and its Subsidiaries or the performance or observance by the
Company or any of its Subsidiaries of any of its obligations under this
Agreement, any other Credit Document or any other instrument or document
furnished pursuant hereto;
(c) such Assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 7.2 or Section 6.4 and such other documents
and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance;
(d) such Assignee will independently and without reliance upon the
Agent, such assigning Lender or any other Lender, and based on such
documents and
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information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement;
(e) such Assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Agent by the terms hereof, together with
such powers as are reasonably incidental thereto; and
(f) such Assignee agrees that it will perform in accordance with
the terms of this Agreement all the obligations which are required to be
performed by it as a Lender.
11.1.3. Register. The Agent shall maintain at the Boston Office a
--------
register (the "Register") for the recordation of (a) the names and
--------
addresses of the Lenders and the Assignees which assume rights and
obligations pursuant to an assignment under Section 11.1.1, (b) the
Percentage Interest of each such Lender as set forth in Exhibit 10.1 and
(c) the amount of the Loan and Letter of Credit Exposure owing to each
Lender from time to time. The entries in the Register shall be conclusive,
in the absence of manifest error, and the Company, the Agent and the
Lenders may treat each Person whose name is registered therein for all
purposes as a party to this Agreement. The Register shall be available for
inspection by the Company or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
11.1.4. Acceptance of Assignment and Assumption. Upon its receipt of
---------------------------------------
a completed Assignment and Acceptance executed by an assigning Lender and
an Assignee (and any necessary consent of the Company) together with the
Note subject to such assignment, and the processing and recordation fee
referred to in Section 11.1.1, the Agent shall (a) accept such Assignment
and Acceptance, (b) record the information contained therein in the
Register and (c) give prompt notice thereof to the Company. Within five
Banking Days after receipt of notice, the Company, at its own expense,
shall execute and deliver to the Agent, in exchange for the surrendered
Note, a new Note to the order of such Assignee in a principal amount equal
to the applicable Commitment and Loan assumed by it pursuant to such
Assignment and Acceptance and, if the assigning Lender has retained a
Commitment and Loan, a new Note to the order of such assigning Lender in a
principal amount equal to the applicable Commitment and Loan retained by
it. Such new Note shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note, and shall be dated the
date of the surrendered Note which it replaces.
11.1.5. Federal Reserve Bank. Notwithstanding the foregoing
--------------------
provisions of this Section 11, any Lender may at any time pledge or assign
all or any portion of such Lender's rights under this Agreement and the
other Credit Documents to a Federal Reserve Bank; provided, however, that
-------- -------
no such pledge or assignment shall release such Lender from such Lender's
obligations hereunder or under any other Credit Document.
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11.1.6. Further Assurances. The Company and its Subsidiaries shall
------------------
sign such documents and take such other actions from time to time
reasonably requested by an Assignee to enable it to share in the benefits
of the rights created by the Credit Documents.
11.2. Credit Participants. Each Lender may, without the consent of the
-------------------
Company or the Agent, in compliance with applicable laws in connection with such
participation, sell to one or more commercial banks, other financial
institutions or mutual funds (each a "Credit Participant") participations in all
------------------
or a portion of its interests, rights and obligations under this Agreement and
the other Credit Documents (including all or a portion of its Commitment, the
Loan and Letter of Credit Exposure owing to it and the Note held by it);
provided, however, that:
- -------- -------
(a) such Lender's obligations under this Agreement shall remain
unchanged;
(b) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations;
(c) the Credit Participant shall be entitled to the benefit of the
cost protection provisions contained in Sections 3.2.4, 3.5 and 9, but
shall not be entitled to receive any greater payment thereunder than the
selling Lender would have been entitled to receive with respect to the
interest so sold if such interest had not been sold; and
(d) the Company, the Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement, and such Lender shall retain
the sole right as one of the Lenders to vote with respect to the
enforcement of the obligations of the Obligors relating to the Loan and
Letter of Credit Exposure and the approval of any amendment, modification
or waiver of any provision of this Agreement (other than amendments,
modifications, consents or waivers described in clause (b) of the proviso
to Section 10.6).
Each Obligor agrees, to the fullest extent permitted by applicable law, that any
Credit Participant and any Lender purchasing a participation from another Lender
pursuant to Section 10.5 may exercise all rights of payment (including the right
of set-off), with respect to its participation as fully as if such Credit
Participant or such Lender were the direct creditor of the Obligors and a Lender
hereunder in the amount of such participation.
11.3. Replacement of Lender. In the event that any Lender or, to the
---------------------
extent applicable, any Credit Participant (the "Affected Lender"):
---------------
(a) fails to perform its obligations to fund any portion of the
Loan or to issue any Letter of Credit on any Closing Date when required to
do so by the terms of the
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Credit Documents, or fails to provide its portion of any Eurodollar Pricing
Option pursuant to Section 3.2.1 or on account of a Legal Requirement as
contemplated by Section 3.2.5;
(b) demands payment under the provisions of Section 3.5 in an amount
materially in excess of the amounts with respect thereto demanded by the
other Lenders;
(c) refuses to consent to a proposed extension of the Final Maturity
Date that is consented to by all of the other Lenders; or
(d) refuses to consent to a proposed amendment, modification, waiver
or other action requiring consent of the holders of 100% of the Percentage
Interests under Section 10.6(b) that is consented to by all of the other
Lenders;
then, so long as no Event of Default exists, the Company shall have the right to
seek a replacement lender which is reasonably satisfactory to the Agent (the
"Replacement Lender"). The Replacement Lender shall purchase the interests of
------------------
the Affected Lender in the Loan, Letters of Credit and its Commitment and shall
assume the obligations of the Affected Lender hereunder and under the other
Credit Documents upon execution by the Replacement Lender of an Assignment and
Acceptance and the tender by it to the Affected Lender of a purchase price
agreed between it and the Affected Lender (or, if they are unable to agree, a
purchase price in the amount of the Affected Lender's Percentage Interest in the
Loan and Letter of Credit Exposure, or appropriate credit support for contingent
amounts included therein, and all other outstanding Credit Obligations then owed
to the Affected Lender). No assignment fee pursuant to Section 11.1.1(ii) shall
be required in connection with such assignment. Such assignment by any Affected
Lender who has performed its obligations under this Agreement shall be deemed an
early termination of any Eurodollar Pricing Option to the extent of the Affected
Lender's portion thereof, and the Company will pay to the Affected Lender any
resulting amounts due under Section 3.2.4. Upon consummation of such
assignment, the Replacement Lender shall become party to this Agreement as a
signatory hereto and shall have all the rights and obligations of the Affected
Lender under this Agreement and the other Credit Documents with a Percentage
Interest equal to the Percentage Interest of the Affected Lender, the Affected
Lender shall be released from its obligations hereunder and under the other
Credit Documents, other than any obligations with respect to any claim that the
Company or any of its Subsidiaries may have against the Affected Lender arising
out of the failure of such Affected Lender to perform its obligations to fund
any portion of the Loan or to issue any Letter of Credit when required to do so
by the terms of the Credit Documents, and no further consent or action by any
party shall be required. Upon the consummation of such assignment, the Company,
the Agent and the Affected Lender shall make appropriate arrangements so that a
new Note is issued to the Replacement Lender if it has acquired a portion of the
Loan. The Company and the Guarantors shall sign such documents and take such
other actions reasonably requested by the Replacement Lender to enable it to
share in the benefits of the rights created
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by the Credit Documents. Until the consummation of an assignment in accordance
with the foregoing provisions of this Section 11.3, the Company shall continue
to pay to the Affected Lender any Credit Obligations as they become due and
payable.
12. CONFIDENTIALITY. Each Lender will make no disclosure of confidential
---------------
information furnished to it by the Company or any of its Subsidiaries unless
such information shall have become public, except:
(a) in connection with operations under or the enforcement of this
Agreement or any other Credit Document to Persons who have a reasonable
need to be furnished such confidential information and who agree to comply
with the restrictions contained in this Section 12 with respect to such
information;
(b) pursuant to any statutory or regulatory requirement or any
mandatory court order, subpoena or other legal process;
(c) to any parent or corporate Affiliate of such Lender or to any
Credit Participant, proposed Credit Participant or proposed Assignee;
provided, however, that any such Person shall agree to comply with the
-------- -------
restrictions set forth in this Section 12 with respect to such information;
(d) to its independent counsel, auditors and other professional
advisors with an instruction to such Person to keep such information
confidential; and
(e) with the prior written consent of the Company, to any other
Person.
13. FOREIGN LENDERS. If any Lender is not incorporated or organized under
---------------
the laws of the United States of America or a state thereof, such Lender shall
deliver to the Company and the Agent the following:
(a) Two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224 or successor form, as the case may be, certifying
in each case that such Person is entitled to receive payments under this
Agreement, the Notes and reimbursement obligations under Letters of Credit
payable to it, without deduction or withholding of any United States
federal income taxes; provided, however, that if such Lender is not a
-------- -------
"bank" within the meaning of section 881(c)(3)(A) of the Code and cannot
deliver Form 1001 or 4224, such Lender shall deliver to the Company and the
Agent a certificate to such effect; and
(b) A duly completed Internal Revenue Service Form W-8 or W-9 or
successor form, as the case may be, to establish an exemption from United
States backup withholding tax.
-92-
<PAGE>
Each such Lender that delivers to the Company and the Agent a Form 1001 or
4224 and Form W-8 or W-9 pursuant to this Section 13 further undertakes to
deliver to the Company and the Agent two further copies of Form 1001 or 4224 and
Form W-8 or W-9, or successor applicable form, or other manner of certification,
as the case may be, on or before the date that any such form expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Company and the Agent. Such Forms
1001 or 4224 shall certify that such Lender is entitled to receive payments
under this Agreement without deduction or withholding of any United States
federal income taxes. The foregoing documents need not be delivered in the
event any change in treaty, law or regulation or official interpretation thereof
has occurred which renders all such forms inapplicable or which would prevent
such Lender from delivering any such form with respect to it, or such Lender
advises the Company that it is not capable of receiving payments without any
deduction or withholding of United States federal income tax and, in the case of
a Form W-8 or W-9, establishing an exemption from United States backup
withholding tax. Until such time as the Company and the Agent have received
such forms indicating that payments hereunder are not subject to United States
withholding tax or are subject to such tax at a rate reduced by an applicable
tax treaty, the Company shall withhold taxes from such payments at the
applicable statutory rate without regard to Section 3.5.
14. NOTICES. Except as otherwise specified in this Agreement or any other
-------
Credit Document, any notice required to be given pursuant to this Agreement or
any other Credit Document shall be given in writing. Any notice, consent,
approval, demand or other communication in connection with this Agreement or any
other Credit Document shall be deemed to be given if given in writing (including
telex, telecopy or similar teletransmission) addressed as provided below (or to
the addressee at such other address as the addressee shall have specified by
notice actually received by the addressor), and if either (a) actually delivered
in fully legible form to such address (evidenced in the case of a telex by
receipt of the correct answer back) or (b) in the case of a letter, unless
actual receipt of the notice is required by any Credit Document five days shall
have elapsed after the same shall have been deposited in the United States
mails, with first-class postage prepaid and registered or certified.
If to the Company or any of its Subsidiaries, to it at its address set
forth in Exhibit 7.1 (as supplemented pursuant to Sections 6.4.1 and 6.4.2), to
the attention of the chief financial officer.
If to any Lender or the Agent, to it at its address set forth on the
signature pages of this Agreement or in the Register, with a copy to the Agent.
15. COURSE OF DEALING; AMENDMENTS AND WAIVERS. No course of dealing between
-----------------------------------------
any Lender or the Agent, on one hand, and the Company or any other Obligor, on
the other hand, shall operate as a waiver of any of the Lenders', the Agent's,
the Company's or any other Obligor's rights under this Agreement or any other
Credit Document or with respect to the Credit Obligations. Each of the Company
and the Guarantors acknowledges that if the
-93-
<PAGE>
Lenders or the Agent, without being required to do so by this Agreement or any
other Credit Document, give any notice or information to, or obtain any consent
from, the Company or any other Obligor, the Lenders and the Agent shall not by
implication have amended, waived or modified any provision of this Agreement or
any other Credit Document, or created any duty to give any such notice or
information or to obtain any such consent on any future occasion. Each of the
Lenders acknowledges that if the Company or any of its Subsidiaries, without
being required to do so by thi s Agreement or any other Credit Document, gives
any notice or information to, or obtains any consent from, any of the Lenders,
neither the Company nor any of the other Obligors shall by implication have
amended, waived or modified any provision of this Agreement or any other Credit
Document, or created any duty to give any such notice or information or to
obtain any such consent on any future occasion. No delay or omission on the part
of any Lender, the Agent, the Company or any other Obligor in exercising any
right under this Agreement or any other Credit Document or with respect to the
Credit Obligations shall operate as a waiver of such right or any other right
hereunder or thereunder. A waiver on any one occasion shall not be construed as
a bar to or waiver of any right or remedy on any future occasion. No waiver,
consent or amendment with respect to this Agreement or any other Credit Document
shall be binding unless it is in writing and signed by the Agent or the Required
Lenders.
16. NO STRICT CONSTRUCTION. The parties have participated jointly in the
----------------------
negotiation and drafting of this Agreement and the other Credit Documents with
counsel sophisticated in financing transactions. In the event an ambiguity or
question of intent or interpretation arises, this Agreement and the other Credit
Documents shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement and the other
Credit Documents.
17. DEFEASANCE. When all Credit Obligations have been paid, performed and
----------
reasonably determined by the Lenders to have been indefeasibly discharged in
full, and if at the time no Lender continues to be committed to extend any
credit to the Company hereunder or under any other Credit Document, this
Agreement and the other Credit Documents shall terminate and, at the Company's
written request, accompanied by such certificates and other items as the Agent
shall reasonably deem necessary, the Credit Security shall revert to the
Obligors and the right, title and interest of the Lenders therein shall
terminate. Thereupon, on the Obligors' demand and at their cost and expense,
the Agent shall execute proper instruments, acknowledging satisfaction of and
discharging this Agreement and the other Credit Documents, and shall redeliver
to the Obligors any Credit Security then in its possession; provided, however,
-------- -------
that Sections 3.2.4, 3.5, 9, 10.8.7, 10.11, 12, 18 and 19 shall survive the
termination of this Agreement.
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<PAGE>
18. VENUE; SERVICE OF PROCESS. Each of the Company and the other Obligors:
-------------------------
(a) Irrevocably submits to the nonexclusive jurisdiction of the
state courts of The Commonwealth of Massachusetts and to the nonexclusive
jurisdiction of the United States District Court for the District of
Massachusetts for the purpose of any suit, action or other proceeding
arising out of or based upon this Agreement or any other Credit Document or
the subject matter hereof or thereof.
(b) Waives to the extent not prohibited by applicable law that
cannot be waived, and agrees not to assert, by way of motion, as a defense
or otherwise, in any such proceeding brought in any of the above-named
courts, any claim that it is not subject personally to the jurisdiction of
such court, that its property is exempt or immune from attachment or
execution, that such proceeding is brought in an inconvenient forum, that
the venue of such proceeding is improper, or that this Agreement or any
other Credit Document, or the subject matter hereof or thereof, may not be
enforced in or by such court.
Each of the Company and the other Obligors consents to service of process in any
such proceeding in any manner at the time permitted by Chapter 223A of the
General Laws of The Commonwealth of Massachusetts and agrees that service of
process by registered or certified mail, return receipt requested, at its
address specified in or pursuant to Section 14 and addressed to the attention of
its general counsel is reasonably calculated to give actual notice.
19. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
--------------------
THAT CANNOT BE WAIVED, EACH OF THE COMPANY, THE OTHER OBLIGORS, THE AGENT AND
THE LENDERS WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF,
DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF
ANY ISSUE, CLAIM OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY CREDIT OBLIGATION OR IN
ANY WAY CONNECTED WITH THE DEALINGS OF THE LENDERS, THE AGENT, THE COMPANY OR
ANY OTHER OBLIGOR IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT, TORT OR OTHERWISE. Each
of the Company and the other Obligors acknowledges that it has been informed by
the Agent that the provisions of this Section 19 constitute a material
inducement upon which each of the Lenders has relied and will rely in entering
into this Agreement and any other Credit Document, and that it has reviewed the
provisions of this Section 19 with its counsel. Each of the Lenders
acknowledges that it has been informed by the Company that the provisions of
this Section 19 constitute a material inducement upon which the Company and each
of the other Obligors have relied and will rely in entering into this Agreement
and any other Credit Document, and that it has reviewed the provisions of this
Section 19 with its counsel. Any Lender, the Agent, the Company or any other
Obligor may file an original
-95-
<PAGE>
counterpart or a copy of this Section 19 with any court as written evidence of
the consent of the Company, the other Obligors, the Agent and the Lenders to the
waiver of their rights to trial by jury.
20. GENERAL. Time is (and shall be) of the essence in this Agreement and the
-------
other Credit Documents. All covenants, agreements, representations and
warranties made in this Agreement or any other Credit Document or in
certificates delivered pursuant hereto or thereto shall be deemed to have been
relied on by each Lender, notwithstanding any investigation made by any Lender
on its behalf, and shall survive the execution and delivery to the Lenders
hereof and thereof. The invalidity or unenforceability of any provision hereof
shall not affect the validity or enforceability of any other provision hereof,
and any invalid or unenforceable provision shall be modified so as to be
enforced to the maximum extent of its validity or enforceability. The headings
in this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof. This Agreement and the other Credit
Documents constitute the entire understanding of the parties with respect to the
subject matter hereof and thereof and supersede all prior and contemporaneous
understandings and agreements, whether written or oral. This Agreement may be
executed in any number of counterparts which together shall constitute one
instrument. This Agreement shall be governed by and construed in accordance
with the laws (other than the conflict of laws rules) of The Commonwealth of
Massachusetts.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
-96-
<PAGE>
Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first above written.
SBA COMMUNICATIONS CORPORATION
By /s/ Jeffrey A. Stoops
--------------------------------------
Title: Senior Vice President
SBA COMMUNICATIONS INTERNATIONAL, INC.
SBA CONSTRUCTION ACQUISITION, INC.
SBA, INC.
SBA LEASING, INC.
SBA SUBSIDIARY HOLDINGS, INC.
SBA TOWERS FLORIDA, INC.
SBA TOWERS GEORGIA, INC.
SBA TOWERS, INC.
SBA TOWERS KENTUCKY, INC.
SBA TOWERS NEBRASKA, INC.
SBA TOWERS NEW YORK, INC.
SBA TOWERS OREGON, INC.
By /s/ Jeffrey A. Stoops
--------------------------------------
As Senior Vice President or Vice President
of each of the foregoing corporations
BANKBOSTON, N.A.
By /s/ Reginald T. Dawson
--------------------------------------
Title: Director
BANKBOSTON, N.A.
Media & Communications Division
100 Federal Street
Boston, Massachusetts 02110
Telecopy: (617) 434-3401
Telex: 940581
-97-
<PAGE>
BANQUE PARIBAS
By /s/ Nichole Cawley
--------------------------------
Title: Director
By /s/ Lynne S. Randall
--------------------------------
Title: Director
BANQUE PARIBAS
787 Seventh Avenue
New York, New York 10019
FIRST UNION NATIONAL BANK
By /s/ Bruce Loftin
--------------------------------
Title: Senior Vice President
FIRST UNION NATIONAL BANK
One First Union Center
Charlotte, North Carolina 28288-0735
FLEET NATIONAL BANK
By /s/ Vincent J. Rivers
--------------------------------
Title: A.V.P.
FLEET NATIONAL BANK
One Federal Street
MA of D 03D
Boston, Massachusetts 02109
LEHMAN COMMERCIAL PAPER INC.
By /s/ Dennis J. Dee
--------------------------------
Title: Authorized Signatory
LEHMAN COMMERCIAL PAPER INC.
3 World Financial Center, 9th Floor
New York, New York 10285
-98-
<PAGE>
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
By /s/ Janet P. Simmons
----------------------------------
Title: Vice President
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
200 S. Orange Avenue
Orlando, Florida 32802
-99-
<PAGE>
Exhibit 10.71
SBA COMMUNICATIONS CORPORATION
CREDIT AGREEMENT
Amendment No. 2
---------------
This Agreement, dated as of February 27, 1998 (this "Agreement"), is among
---------
SBA Communications Corporation, a Florida corporation, its subsidiaries set
forth on the signature pages hereof and BankBoston, N.A., as Agent for itself
and the other Lenders under the Credit Agreement (as defined below). The
parties agree as follows:
1. Credit Agreement; Definitions. This Agreement amends the Credit
-----------------------------
Agreement dated as of August 8, 1997 among the parties hereto and the Lenders
(as in effect prior to giving effect to this Agreement, the "Credit Agreement").
----------------
Terms defined in the Credit Agreement as amended hereby (the "Amended Credit
--------------
Agreement") and not otherwise defined herein are used with the meaning so
- ---------
defined.
2. Amendment of Credit Agreement. Effective upon the date hereof, the
-----------------------------
Credit Agreement is amended by adding at the end of Section 6.6 thereof new
Section 6.6.16 to read in its entirety as follows:
"6.6.16. The Company's $150,000,000 12% Senior Discount Notes due 2008 so
long as (a) contemporaneously with the issuance thereof the proceeds are applied
to repay the Loan in full (except that at least $1,000 of the Loan shall remain
outstanding) and (b) thereafter no additional portion of the Loan shall be
outstanding."
3. Waiver of Sections 6.5.1 and 6.5.2. The Lenders waive compliance
----------------------------------
with Sections 6.5.1 and 6.5.2 of the Credit Agreement for periods through March
31, 1998 to the extent noncompliance results from the issuance of the Senior
Discount Notes permitted by Section 6.6.16 of the Amended Credit Agreement.
4. Special Covenant Regarding Restatement. The parties hereto agree to
--------------------------------------
negotiate in good faith to amend and restate the Credit Agreement prior to March
31, 1998 on substantially the terms set forth in the SBA Telecommunications
$75,000,000 Secured Credit Facility Discussion Term Sheet dated February 6, 1998
from BankBoston to the Company.
5. Representation and Warranty. In order to induce the Agent to enter
---------------------------
into this Agreement, each of the Borrower and the Guarantors jointly and
severally represents and warrants that, after giving effect to this Agreement,
no Default exists.
6. General. The Amended Credit Agreement and all of the Credit
-------
Documents are each confirmed as being in full force and effect. This Agreement,
the Amended Credit
<PAGE>
Agreement and the other Credit Documents referred to herein or therein
constitute the entire understanding of the parties with respect to the subject
matter hereof and thereof and supersede all prior and current understandings and
agreements, whether written or oral. Each of this Agreement and the Amended
Credit Agreement is a Credit Document and may be executed in any number of
counterparts, which together shall constitute one instrument, and shall bind and
inure to the benefit of the parties and their respective successors and assigns,
including as such successors and assigns all holders of any Note. This Agreement
shall be governed by and construed in accordance with the laws (other than the
conflict of law rules) of The Commonwealth of Massachusetts.
[The rest of this page is left intentionally blank]
-2-
<PAGE>
Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first written above.
SBA COMMUNICATIONS CORPORATION
By /s/ Jeffrey A. Stoops
----------------------------------------------
Title:
COMMUNICATION SITE SERVICES, INC.
SBA COMMUNICATIONS INTERNATIONAL, INC.
SBA, INC.
SBA LEASING, INC.
SBA SUBSIDIARY HOLDINGS, INC.
SBA TOWERS, INC.
By /s/ Jeffrey A. Stoops
----------------------------------------------
As Senior Vice President or Vice President
of each of the foregoing corporations
BANKBOSTON, N.A.,
as Agent under the Credit Agreement
By /s/ Reginald T. Dawson
----------------------------------------------
Title:
-3-
<PAGE>
The foregoing amendment is approved by the
Lenders signing below:
BANQUE PARIBAS
By /s/ Salo Aisenberg
----------------------------------------------
Title:
FIRST UNION NATIONAL BANK
By /s/ Bruce W. Loftin
----------------------------------------------
Title:
FLEET NATIONAL BANK
By /s/ Vincent J. Rivers
----------------------------------------------
Title:
LEHMAN COMMERCIAL PAPER INC.
By /s/ Michele Swanson
----------------------------------------------
Title:
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
By
----------------------------------------------
Title:
-4-
<PAGE>
EXHIBIT 10.75
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SBA TELECOMMUNICATIONS, INC.
AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of June 29, 1998
BANKBOSTON, N.A., Agent
FIRST UNION NATIONAL BANK, Co-Agent
FLEET NATIONAL BANK, Co-Agent
-----------------
- --------------------------------------------------------------------------------
BANCBOSTON SECURITIES INC.,
- --------------------------------------------------------------------------------
Syndication Agent and Manager
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1. AMENDMENT AND RESTATEMENT; DEFINITIONS................................................................1
--------------------------------------
1.1. Amendment and Restatement.......................................................................1
-------------------------
1.2. Definitions; Certain Rules of Construction......................................................2
------------------------------------------
2. THE CREDITS..........................................................................................27
-----------
2.1. Revolving Credit...............................................................................27
----------------
2.1.1. Revolving Loan........................................................................27
--------------
2.1.2. Maximum Amount of Revolving Credit....................................................27
----------------------------------
2.1.3. Borrowing Requests....................................................................29
------------------
2.1.4. Revolving Notes.......................................................................30
---------------
2.2. Incremental Credit.............................................................................30
------------------
2.2.1. Request for Incremental Facility......................................................30
--------------------------------
2.2.2. Incremental Facility..................................................................30
--------------------
2.2.3. Incremental Borrowing Requests........................................................31
------------------------------
2.2.4. Incremental Revolving Notes...........................................................31
---------------------------
2.2.5. Incremental Term Loan.................................................................31
---------------------
2.2.6. Incremental Term Notes................................................................32
----------------------
2.3. Letters of Credit..............................................................................32
-----------------
2.3.1. Issuance of Letters of Credit.........................................................32
-----------------------------
2.3.2. Requests for Letters of Credit........................................................32
------------------------------
2.3.3. Form and Expiration of Letters of Credit..............................................32
----------------------------------------
2.3.4. Lenders' Participation in Letters of Credit...........................................33
-------------------------------------------
2.3.5. Presentation..........................................................................33
------------
2.3.6. Payment of Drafts.....................................................................33
-----------------
2.3.7. Uniform Customs and Practice..........................................................34
----------------------------
2.3.8. Subrogation...........................................................................35
-----------
2.3.9. Modification, Consent, etc............................................................35
--------------------------
2.4. Application of Proceeds........................................................................36
-----------------------
2.4.1. Revolving Loan........................................................................36
--------------
2.4.2. Incremental Facility..................................................................36
--------------------
2.4.3. Letters of Credit.....................................................................36
-----------------
2.4.4. Specifically Prohibited Applications..................................................36
------------------------------------
2.5. Nature of Obligations of Lenders to Make Extensions of Credit..................................36
-------------------------------------------------------------
3. INTEREST; EURODOLLAR PRICING OPTIONS; FEES...........................................................37
------------------------------------------
3.1. Interest.......................................................................................37
--------
3.2. Eurodollar Pricing Options.....................................................................37
--------------------------
3.2.1. Election of Eurodollar Pricing Options................................................37
--------------------------------------
3.2.2. Notice to Lenders and Company.........................................................38
-----------------------------
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C> <C> <C>
3.2.3. Selection of Eurodollar Interest Periods..............................................38
----------------------------------------
3.2.4. Additional Interest...................................................................39
-------------------
3.2.5. Violation of Legal Requirements.......................................................39
-------------------------------
3.2.6. Funding Procedure.....................................................................40
-----------------
3.3. Commitment Fees................................................................................40
---------------
3.3.1. Revolving Loan........................................................................40
--------------
3.3.2. Incremental Revolving Loan............................................................40
--------------------------
3.4. Letter of Credit Fees..........................................................................40
---------------------
3.5. Changes in Circumstances; Yield Protection.....................................................41
------------------------------------------
3.5.1. Reserve Requirements, etc.............................................................41
-------------------------
3.5.2. Taxes.................................................................................41
-----
3.5.3. Capital Adequacy......................................................................42
----------------
3.5.4. Regulatory Changes....................................................................42
------------------
3.5.5. Compensation Claims...................................................................42
-------------------
3.5.6. Mitigation............................................................................43
----------
3.6. Computations of Interest and Fees..............................................................43
---------------------------------
4. PAYMENT..............................................................................................43
-------
4.1. Payment at Maturity............................................................................43
-------------------
4.2. Scheduled Required Prepayments.................................................................43
------------------------------
4.3. Contingent Required Prepayments................................................................43
-------------------------------
4.3.1. Excess Credit Exposure................................................................43
----------------------
4.3.2. Net Asset Sale Proceeds...............................................................44
-----------------------
4.3.3. Net Debt Proceeds.....................................................................44
-----------------
4.3.4. Net Equity Proceeds...................................................................44
-------------------
4.3.5. Excess Cash Flow......................................................................44
----------------
4.4. Voluntary Prepayments..........................................................................44
---------------------
4.5. Letters of Credit..............................................................................45
-----------------
4.6. Reborrowing; Application of Payments, etc......................................................45
-----------------------------------------
4.6.1. Reborrowing...........................................................................45
-----------
4.6.2. Order of Application..................................................................45
--------------------
4.6.3. Payment with Accrued Interest, etc....................................................46
----------------------------------
4.6.4. Payments for Lenders..................................................................46
--------------------
5. CONDITIONS TO EXTENDING CREDIT.......................................................................46
------------------------------
5.1. Conditions on Effective Date...................................................................46
----------------------------
5.1.1. Notes.................................................................................46
-----
5.1.2. Payment of Fees.......................................................................46
---------------
5.1.3. Legal Opinions........................................................................46
--------------
5.1.4. Guarantee and Security Agreement; Parent Pledge and Subordination
-----------------------------------------------------------------
Agreement, etc.......................................................................................47
--------------
5.1.5. Perfection of Security................................................................47
----------------------
5.1.6. Solvency..............................................................................47
--------
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C> <C> <C>
5.1.7. No Material Adverse Change in Syndication Market......................................48
------------------------------------------------
5.1.8. Proper Proceedings....................................................................48
------------------
5.1.9. General...............................................................................48
-------
5.2. Conditions to Each Extension of Credit.........................................................48
--------------------------------------
5.2.1. Officer's Certificate.................................................................48
---------------------
5.2.2. Legality, etc.........................................................................48
-------------
6. GENERAL COVENANTS....................................................................................49
-----------------
6.1. Taxes and Other Charges; Accounts Payable......................................................49
-----------------------------------------
6.1.1. Taxes and Other Charges...............................................................49
-----------------------
6.1.2. Accounts Payable......................................................................49
----------------
6.2. Conduct of Business, etc.......................................................................49
------------------------
6.2.1. Types of Business.....................................................................49
-----------------
6.2.2. Maintenance of Properties.............................................................50
-------------------------
6.2.3. Statutory Compliance..................................................................50
--------------------
6.2.4. Compliance with Material Agreements...................................................50
-----------------------------------
6.3. Insurance......................................................................................50
---------
6.3.1. Property Insurance....................................................................50
------------------
6.3.2. Liability Insurance...................................................................51
-------------------
6.3.3. Key Executive Life Insurance..........................................................51
----------------------------
6.3.4. Flood Insurance.......................................................................51
---------------
6.4. Financial Statements and Reports...............................................................51
--------------------------------
6.4.1. Annual Reports........................................................................51
--------------
6.4.2. Quarterly Reports.....................................................................53
-----------------
6.4.3. Monthly Reports.......................................................................54
---------------
6.4.4. Tower Acquisition Reports.............................................................54
-------------------------
6.4.5. Other Reports.........................................................................54
-------------
6.4.6. Notice of Litigation, Defaults, etc...................................................55
-----------------------------------
6.4.7. ERISA Reports.........................................................................55
-------------
6.4.8. Other Information.....................................................................56
-----------------
6.5. Certain Financial Tests........................................................................56
-----------------------
6.5.1. Consolidated Total Debt to Consolidated Adjusted EBITDA...............................56
-------------------------------------------------------
6.5.2. Consolidated Adjusted EBITDA to Consolidated Pro Forma Interest
---------------------------------------------------------------
Expense..............................................................................................57
-------
6.5.3. Consolidated EBITDA to Consolidated Fixed Charges.....................................57
-------------------------------------------------
6.5.4. Consolidated Adjusted EBITDA..........................................................57
----------------------------
6.5.5. Consolidated Adjusted EBITDA to Consolidated Pro Forma Fixed
------------------------------------------------------------
Charges..............................................................................................58
-------
6.5.6. Overdue Tower Construction Receivables................................................58
--------------------------------------
6.5.7. Capital Expenditures..................................................................58
--------------------
6.5.8. Executive Management Compensation.....................................................58
---------------------------------
6.6. Indebtedness...................................................................................58
------------
6.7. Guarantees; Letters of Credit..................................................................60
-----------------------------
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C> <C> <C>
6.8. Liens..........................................................................................60
-----
6.9. Investments and Acquisitions...................................................................62
----------------------------
6.10. Distributions..................................................................................63
-------------
6.11. Asset Dispositions and Mergers.................................................................64
------------------------------
6.12. Issuance of Stock by Subsidiaries or the Company; Subsidiary Distributions.....................65
--------------------------------------------------------------------------
6.12.1. Issuance of Stock by Subsidiaries or the Company.....................................65
------------------------------------------------
6.12.2. No Restrictions on Subsidiary Distributions..........................................65
-------------------------------------------
6.13. Voluntary Prepayments of Other Indebtedness....................................................65
-------------------------------------------
6.14. Derivative Contracts...........................................................................65
--------------------
6.15. Negative Pledge Clauses........................................................................66
-----------------------
6.16. ERISA, etc.....................................................................................66
----------
6.17. Transactions with Affiliates...................................................................66
----------------------------
6.18. Interest Rate Protection.......................................................................66
------------------------
6.19. Environmental Laws.............................................................................67
------------------
6.19.1. Compliance with Law and Permits......................................................67
-------------------------------
6.19.2. Notice of Claims, etc................................................................67
---------------------
6.20. Tower Matters..................................................................................67
-------------
6.20.1. Tower Construction Requirements......................................................67
-------------------------------
6.20.2. No Removal of Towers.................................................................67
--------------------
6.20.3. Pledged Towers. ....................................................................67
--------------
6.21. Series A Preferred Stock Redemptions...........................................................68
------------------------------------
6.22. Restricted Operations of Parent................................................................68
-------------------------------
7. REPRESENTATIONS AND WARRANTIES.......................................................................69
------------------------------
7.1. Organization and Business......................................................................69
-------------------------
7.1.1. The Company...........................................................................69
-----------
7.1.2. Subsidiaries..........................................................................69
------------
7.1.3. The Parent............................................................................69
----------
7.1.4. Qualification.........................................................................70
-------------
7.1.5. Capitalization........................................................................70
--------------
7.2. Financial Statements and Other Information; Material Agreements................................70
---------------------------------------------------------------
7.2.1. Financial Statements and Other Information............................................70
------------------------------------------
7.2.2. Material Agreements...................................................................71
-------------------
7.3. Agreements Relating to Financing Debt, Investments, etc........................................71
-------------------------------------------------------
7.4. Changes in Condition...........................................................................72
--------------------
7.5. Title to Assets................................................................................72
---------------
7.6. Operations in Conformity With Law, etc.........................................................72
--------------------------------------
7.7. Litigation.....................................................................................73
----------
7.8. Authorization and Enforceability...............................................................73
--------------------------------
7.9. No Legal Obstacle to Agreements................................................................73
-------------------------------
7.10. Defaults.......................................................................................74
--------
7.11. Licenses, etc..................................................................................74
-------------
7.12. Tax Returns....................................................................................75
-----------
</TABLE>
-iv-
<PAGE>
<TABLE>
<S> <C> <C> <C>
7.13. Certain Business Representations...............................................................75
--------------------------------
7.13.1. Labor Relations......................................................................75
---------------
7.13.2. Antitrust............................................................................75
---------
7.13.3. Tower Sites..........................................................................75
-----------
7.13.4. Real Property Leases.................................................................75
--------------------
7.13.5. FCC and FAA Matters..................................................................76
-------------------
7.14. Environmental Regulations......................................................................76
-------------------------
7.14.1. Environmental Compliance.............................................................76
------------------------
7.14.2. Environmental Litigation.............................................................76
------------------------
7.14.3. Hazardous Material...................................................................77
------------------
7.14.4. Environmental Condition of Properties................................................77
-------------------------------------
7.15. Pension Plans..................................................................................77
-------------
7.16. Government Regulation; Margin Stock............................................................78
-----------------------------------
7.16.1. Government Regulation................................................................78
---------------------
7.16.2. Margin Stock.........................................................................78
------------
7.17. Disclosure.....................................................................................78
----------
8. DEFAULTS.............................................................................................78
--------
8.1. Events of Default..............................................................................78
-----------------
8.1.1. Payment...............................................................................78
-------
8.1.2. Specified Covenants...................................................................78
-------------------
8.1.3. Other Covenants.......................................................................79
---------------
8.1.4. Representations and Warranties........................................................79
------------------------------
8.1.5. Cross Default, etc....................................................................79
------------------
8.1.6. Ownership; Liquidation; etc...........................................................80
---------------------------
8.1.7. Enforceability, etc...................................................................80
-------------------
8.1.8. Judgments.............................................................................80
---------
8.1.9. ERISA.................................................................................80
-----
8.1.10. Bankruptcy, etc.......................................................................81
---------------
8.2. Certain Actions Following an Event of Default..................................................81
---------------------------------------------
8.2.1. Terminate Obligation to Extend Credit.................................................82
-------------------------------------
8.2.2. Specific Performance; Exercise of Rights..............................................82
----------------------------------------
8.2.3. Acceleration..........................................................................82
------------
8.2.4. Enforcement of Payment; Credit Security; Setoff.......................................82
-----------------------------------------------
8.2.5. Cumulative Remedies...................................................................83
-------------------
8.3. Annulment of Defaults..........................................................................83
---------------------
8.4. Waivers........................................................................................83
-------
9. EXPENSES; INDEMNITY..................................................................................83
-------------------
9.1. Expenses.......................................................................................83
--------
9.2. General Indemnity..............................................................................84
-----------------
9.3. Indemnity With Respect to Letters of Credit....................................................85
-------------------------------------------
</TABLE>
-v-
<PAGE>
<TABLE>
<S> <C> <C> <C>
10. OPERATIONS; AGENT....................................................................................85
-----------------
10.1. Interests in Credits...........................................................................85
--------------------
10.2. Agent's Authority to Act, etc..................................................................85
-----------------------------
10.3. Company to Pay Agent, etc......................................................................85
-------------------------
10.4. Lender Operations for Advances, Letters of Credit, etc.........................................85
------------------------------------------------------
10.4.1. Advances.............................................................................86
--------
10.4.2. Letters of Credit....................................................................86
-----------------
10.4.3. Agent to Allocate Payments, etc......................................................86
--------------------------------
10.4.4. Delinquent Lenders; Nonperforming Lenders............................................87
-----------------------------------------
10.5. Sharing of Payments, etc.......................................................................87
------------------------
10.6. Agent's Resignation............................................................................88
-------------------
10.7. Concerning the Agent...........................................................................88
--------------------
10.7.1. Action in Good Faith, etc............................................................88
-------------------------
10.7.2. No Implied Duties, etc...............................................................89
----------------------
10.7.3. Validity, etc........................................................................89
-------------
10.7.4. Compliance...........................................................................89
----------
10.7.5. Employment of Agents and Counsel.....................................................89
--------------------------------
10.7.6. Reliance on Documents and Counsel....................................................90
---------------------------------
10.7.7. Agent's Reimbursement................................................................90
---------------------
10.8. Rights as a Lender.............................................................................90
------------------
10.9. Independent Credit Decision....................................................................90
---------------------------
10.10.Indemnification................................................................................91
---------------
11. SUCCESSORS AND ASSIGNS; LENDER ASSIGNMENTS AND PARTICIPATIONS........................................91
-------------------------------------------------------------
11.1. Assignments by Lenders.........................................................................91
----------------------
11.1.1. Assignees and Assignment Procedures..................................................91
-----------------------------------
11.1.2. Terms of Assignment and Acceptance...................................................92
----------------------------------
11.1.3. Register.............................................................................93
--------
11.1.4. Acceptance of Assignment and Assumption..............................................94
---------------------------------------
11.1.5. Federal Reserve Bank.................................................................94
--------------------
11.1.6. Further Assurances...................................................................94
------------------
11.2. Credit Participants............................................................................94
-------------------
11.3. Replacement of Lender..........................................................................95
---------------------
12. CONFIDENTIALITY......................................................................................96
---------------
13. FOREIGN LENDERS......................................................................................97
---------------
14. NOTICES..............................................................................................97
-------
15. AMENDMENTS, CONSENTS, WAIVERS, ETC...................................................................98
----------------------------------
15.1. Lender Consents for Amendments.................................................................98
------------------------------
15.2. Course of Dealing; No Implied Waivers.........................................................100
-------------------------------------
</TABLE>
-vi-
<PAGE>
<TABLE>
<S> <C> <C>
16. NO STRICT CONSTRUCTION..............................................................................100
----------------------
17. DEFEASANCE..........................................................................................100
----------
18. VENUE; SERVICE OF PROCESS...........................................................................100
-------------------------
19. WAIVER OF JURY TRIAL................................................................................101
--------------------
20. GENERAL.............................................................................................102
-------
</TABLE>
-vii-
<PAGE>
EXHIBITS
1.1 - Borrower Assumption Agreement
2.1.4 - Revolving Note
2.2.4 - Incremental Revolving Note
2.2.6 - Incremental Term Note
5.1.4A - Guarantee and Security Agreement
5.1.4B - Parent Pledge and Subordination Agreement
5.2.1 - Officer's Certificate
6.4. - Compliance Certificate
6.6.8 - Seller Subordination Terms
6.20.3A - Mortgage
6.20.3B - Leasehold Mortgage
6.20.3C - Estoppel and Consent Letter
6.20.3D - Local Real Estate Opinion
7.1 - Company, its Parent and its Subsidiaries
7.2.2 - Material Agreements
7.3 - Financing Debt, Certain Investments, etc.
7.13.3 - Tower Sites
7.14 - Hazardous Material Sites
7.15 - Multi-employer and Defined Benefit Plans
10.1 - Percentage Interests
11.1.1 - Assignment and Acceptance
-viii-
<PAGE>
SBA TELECOMMUNICATIONS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
This Agreement, dated as of June 29, 1998 is among SBA Telecommunications,
Inc., a Florida corporation, the Subsidiaries of SBA Telecommunications, Inc.
from time to time party hereto, SBA Communications Corporation, a Florida
corporation and the parent company of SBA Telecommunications, Inc., the Lenders
from time to time party hereto and BankBoston, N.A., both in its capacity as a
Lender and in its capacity as agent for itself and the other Lenders. The
parties agree as follows:
Recitals: Pursuant to this Agreement, the Lenders are extending to the
--------
Company a $55,000,000 revolving credit facility, including a $50,000,000
suballotment for letters of credit. In addition, the respective Lenders, each in
its own discretion, may elect to extend to the Company an incremental revolving
credit facility in an aggregate maximum amount of $55,000,000, which incremental
revolving credit facility would convert to a term loan on the second anniversary
of the first advance thereunder. All the credit facilities mature on June 29,
2005. These credit facilities are guaranteed by the Company's Domestic
Subsidiaries and are secured by liens on substantially all the assets of the
Company and its Domestic Subsidiaries (including the stock of the Company and
the Company's Subsidiaries and, from and after the Revolving Loan Availability
Date, real estate on which Towers contributing at least 80% of Consolidated Site
Leasing Revenues are located) and a pledge by the Parent of the stock of the
Company. The proceeds of the credit facilities may be used to acquire and
construct Towers, to acquire Tower Companies, for working capital and for
general corporate purposes, as provided herein.
1. AMENDMENT AND RESTATEMENT; DEFINITIONS.
--------------------------------------
1.1. Amendment and Restatement. Effective as of the Effective Date, this
-------------------------
Agreement amends and restates in its entirety the Credit Agreement dated as of
August 8, 1997, as amended and in effect on the date hereof prior to giving
effect to this Agreement (the "Original Credit Agreement"), among the Parent,
its Subsidiaries and a group of lenders for which BankBoston, N.A. is acting as
agent. On the Effective Date the Company and the Parent will enter into an
assignment, assumption and release agreement with the Agent in substantially the
form of Exhibit 1.1 (the "Borrower Assumption Agreement"), and the Lenders will
-----------------------------
make such assignments and other arrangements among themselves, so that the Notes
and Letter of Credit Exposure will be owed only by the Company (and the Parent
shall be released therefrom) and will be held by the Lenders in accordance with
their Percentage Interests. Amounts in respect of interest, commitment fees,
Letter of Credit fees and other amounts payable hereunder shall be payable in
accordance with the terms of the Original
<PAGE>
Credit Agreement as in effect prior to the amendment and restatement on the
Effective Date for periods prior to the Effective Date and in accordance with
this Agreement (as it amends and restates the Original Credit Agreement) for
periods from and after the Effective Date.
1.2. Definitions; Certain Rules of Construction. Certain capitalized terms
------------------------------------------
are used in this Agreement and in the other Credit Documents with the specific
meanings defined below in this Section 1. Except as otherwise explicitly
specified to the contrary or unless the context clearly requires otherwise, (a)
the capitalized term "Section" refers to sections of this Agreement, (b) the
capitalized term "Exhibit" refers to exhibits to this Agreement, (c) references
to a particular Section include all subsections thereof, (d) the word
"including" shall be construed as "including without limitation", (e) accounting
terms not otherwise defined herein have the meaning provided under GAAP, (f)
references to a particular statute or regulation include all rules and
regulations thereunder and any successor statute, regulation or rules, in each
case as from time to time in effect, (g) references to a particular Person
include such Person's successors and assigns to the extent not prohibited by
this Agreement and the other Credit Documents and (h) references to "Dollars" or
"$" mean United States Funds. References to "the date hereof" mean the date
first set forth above.
1.2.1. "Accumulated Benefit Obligations" means the actuarial present
-------------------------------
value of the accumulated benefit obligations under any Plan, calculated in
accordance with Statement No. 87 of the Financial Accounting Standards
Board.
1.2.2. "Affected Lender" is defined in Section 11.3.
---------------
1.2.3. "Affiliate" means, with respect to the Company (or any other
---------
specified Person), any other Person directly or indirectly controlling,
controlled by or under direct or indirect common control with the Company
(or such specified Person), and shall include (a) any officer or director
or general partner of the Company (or such specified Person), (b) any
Person of which the Company (or such specified Person) or any Affiliate (as
defined in clause (a) above) of the Company (or such specified Person)
shall, directly or indirectly, beneficially own either (i) at least 10% of
the outstanding equity securities having the general power to vote or (ii)
at least 10% of all equity interests or (c) any Person directly or
indirectly controlling the Company through a management agreement, voting
agreement or other contract.
1.2.4. "Agent" means BankBoston in its capacity as agent for the
-----
Lenders hereunder, as well as its successors and assigns in such capacity
pursuant to Section 10.6.
1.2.5. "Agreement" means this Amended and Restated Credit Agreement
---------
as from time to time further amended, modified and in effect.
<PAGE>
1.2.6. "Applicable Margin" means, on each day during any month, the
-----------------
percentage in the table below set opposite the ratio which (a) Consolidated
Total Debt as of the end of the most recent period of four consecutive
fiscal quarters for which financial statements have been furnished to the
Lenders in accordance with Sections 6.4.1 and 6.4.2 prior to the first day
of such month to (b) Consolidated Adjusted EBITDA for such period:
<TABLE>
<CAPTION>
Ratio of Consolidated Total Debt Base Rate Eurodollar Rate
to Consolidated Adjusted EBITDA Applicable Margin Applicable Margin
- ----------------------------------- ------------------ ------------------
<S> <C> <C>
Greater than 550% 2.250% 3.250%
Less than or equal to 550% but 2.250% 3.000%
greater than 500%
Less than or equal to 500% but 1.750% 2.500%
greater than 400%
Less than or equal to 400% but 1.250% 2.000%
greater than 300%
Less than or equal to 300% but 0.750% 1.500%
greater than 200%
Less than or equal to 200% 0.000% 1.000%
</TABLE>
Changes in the Applicable Margin shall occur on the first day of each month
after quarterly financial statements have been furnished to the Lenders in
accordance with Sections 6.4.1 or 6.4.2 from time to time. In the event that
the financial statements required to be delivered pursuant to Section 6.4.1 or
6.4.2, as applicable, are not delivered by the first day of the month after the
due date, then during the period from such first day of such month until the
date upon which they are actually delivered, the Applicable Margin shall be the
maximum amount set forth in the table above.
1.2.7. "Applicable Rate" means, at any date, the sum of:
---------------
(a) (i) with respect to each portion of the Loan subject to a
Eurodollar Pricing Option, the sum of the Applicable Margin (which
may change during the Eurodollar Interest Period for such Eurodollar
Pricing Option in accordance with the definition of "Applicable
Margin") plus the Eurodollar Rate with respect to such Eurodollar
----
Pricing Option;
-3-
<PAGE>
(ii) with respect to each other portion of the Loan, the sum of
the Applicable Margin plus the Base Rate;
----
plus (b) an additional 2% per annum effective on the day the Agent
----
notifies the Company that the interest rates hereunder are increasing
as a result of the occurrence and continuance of an Event of Default
until the earlier of such time as (i) such Event of Default is no
longer continuing or (ii) such Event of Default is deemed no longer to
exist, in each case pursuant to Section 8.3.
1.2.8. "Assignee" is defined in Section 11.1.1.
--------
1.2.9. "Assignment and Acceptance" is defined in Section 11.1.1.
-------------------------
1.2.10. "BankBoston" means BankBoston, N.A.
----------
1.2.11. "Banking Day" means any day other than Saturday, Sunday or a
-----------
day on which banks in Boston, Massachusetts are authorized or required by
law or other governmental action to close and, if such term is used with
reference to a Eurodollar Pricing Option, any day on which dealings are
effected in the Eurodollars in question by first-class banks in the inter-
bank Eurodollar markets in New York, New York.
1.2.12. "Bankruptcy Code" means Title 11 of the United States Code.
---------------
1.2.13. "Bankruptcy Default" means an Event of Default referred to in
------------------
Section 8.1.10.
1.2.14. "Base Rate" means, on any date, the greater of (a) the rate of
---------
interest announced by BankBoston at the Boston Office as its Base Rate or
(b) the sum of 1/2% plus the Federal Funds Rate.
----
1.2.15. "Borrower Assumption Agreement" is defined in Section 1.1.
-----------------------------
1.2.16. "Boston Office" means the principal banking office of
-------------
BankBoston in Boston, Massachusetts.
1.2.17. "By-laws" means all written by-laws, rules, regulations and
-------
all other documents relating to the management, governance or internal
regulation of any Person other than an individual, or interpretive of the
Charter of such Person, all as from time to time in effect.
-4-
<PAGE>
1.2.18. "Capital Expenditures" means, for any period, amounts added or
--------------------
required to be added to the property, plant and equipment or other fixed
assets account on the Consolidated balance sheet of the Company and its
Subsidiaries, prepared in accordance with GAAP, in respect of (a) the
acquisition, construction, improvement or replacement of land, buildings,
machinery, equipment, leaseholds and any other real or personal property,
(b) to the extent not included in clause (a) above, materials, contract
labor and direct labor relating thereto (excluding amounts properly
expensed as repairs and maintenance in accordance with GAAP) and (c)
software development costs to the extent not expensed.
1.2.19. "Capitalized Lease" means any lease which is required to be
-----------------
capitalized on the balance sheet of the lessee in accordance with GAAP,
including Statement Nos. 13 and 98 of the Financial Accounting Standards
Board.
1.2.20. "Capitalized Lease Obligations" means the amount of the
-----------------------------
liability reflecting the aggregate discounted amount of future payments
under all Capitalized Leases calculated in accordance with GAAP, including
Statement Nos. 13 and 98 of the Financial Accounting Standards Board.
1.2.21. "Cash Equivalents" means:
----------------
(1) negotiable certificates of deposit, time deposits (including
sweep accounts), demand deposits and bankers' acceptances having a maturity
of nine months or less and issued by any United States financial
institution having capital and surplus and undivided profits aggregating at
least $100,000,000 and rated at least Prime-1 by Moody's or A-1 by S&P or
issued by any Lender;
(2) corporate obligations having a maturity of nine months or less
and rated at least Prime-1 by Moody's or A-1 by S&P or issued by any
Lender;
(3) any direct obligation of the United States of America or any
agency or instrumentality thereof, or of any state or municipality thereof,
(i) which has a remaining maturity at the time of purchase of not more than
one year or which is subject to a repurchase agreement with any Lender (or
any other financial institution referred to in clause (a) above)
exercisable within one year from the time of purchase and (ii) which, in
the case of obligations of any state or municipality, is rated at least Aaa
by Moody's or AAA by S&P;
(4) any mutual fund or other pooled investment vehicle rated at
least Aa by Moody's or AA by S&P which invests principally in obligations
described above; and
-5-
<PAGE>
(5) any Investment by a Foreign Subsidiary in its local jurisdiction
comparable to the items described above.
1.2.22. "CERCLA" means the federal Comprehensive Environmental
------
Response, Compensation and Liability Act of 1980.
1.2.23. "Charter" means the articles of organization, certificate of
-------
incorporation, statute, constitution, joint venture agreement, partnership
agreement, trust indenture, limited liability company agreement or other
charter document of any Person other than an individual, each as from time
to time in effect.
1.2.24. "Closing Date" means the Incremental Closing Date, the
------------
Incremental Conversion Date and each other date on which any extension of
credit is made pursuant to Sections 2.1, 2.2 or 2.3.
1.2.25. "Code" means the federal Internal Revenue Code of 1986.
----
1.2.26. "Commitment" means, with respect to any Lender, such Lender's
----------
obligations to extend the respective credits contemplated by Section 2.
The original Commitments are set forth in Exhibit 10.1 and the subsequent
Commitments are recorded from time to time in the Register.
1.2.27. "Commitment Fee Rate" means, with respect to any Payment Date,
-------------------
(a) 0.500% in the event that Consolidated Total Debt on the last day of the
fiscal quarter ending approximately three months prior to such Payment
Date, exceeds 300% of Consolidated Adjusted EBITDA for the period of four
consecutive fiscal quarters ending on the last day of the fiscal quarter
ending approximately three months prior to such Payment Date and (b) 0.375%
in all other events.
1.2.28. "Communications Act" means the federal Communications Act of
------------------
1934.
1.2.29. "Company" means SBA Telecommunications, Inc., a Florida
-------
corporation and a Wholly Owned Subsidiary of the Parent.
1.2.30. "Computation Covenants" means Sections 6.5, 6.6.7, 6.6.8,
---------------------
6.6.11, 6.6.14, 6.6.15, 6.9.5, 6.10.4, 6.11.6, 6.11.7, 6.16 and 6.20.3.
1.2.31. "Consolidated" and "Consolidating", when used with reference
------------ -------------
to any term, mean that term as applied to the accounts of the Company (or
other specified Person) and all of its Subsidiaries (or other specified
group of Persons), or such of its Subsidiaries as may be specified,
consolidated (or combined) or consolidating (or
-6-
<PAGE>
combining), as the case may be, in accordance with GAAP and with
appropriate deductions for minority interests in Subsidiaries.
1.2.32. "Consolidated Adjusted EBITDA" means, for any period, the
----------------------------
total of Consolidated EBITDA minus Consolidated Site Leasing Cash Flow plus
----- ----
Consolidated Annualized Site Leasing Cash Flow.
1.2.33. "Consolidated Annualized Site Leasing Cash Flow" means, for
----------------------------------------------
any fiscal quarter, the product of (a) Consolidated Site Leasing Cash Flow
for such fiscal quarter multiplied by (b) four.
1.2.34. "Consolidated EBITDA" means, for any period, the sum of:
-------------------
(1) Consolidated Net Income;
plus
- ----
(2) all amounts deducted in computing such Consolidated Net
Income in respect of:
(1) depreciation, amortization and other non-cash charges,
(2) Consolidated Interest Expense (including Distributions
described in Section 6.10.4 in respect of interest expense of the
Parent), and
(3) taxes based upon or measured by net income (including
Distributions described in Section 6.10.5 in respect of such taxes of
the Parent).
1.2.35. "Consolidated Excess Cash Flow" means, for any period, the
-----------------------------
total of:
(a) Consolidated EBITDA,
minus (b) Capital Expenditures,
-----
minus (c) Consolidated Fixed Charges (but in no event including contingent
-----
prepayments required by Section 4.3),
minus (d) voluntary prepayments of the Incremental Term Notes and other
-----
term Financing Debt of the Company and its Subsidiaries
permitted by this Agreement,
minus (e) $2,500,000.
-----
-7-
<PAGE>
1.2.36. "Consolidated Fixed Charges" means, for any period, the sum
--------------------------
of:
(1) Consolidated Interest Expense,
plus (b) Non-Tower Capital Expenditures,
- ----
plus (c) the aggregate amount of all mandatory scheduled payments,
- ----
mandatory scheduled prepayments, sinking fund payments and
mandatory reductions in revolving loans as a result of reductions
in revolving credit availability, all with respect to
Consolidated Total Debt, including payments in the nature of
principal under Capitalized Leases, but in no event including
contingent prepayments required by Section 4.3,
plus (d) taxes based upon or measured by net income that are actually
----
paid in cash,
plus (e) Distributions paid in cash to the Parent, any of its
- ----
stockholders or any of its Subsidiaries (other than the Company
or any of its Subsidiaries), including Distributions described in
Sections 6.10.4 or 6.10.5 in respect of interest expense and
taxes, respectively, of the Parent, but without duplication of
the items described in clauses (a) and (d) above.
1.2.37. "Consolidated Interest Expense" means, for any period, the
-----------------------------
total of:
(1) the aggregate amount of interest, including commitment fees,
payments in the nature of interest under Capitalized Leases and
net payments under Interest Rate Protection Agreements, accrued
by the Company and its Subsidiaries (whether such interest is
reflected as an item of expense or capitalized, but excluding PIK
Interest) in accordance with GAAP on a Consolidated basis
(including Distributions described in Section 6.10.4 in respect
of interest expense of the Parent),
minus (b) to the extent otherwise included in clause (a) above, the
- -----
amortization of deferred financing fees, original issue discount
relating to Indebtedness and accrued interest on Indebtedness not
paid in cash to the extent permitted by the terms, including
subordination terms, of such Indebtedness (including PIK
Interest)
plus (c) actual cash payments with respect to accrued and unpaid
- ----
interest (including PIK Interest) that has previously reduced
Consolidated Interest Expense pursuant to clause (b) above.
-8-
<PAGE>
1.2.38. "Consolidated Net Income" means, for any period, the net
-----------------------
income (or loss) of the Company and its Subsidiaries, determined in
accordance with GAAP on a Consolidated basis, including (a) the income (or
loss) of any Person accrued prior to the date such Person becomes a
Subsidiary or is merged into or consolidated with the Company or any of its
Subsidiaries; and (b) to the extent not included in clause (a), the income
(or loss) properly allocable to a Tower or group of Towers or other assets
accrued prior to the date such Towers or other assets are acquired by the
Company and its Subsidiaries; provided, however, that Consolidated Net
-------- -------
Income shall not include:
(1) all amounts included in computing such net income (or loss)
in respect of (A) the write-up of any asset on or after December 31,
1997 or (B) the retirement of any Indebtedness or equity at less than
face value after December 31, 1997;
(2) extraordinary and non-recurring gains;
(3) the income of any Subsidiary to the extent the payment of
such income in the form of a Distribution or repayment of Indebtedness to
the Company or a Wholly Owned Subsidiary is not permitted, whether on
account of any Charter or By-law restriction, any agreement, instrument,
deed or lease or any law, statute, judgment, decree or governmental order,
rule or regulation applicable to such Subsidiary; and
(4) any after-tax gains or losses attributable to returned
surplus assets of any Plan.
1.2.39. "Consolidated Pro Forma Fixed Charges" means, for any future
------------------------------------
period, Consolidated Fixed Charges projected to be accrued by the Company
and its Subsidiaries. For purposes of computing Consolidated Pro Forma
Fixed Charges:
(1) the amount of Financing Debt outstanding on the first day of
such period shall be assumed to remain outstanding during the entire
period, except to the extent required to be reduced by mandatory scheduled
payments, reductions in revolving credit availability and other items
included in Consolidated Fixed Charges; and
(2) where interest varies with a floating rate, the rate in effect
on the first day of such period will be assumed to remain constant during
the entire period (giving effect to any applicable Interest Rate Protection
Agreements).
-9-
<PAGE>
1.2.40. "Consolidated Pro Forma Interest Expense" means, for any
---------------------------------------
future period, projected Consolidated Interest Expense. For purposes of
computing Consolidated Pro Forma Interest Expense:
(1) the amount of Financing Debt outstanding on the first day of
such period shall be assumed to remain outstanding during the entire
period, except to the extent required to be reduced by mandatory scheduled
payments, reductions in revolving credit availability and other items
included in Consolidated Fixed Charges; and
(2) where interest varies with a floating rate, the rate in effect
on the first day of such period will be assumed to remain constant during
the entire period (giving effect to any applicable Interest Rate Protection
Agreements).
1.2.41. "Consolidated Revenues" means, for any period:
---------------------
(1) the net operating revenues (after reductions for discounts,
commissions and bad debt reserves) of the Company and its Subsidiaries
determined in accordance with GAAP on a Consolidated basis, minus
-----
(2) any proceeds included in such net operating revenues from the
sale, refinancing, condemnation or destruction of any assets.
1.2.42. "Consolidated Site Leasing Cash Flow" means, for any period,
-----------------------------------
the remainder of (a) Consolidated Site Leasing Revenues minus (b) the
-----
cost of site leasing revenue of the Company and its Subsidiaries determined
in accordance with GAAP on a Consolidated basis.
1.2.43. "Consolidated Site Leasing Revenues" means, for any period:
----------------------------------
(1) the net operating revenues (after reductions for discounts,
commissions and bad debt reserves) of the Company and its Subsidiaries
determined in accordance with GAAP on a Consolidated basis, generated from
acquired, constructed, leased, subleased or managed Towers, minus
-----
(2) any proceeds included in such net operating revenues from the
sale, refinancing, condemnation or destruction of any assets.
1.2.44. "Consolidated Total Debt" means, at any date, all Financing
-----------------------
Debt of the Company and its Subsidiaries on a Consolidated basis.
1.2.45. "Credit Documents" means:
----------------
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<PAGE>
(1) this Agreement, the Notes, each Letter of Credit, each draft
presented or accepted under a Letter of Credit, the Guarantee and Security
Agreement, the Parent Pledge and Subordination Agreement, the fee
agreement contemplated by Section 5.1.2, each Estoppel and Consent Letter,
each Mortgage, the Borrower Assumption Agreement and each Interest Rate
Protection Agreement provided by a Lender (or an Affiliate of a Lender) to
the Company or any of its Subsidiaries, each as from time to time in
effect; and
(2) any other present or future agreement or instrument from time to
time entered into among the Company, any of its Subsidiaries or any other
Obligor, on one hand, and the Agent, any Letter of Credit Issuer or all the
Lenders, on the other hand, relating to, amending or modifying this
Agreement or any other Credit Document referred to above or which is stated
to be a Credit Document, each as from time to time in effect.
1.2.46. "Credit Exposure" means, at any date, the Loan and Letter of
---------------
Credit Exposure, collectively.
1.2.47. "Credit Obligations" means all present and future liabilities,
------------------
obligations and Indebtedness of the Company, any of its Subsidiaries or any
other Obligor owing to the Agent or any Lender (or any Affiliate of a
Lender) under or in connection with this Agreement or any other Credit
Document, including obligations in respect of principal, interest,
reimbursement obligations under Letters of Credit and Interest Rate
Protection Agreements provided by a Lender (or an Affiliate of a Lender),
commitment fees, Letter of Credit fees, amounts provided for in Sections
3.2.4, 3.5 and 9 and other fees, charges, indemnities and expenses from
time to time owing hereunder or under any other Credit Document (all
whether accruing before or after a Bankruptcy Default and regardless of
whether allowed as a claim in bankruptcy or similar proceedings).
1.2.48. "Credit Participant" is defined in Section 11.2.
------------------
1.2.49. "Credit Security" means all assets now or from time to time
---------------
hereafter subjected to a security interest, mortgage or charge (or intended
or required so to be subjected pursuant to the Guarantee and Security
Agreement or any other Credit Document) to secure the payment or
performance of any of the Credit Obligations on a pari passu basis,
including the assets described in section 3.1 of the Guarantee and the
Security Agreement and in section 2.1 of the Parent Pledge and
Subordination Agreement.
1.2.50. "Default" means any Event of Default and any event or
-------
condition which with the passage of time or giving of notice, or both,
would become an Event of
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<PAGE>
Default and the filing against the Company, any of its Subsidiaries or any
other Obligor of a petition commencing an involuntary case under the
Bankruptcy Code.
1.2.51. "Delinquency Period" is defined in Section 10.4.4.
------------------
1.2.52. "Delinquent Lender" is defined in Section 10.4.4.
-----------------
1.2.53. "Delinquent Payment" is defined in Section 10.4.4.
------------------
1.2.54. "Designated Financing Debt" means Financing Debt incurred by
-------------------------
the Company or any of its Subsidiaries after the Effective Date other than
Financing Debt permitted by Sections 6.6.1 (the Loan), 6.6.7 (purchase
money Indebtedness and Capitalized Leases), 6.6.10 (intercompany
Indebtedness) and 6.6.11 (subordinated debt).
1.2.55. "Designated Real Property" means each real property owned or
------------------------
leased by the Company or any of its Subsidiaries upon which any Tower is
located and which must be pledged to the Agent to comply with Section
6.20.3.
1.2.56. "Distribution" means, with respect to the Company (or other
------------
specified Person):
(1) the declaration or payment of any dividend or distribution on or
in respect of any shares of any class of capital stock of or other equity
interests in the Company (or such specified Person);
(2) the purchase, redemption or other retirement of any shares of
any class of capital stock of or other equity interest in the Company (or
such specified Person) or of options, warrants or other rights for the
purchase of such shares, directly, indirectly through a Subsidiary or
otherwise;
(3) any other distribution on or in respect of any shares of any
class of capital stock of or equity or other beneficial interest in the
Company (or such specified Person);
(4) any payment of principal or interest with respect to, or any
purchase, redemption or defeasance of, any Financing Debt of the Company
(or such specified Person) which by its terms or the terms of any agreement
is subordinated to the payment of the Credit Obligations; and
(5) any payment, loan or advance by the Company (or such specified
Person) to, or any other Investment by the Company (or such specified
Person) in, the
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<PAGE>
holder of any shares of any class of capital stock of or equity interest in
the Company (or such specified Person), or any Affiliate of such holder
(including the payment of management fees and transaction fees and
expenses);
provided, however, that the term "Distribution" shall not include (i) dividends
- -------- -------
payable in perpetual common stock of or other similar equity interests in the
Company (or such specified Person) or (ii) payments in the ordinary course of
business in respect of (A) reasonable compensation paid to employees, officers
and directors, (B) advances and reimbursements to employees for travel expenses,
drawing accounts and similar expenditures, or (C) rent paid to, or accounts
payable for services rendered or goods sold by, non-Affiliates that own capital
stock of or other equity interests in the Company (or such specified Person).
1.2.57. "Domestic Subsidiary" means any Subsidiary that is not a
-------------------
Foreign Subsidiary.
1.2.58. "Effective Date" means such date prior to June 30, 1998 agreed
--------------
to by the Company and the Agent as the date the amendment and restatement
of the Original Credit Agreement as contemplated hereby becomes effective.
1.2.59. "Environmental Laws" means all applicable federal, state or
------------------
local statutes, laws, ordinances, codes, rules, regulations and guidelines
(including consent decrees and administrative orders) relating to public
health and safety and protection of the environment, including the federal
Occupational Health and Safety Act.
1.2.60 "ERISA" means the federal Employee Retirement Income Security
-----
Act of 1974.
1.2.61. "ERISA Group Person" means the Company, any Subsidiary of the
------------------
Company and any Person which is a member of the controlled group or under
common control with the Company or any Subsidiary within the meaning of
section 414 of the Code or section 4001(a)(14) of ERISA.
1.2.62. "ESMR Operator" means a person licensed by the FCC to
-------------
operate an enhanced specialized mobile radio communications system, which
system employs digital technology with a multi-site configuration that
permits frequency re-use in specialized mobile radio frequencies.
1.2.63. "Estoppel and Consent Letters" is defined in Section 6.20.3.
----------------------------
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<PAGE>
1.2.64. "Eurodollars" means, with respect to any Lender, deposits of
-----------
United States Funds in a non-United States office or an international
banking facility of such Lender.
1.2.65. "Eurodollar Basic Rate" means, for any Eurodollar Interest
---------------------
Period, the rate of interest at which Eurodollar deposits which have a term
corresponding to such Eurodollar Interest Period are offered to the Agent
by first class banks in the inter-bank Eurodollar market for delivery in
immediately available funds at a Eurodollar Office on the first day of such
Eurodollar Interest Period as determined by the Agent at approximately
10:00 a.m. (Boston time) two Banking Days prior to the date upon which such
Eurodollar Interest Period is to commence (which determination by the Agent
shall, in the absence of manifest error, be conclusive).
1.2.66. "Eurodollar Interest Period" means any period, selected as
--------------------------
provided in Section 3.2.1, of one, two, three or six months, commencing on
any Banking Day and ending on the corresponding date in the subsequent
calendar month so indicated (or, if such subsequent calendar month has no
corresponding date, on the last day of such subsequent calendar month);
provided, however, that subject to Section 3.2.3, if any Eurodollar
-------- -------
Interest Period so selected would otherwise begin or end on a date which is
not a Banking Day, such Eurodollar Interest Period shall instead begin or
end, as the case may be, on the immediately preceding or succeeding Banking
Day as determined by the Agent in accordance with the then current banking
practice in the inter-bank Eurodollar market with respect to Eurodollar
deposits at the applicable Eurodollar Office, which determination by the
Agent shall, in the absence of manifest error, be conclusive.
1.2.67. "Eurodollar Office" means such non-United States office or
-----------------
international banking facility of any Lender as the Lender may from time to
time select.
1.2.68. "Eurodollar Pricing Options" means the options granted
--------------------------
pursuant to Section 3.2.1 to have the interest on any portion of the Loan
computed on the basis of a Eurodollar Rate.
1.2.69. "Eurodollar Rate" for any Eurodollar Interest Period means the
---------------
rate, rounded upward to the nearest 1/100%, obtained by dividing (a) the
Eurodollar Basic Rate for such Eurodollar Interest Period by (b) an amount
equal to 1 minus the Eurodollar Reserve Rate; provided, however, that if at
----- -------- -------
any time during such Eurodollar Interest Period the Eurodollar Reserve Rate
applicable to any outstanding Eurodollar Pricing Option changes, the
Eurodollar Rate for such Eurodollar Interest Period shall automatically be
adjusted to reflect such change, effective as of the date of such change to
the extent required by the Legal Requirement implementing such change.
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<PAGE>
1.2.70. "Eurodollar Reserve Rate" means the stated maximum rate
-----------------------
(expressed as a decimal) of all reserves (including any basic,
supplemental, marginal or emergency reserve or any reserve asset), if any,
as from time to time in effect, required by any Legal Requirement to be
maintained by any Lender against (a) "Eurocurrency liabilities" as
specified in Regulation D of the Board of Governors of the Federal Reserve
System applicable to Eurodollar Pricing Options, (b) any other category of
liabilities that includes Eurodollar deposits by reference to which the
interest rate on portions of the Loan subject to Eurodollar Pricing Options
is determined, (c) the principal amount of or interest on any portion of
the Loan subject to a Eurodollar Pricing Option or (d) any other category
of extensions of credit, or other assets, that includes loans subject to a
Eurodollar Pricing Option by a non-United States office of any of the
Lenders to United States residents, in each case without the benefits of
credits for prorations, exceptions or offsets that may be available to a
Lender.
1.2.71. "Event of Default" is defined in Section 8.1.
----------------
1.2.72. "Executive Management" means the Parent's Chief Executive
--------------------
Officer, Chief Financial Officer, Chief Operating Officer, Executive Vice
President-Sales and Marketing and Senior Vice President-Corporate
Development and General Counsel.
1.2.73. "FAA" means the Federal Aviation Administration.
---
1.2.74. "FCC" means the Federal Communications Commission.
---
1.2.75. "Federal Funds Rate" means, for any day, the rate equal to the
------------------
weighted average (rounded upward to the nearest 1/8%) of the rates on
overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, (a) as such weighted average is
published for such day (or, if such day is not a Banking Day, for the
immediately preceding Banking Day) by the Federal Reserve Bank of New York
or (b) if such rate is not so published for such Banking Day, quotations
received by the Agent from three federal funds brokers of recognized
standing selected by the Agent. Each determination by the Agent of the
Federal Funds Rate shall, in the absence of manifest error, be conclusive.
1.2.76. "Final Maturity Date" means June 29, 2005.
-------------------
1.2.77. "Financing Debt" means each of the items described in clauses
--------------
(a) through (f) of the definition of the term "Indebtedness" and, without
duplication, any Guarantees of such items.
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<PAGE>
1.2.78. "Financial Officer" of the Company (or other specified Person)
-----------------
means its chief executive officer, chief financial officer, chairman,
president or treasurer, each of whose incumbency and signatures have been
certified to the Agent by the secretary or other appropriate attesting
officer of the Company (or such specified Person).
1.2.79. "Foreign Subsidiary" means each Subsidiary that is organized
------------------
under the laws of, and conducting its business primarily in a jurisdiction
outside of, the United States of America.
1.2.80. "Funding Liability" means (a) any Eurodollar deposit which was
-----------------
used (or deemed by Section 3.2.6 to have been used) to fund any portion of
the Loan subject to a Eurodollar Pricing Option, and (b) any portion of the
Loan subject to a Eurodollar Pricing Option funded (or deemed by Section
3.2.6 to have been funded) with the proceeds of any such Eurodollar
deposit.
1.2.81. "GAAP" means generally accepted accounting principles as from
----
time to time in effect, including the statements and interpretations of the
United States Financial Accounting Standards Board; provided, however, that
-------- -------
for purposes of compliance with Section 6 (other than Section 6.4) and the
related definitions, "GAAP" means such principles as in effect on December
31, 1997 as applied by the Company and its Subsidiaries in the preparation
of the most recent annual statements referred to in Section 7.2.1(a), and
consistently followed, without giving effect to any subsequent changes
thereto.
1.2.82. "Guarantee" means, with respect to the Company (or other
---------
specified Person):
(1) any guarantee by the Company (or such specified Person) of the
payment or performance of, or any contingent obligation by the Company (or
such specified Person) in respect of, any Indebtedness or other obligation
of any primary obligor;
(2) any other arrangement whereby credit is extended to a primary
obligor on the basis of any promise or undertaking of the Company (or such
specified Person), including any binding "comfort letter" or "keep well
agreement" written by the Company (or such specified Person), to a creditor
or prospective creditor of such primary obligor, to (i) pay the
Indebtedness of such primary obligor, (ii) purchase an obligation owed by
such primary obligor, (iii) pay for the purchase or lease of assets or
services regardless of the actual delivery thereof or (iv) maintain the
capital, working capital, solvency or general financial condition of such
primary obligor;
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<PAGE>
(3) any liability of the Company (or such specified Person), as a
general partner of a partnership in respect of Indebtedness or other
obligations of such partnership;
(4) any liability of the Company (or such specified Person) as a
joint venturer of a joint venture in respect of Indebtedness or other
obligations of such joint venture;
(5) any liability of the Company (or such specified Person) with
respect to the tax liability of others as a member of a group (other than a
group consisting solely of the Company and its Subsidiaries) that is
consolidated for tax purposes; and
(6) reimbursement obligations, whether contingent or matured, of the
Company (or such specified Person) with respect to letters of credit,
bankers acceptances, surety bonds, other financial guarantees and Interest
Rate Protection Agreements,
in each case whether or not any of the foregoing are reflected on the balance
sheet of the Company (or such specified Person) or in a footnote thereto;
provided, however, that the term "Guarantee" shall not include endorsements for
- -------- -------
collection or deposit in the ordinary course of business. The amount of any
Guarantee and the amount of Indebtedness resulting from such Guarantee shall be
the maximum amount that the guarantor may become obligated to pay in respect of
the obligations (whether or not such obligations are outstanding at the time of
computation).
1.2.83. "Guarantee and Security Agreement" is defined in Section
--------------------------------
5.1.4.
1.2.84. "Guarantor" means each Domestic Subsidiary of the Company
---------
party to, or which subsequently becomes party to, the Guarantee and
Security Agreement as a Guarantor.
1.2.85. "Hazardous Material" means any pollutant, toxic or hazardous
------------------
material or waste, including any "hazardous substance" or "pollutant" or
"contaminant" as defined in section 101(14) of CERCLA or any other
Environmental Law or regulated as toxic or hazardous under RCRA or any
other Environmental Law.
1.2.86. "Incremental Closing Date" is defined in Section 2.2.2.
------------------------
1.2.87. "Incremental Commitment Notice" is defined in section 2.2.1.
-----------------------------
1.2.88. "Incremental Conversion Date" is defined in Section 2.2.2.
---------------------------
1.2.89. "Incremental Facility" is defined in Section 2.2.1.
--------------------
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<PAGE>
1.2.90. "Incremental Revolving Loan" is defined in Section 2.2.4.
--------------------------
1.2.91. "Incremental Revolving Notes" is defined in Section 2.2.4.
---------------------------
1.2.92. "Incremental Term Loan" is defined in Section 2.2.5.
---------------------
1.2.93. "Incremental Term Notes" is defined in Section 2.2.6.
----------------------
1.2.94. "Indebtedness" means all obligations, contingent or otherwise,
------------
which in accordance with GAAP are required to be classified upon the
balance sheet of the Company (or other specified Person) as liabilities,
but in any event including (without duplication):
(1) borrowed money;
(2) indebtedness evidenced by notes, debentures or similar
instruments;
(3) Capitalized Lease Obligations;
(4) the deferred purchase price of assets, services or securities,
including related noncompetition, consulting and stock repurchase
obligations (other than ordinary trade accounts payable within six months
after the incurrence thereof in the ordinary course of business);
(5) mandatory redemption or dividend rights on capital stock (or
other equity);
(6) reimbursement obligations, whether contingent or matured, with
respect to letters of credit, bankers acceptances, surety bonds, other
financial guarantees and Interest Rate Protection Agreements (without
duplication of other Indebtedness supported or guaranteed thereby);
(7) unfunded pension liabilities;
(8) obligations that are immediately and directly due and payable
out of the proceeds of or production from property;
(9) liabilities secured by any Lien existing on property owned or
acquired by the Company (or such specified Person), whether or not the
liability secured thereby shall have been assumed; and
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<PAGE>
(10) all Guarantees in respect of Indebtedness of others.
1.2.95. "Indemnified Party" is defined in Section 9.2.
-----------------
1.2.96. "Intellectual Property Security Agreements" is defined in
-----------------------------------------
Section 5.1.4.
1.2.97. "Interest Rate Protection Agreement" means any interest rate
----------------------------------
swap, interest rate cap, interest rate hedge or other contractual
arrangement that converts variable interest rates into fixed interest
rates, fixed interest rates into variable interest rates or other similar
arrangements.
1.2.98. "Investment" means, with respect to the Company (or other
----------
specified Person):
(1) any share of capital stock, partnership or other equity
interest, evidence of Indebtedness or other security issued by any other
Person;
(2) any loan, advance or extension of credit to, or contribution to
the capital of, any other Person;
(3) any Guarantee of the Indebtedness of any other Person;
(4) any acquisition of all, or any division or similar operating
unit of, the business of any other Person or the assets comprising such
business, division or unit; and
(5) any other similar investment.
The investments described in the foregoing clauses (a) through (e) shall be
included in the term "Investment" whether they are made or acquired by purchase,
exchange, issuance of stock or other securities, merger, reorganization or any
other method; provided, however, that the term "Investment" shall not include
-------- -------
(i) trade and customer accounts receivable for property leased, goods furnished
or services rendered in the ordinary course of business and payable on a current
basis in accordance with customary trade terms, (ii) deposits, advances or
prepayments to suppliers for property leased or licensed, goods furnished and
services rendered in the ordinary course of business, (iii) advances to
employees for relocation and travel expenses, drawing accounts and similar
expenditures, (iv) stock or other securities acquired in connection with the
satisfaction or enforcement of Indebtedness or claims due to the Company (or
such specified Person) or as security for any such Indebtedness or claim or (v)
demand deposits in banks or similar financial institutions.
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<PAGE>
In determining the amount of outstanding Investments:
(A) the amount of any Investment shall be the cost thereof minus any
-----
returns of capital in cash on such Investment (determined in accordance
with GAAP without regard to amounts realized as income on such Investment);
(B) the amount of any Investment in respect of a purchase described
in clause (d) above shall include the amount of any Financing Debt assumed
in connection with such purchase or secured by any asset acquired in such
purchase (whether or not any Financing Debt is assumed) or for which any
Person that becomes a Subsidiary is liable on the date on which the
securities of such Person are acquired; and
(C) no Investment shall be increased as the result of an increase in
the undistributed retained earnings of the Person in which the Investment
was made or decreased as a result of an equity interest in the losses of
such Person.
1.2.99. "Leases" means the leases with respect to real property on
------
which Towers are located.
1.2.100. "Legal Requirement" means any present or future requirement
-----------------
imposed upon any of the Lenders or the Company and its Subsidiaries by any
law, statute, rule, regulation, directive, order, decree or guideline (or
any interpretation thereof by courts or of administrative bodies) of the
United States of America, or any jurisdiction in which any Eurodollar
Office is located or any state or political subdivision of any of the
foregoing, or by any board, governmental or administrative agency, central
bank or monetary authority of the United States of America, any
jurisdiction in which any Eurodollar Office is located, or any political
subdivision of any of the foregoing. Any such law, statute, rule,
regulation, directive, order, decree, guideline or interpretation imposed
on any of the Lenders not having the force of law shall be deemed to be a
Legal Requirement for purposes of Section 3 if such Lender reasonably
believes that compliance therewith is customary commercial practice.
1.2.101. "Lender" means each of the Persons listed as lenders on the
------
signature pages hereto, including BankBoston in its capacity as a Lender
and such other Persons who may from time to time own a Percentage Interest
in the Credit Obligations, but the term "Lender" shall not include any
Credit Participant.
1.2.102. "Lending Officer" means such individuals whom the Agent may
---------------
designate in writing to the Company from time to time as the individual who
may receive telephone requests for extensions of credit under Sections
2.1.3, 2.2.3 and 2.3.2.
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1.2.103. "Letter of Credit" is defined in Section 2.3.1.
----------------
1.2.104. "Letter of Credit Exposure" means, at any date, the sum of
-------------------------
(a) the aggregate face amount of all drafts that may then or thereafter be
presented by beneficiaries under all Letters of Credit then outstanding,
plus (b) the aggregate face amount of all drafts that the Letter of Credit
Issuer has previously accepted under Letters of Credit but has not paid.
1.2.105. "Letter of Credit Issuer" means, for any Letter of Credit,
-----------------------
BankBoston or, in the event BankBoston does not for any reason issue a
requested Letter of Credit, another Lender designated by the Agent to issue
such Letter of Credit, which designation shall be made promptly by the
Agent.
1.2.106. "License Agreements" means any license or lease agreements
------------------
between the Company or one of its Subsidiaries, on one hand, and its
customers, on the other hand, for the licensing or leasing of space on any
Tower.
1.2.107. "Lien" means, with respect to the Company (or any other
----
specified Person):
(1) any lien, encumbrance, mortgage, pledge, charge or security
interest of any kind upon any property or assets of the Company (or such
specified Person), whether now owned or hereafter acquired, or upon the
income or profits therefrom;
(2) the acquisition of, or the agreement to acquire, any property or
asset upon conditional sale or subject to any other title retention
agreement, device or arrangement (including a Capitalized Lease);
(3) the sale, assignment, pledge or transfer for security of any
accounts, general intangibles or chattel paper of the Company (or such
specified Person), with or without recourse; and
(4) the transfer of any tangible property or assets for the purpose
of subjecting such items to the payment of previously outstanding
Indebtedness in priority to payment of the general creditors of the Company
(or such specified Person).
1.2.108. "Loan" means, collectively, the Revolving Loan, the
----
Incremental Revolving Loan and the Incremental Term Loan.
1.2.109. "Margin Stock" means "margin stock" within the meaning of
------------
Regulations T, U or X of the Board of Governors of the Federal Reserve
System.
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<PAGE>
1.2.110. "Material Adverse Change" means, since any specified date or
-----------------------
from the circumstances existing immediately prior to the happening of any
specified event, a material adverse change in (a) the business, assets,
financial condition, income or prospects of the Company and its
Subsidiaries (on a Consolidated basis), whether as a result of (i) general
economic conditions affecting the wireless telecommunications industry,
(ii) difficulties in obtaining supplies and raw materials, (iii) fire,
flood or other natural calamities, (iv) environmental pollution, (v)
regulatory changes, judicial decisions, war or other governmental action or
(vi) any other event or development, whether or not related to those
enumerated above or (b) the ability of the Obligors to perform their
obligations under the Credit Documents or (c) the rights and remedies of
the Agent and the Lenders under the Credit Documents to the extent that the
Agent and the Lenders are unable practically to realize the principal legal
benefits of their aggregate rights and remedies under the Credit Documents.
1.2.111. "Material Agreements" is defined in Section 7.2.2.
-------------------
1.2.112. "Maximum Amount of Incremental Credit" is defined in Section
------------------------------------
2.2.1.
1.2.113. "Maximum Amount of Revolving Credit" is defined in Section
----------------------------------
2.1.2.
1.2.114. "Moody's" means Moody's Investors Service, Inc.
-------
1.2.115. "Mortgages" means the mortgages and the deeds of trust (and
---------
the leasehold mortgages and leasehold deeds of trust) executed by the
Company or any of its Subsidiaries in favor of the Agent for the benefit of
the Lenders, encumbering the real property or leaseholds upon which Towers
are located, in substantially the form of Exhibits 6.20.3A and 6.20.3B,
respectively.
1.2.116. "Multiemployer Plan" means any Plan that is a "multiemployer
------------------
plan" as defined in section 4001(a)(3) of ERISA.
1.2.117. "Net Asset Sale Proceeds" means the cash proceeds of the sale
-----------------------
or disposition of assets (including by way of merger), and the cash
proceeds of any insurance payments on account of the destruction or loss of
property, by the Company or any of its Subsidiaries after the Effective
Date, net of (a) any Indebtedness permitted by Section 6.6.7 (Capitalized
Leases and purchase money indebtedness) secured by assets being sold in
such transaction required to be paid from such proceeds, (b) income taxes
that, as estimated by the Company in good faith, will be required to be
paid by the Company or any of its Subsidiaries in cash as a result of, and
within 15 months after, such sale or disposition, (c) reasonable reserves
for liabilities resulting from the
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<PAGE>
sale of assets and (d) all reasonable expenses of the Company or any of its
Subsidiaries payable in connection with the sale or disposition; provided,
--------
however, that "Net Asset Sale Proceeds" shall not include cash proceeds:
-------
(1) of asset sales permitted by Section 6.11.1,
(2) of mergers permitted by Section 6.11.2,
(3) from the sale of Tower assets that will be used to
acquire replacement or other Tower assets within 180 days after such
sale or disposition; provided, however, that if any amount in this
-------- -------
clause (iii) is not actually used to acquire replacement or other
Tower assets within such 180-day period, such amount shall then
automatically become Net Asset Sale Proceeds,
(4) in an amount less than $100,000 for each transaction or
series of related transactions, but not to exceed $300,000 in the
aggregate after the Effective Date; or
(5) constituting insurance payments on account of the
destruction or loss of property to the extent applied within 180 days
after receipt to the restoration or replacement of such property.
1.2.118. "Net Debt Proceeds" means cash proceeds of the incurrence of
-----------------
Designated Financing Debt by the Company or any of its Subsidiaries (net of
reasonable out-of-pocket transaction fees and expenses).
1.2.119. "Net Equity Proceeds" means the cash proceeds received by the
-------------------
Parent or any of its Subsidiaries in connection with any sale, disposition
or issuance after the Effective Date of any shares of capital stock or
other equity interests of the Company or any of its Subsidiaries or
options, warrants or other purchase rights to acquire such capital stock or
other equity interests to, or receipt of a capital contribution from, any
Person (other than any Obligors or their officers, employees and directors)
(net of reasonable out-of-pocket fees and expenses), excluding any such
cash proceeds that are used by the Company or any of its Subsidiaries
within 180 days to acquire or construct Towers; provided, however, that if
-------- -------
any such amount is not actually used to acquire Tower assets within such
180-day period, such amount shall then automatically become Net Equity
Proceeds.
1.2.120. "Nonperforming Lender" is defined in Section 10.4.4.
--------------------
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<PAGE>
1.2.121. "Non-Tower Capital Expenditures" means, for any period the
------------------------------
remainder of (a) Capital Expenditures minus (b) amounts included in the
-----
foregoing clause (a) on account of Tower construction and acquisition
costs.
1.2.122. "Notes" means, collectively, the Revolving Notes, the
-----
Incremental Revolving Notes and the Incremental Term Notes.
1.2.123. "Obligor" means the Company, the Parent, each Guarantor and
-------
each other Person guaranteeing or providing collateral for the Credit
Obligations. As of the Effective Date the only Obligors are the Company,
the Parent and the Company's Domestic Subsidiaries.
1.2.124. "Offering Memorandum" is defined in Section 7.2.1.
-------------------
1.2.125. "Original Credit Agreement" is defined in Section 1.1.
-------------------------
1.2.126. "Overdue Reimbursement Rate" means, at any date, the highest
--------------------------
Applicable Rate then in effect.
1.2.127. "Parent" means SBA Communications Corporation, a Florida
------
corporation.
1.2.128. "Parent Discount Notes" means the $269,000,000 of 12% Senior
---------------------
Discount Notes due 2008 of the Parent offered pursuant to the Offering
Memorandum, providing cash proceeds to the Parent of at least $144,500,000.
1.2.129. "Parent Discount Notes Indenture" means the Indenture dated
-------------------------------
March 2, 1998 between the Parent and State Street Bank and Trust Company,
as trustee.
1.2.130. "Parent Pledge and Subordination Agreement" is defined in
-----------------------------------------
Section 5.1.4.
1.2.131. "Payment Date" means (a) the last Banking Day of each March,
------------
June, September and December occurring after the Effective Date, (b) the
Incremental Conversion Date and (c) the Final Maturity Date.
1.2.132. "PBGC" means the Pension Benefit Guaranty Corporation or any
----
successor entity.
1.2.133. "PCS A-F Block Provider" means a licensee of personal
----------------------
communications services frequencies who was licensed by the FCC (a) in
auctions of
-24-
<PAGE>
the A-block, B-block, D-block, E-block or F-block frequencies concluded in
1995, 1996 and 1997 or (b) in other auctions for which the field of bidders
is not restricted by size or other economic factors.
1.2.134. "PCS C-Block Provider" means (a) a licensee of 30 MHz
--------------------
personal communication services frequencies who was licensed by the FCC in
the C-block auction concluded in May 1996 and (b) any other licensee of
personal communications services frequencies who was licensed by the FCC in
a special auction restricted to small businesses.
1.2.135. "Percentage Interest" means, with respect to any Lender, the
-------------------
Commitment of such Lender with respect to the respective portions of the
Loan and Letter of Credit Exposure. For purposes of determining votes or
consents by the Lenders, the Percentage Interest of any Lender shall be
computed as follows: (a) at all times when no Event of Default under
Section 8.1.1 and no Bankruptcy Default exists, the ratio that the
respective Commitments of such Lender bears to the total Commitments of all
Lenders as from time to time in effect and reflected in the Register, and
(b) at all other times, the ratio that the respective amounts of the
outstanding Loan and Letter of Credit Exposure owing to such Lender bear to
the total outstanding Loan and Letter of Credit Exposure owing to all
Lenders.
1.2.136. "Performing Lender" is defined in Section 10.4.4.
-----------------
1.2.137. "Person" means any present or future natural person or any
------
corporation, association, partnership, joint venture, limited liability,
joint stock or other company, business trust, trust, organization, business
or government or any governmental agency or political subdivision thereof.
1.2.138. "PIK Interest" means any accrued interest payments on
------------
Financing Debt that are postponed, evidenced by book entry accrual or made
through the issuance of "payment-in-kind" notes or other similar
securities, all in accordance with the terms of such Financing Debt;
provided, however, that in no event shall PIK Interest include payments
-------- -------
made with cash or Cash Equivalents.
1.2.139. "Plan" means, at any date, any pension benefit plan subject
----
to Title IV of ERISA maintained, or to which contributions have been made
or are required to be made, by any ERISA Group Person within six years
prior to such date.
1.2.140. "Pledged Towers" means, on any date, Towers with respect to
--------------
which the Lenders hold a perfected, first priority security interest in the
Towers and the real property or leasehold upon which such Towers are
located and, in the case of leaseholds, the Lenders have received an
Estoppel and Consent Letter from the lessor.
-25-
<PAGE>
1.2.141. "RCRA" means the federal Resource Conservation and Recovery
----
Act, 42 U.S.C. section 690, et seq.
-- ---
1.2.142. "Register" is defined in Section 11.1.3.
--------
1.2.143. "Related Fund" means, with respect to any Lender that is a
------------
fund that invests in senior bank loans, any other fund that invests in
senior bank loans and is managed by the same investment advisor as such
Lender or by an Affiliate of such investment advisor.
1.2.144. "Replacement Lender" is defined in Section 11.3.
------------------
1.2.145. "Required Lenders" means, with respect to any approval,
----------------
consent, modification, waiver or other action to be taken by the Agent or
the Lenders under the Credit Documents which require action by the Required
Lenders, such Lenders as own at least 60% of the Percentage Interests;
provided, however, that with respect to any matters referred to in the
-------- -------
proviso to Section 15.1, Required Lenders means such Lenders as own at
least the respective portions of the Percentage Interests required by
Section 15.1.
1.2.146. "Revolving Loan" is defined in Section 2.1.4.
--------------
1.2.147. "Revolving Loan Availability Date" means the third Banking
--------------------------------
Day after the Lenders first receive reports delivered in accordance with
Section 6.4.1 or 6.4.2 that show Consolidated Adjusted EBITDA for the
period of four consecutive fiscal quarters then ending on a date set forth
in the table below equal to or in excess of the amount indicated in such
table:
Fiscal Quarter Ending Amount
--------------------- ------
September 30, 1998 $2,500,000
December 31, 1998 $2,500,000
March 31, 1999 $4,250,000
1.2.148. "Revolving Notes" is defined in Section 2.1.4.
---------------
1.2.149. "S&P" means Standard & Poor's, a division of The McGraw Hill
---
Companies, Inc.
1.2.150. "Securities Act" means the federal Securities Act of 1933.
--------------
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<PAGE>
1.2.151. "Series A Preferred Stock" means the 4% Series A Convertible
------------------------
Preferred Stock, par value $0.01 per share, of the Parent originally issued
pursuant to the Private Placement Offering Memorandum for the Series A
Preferred Stock dated as of February 28, 1997, as updated as of May 15,
1997.
1.2.152. "Series B Preferred Stock" means the 4% Series B Redeemable
------------------------
Preferred Stock, par value $0.01 per share, of the Parent issuable upon
conversion of the Series A Preferred Stock.
1.2.153. "Series C Preferred Stock" means the 4% Series C Convertible
------------------------
Preferred Stock, par value $0.01 per share, of the Parent issuable pursuant
to the Series A Convertible Preferred Stock Purchase Agreement dated as of
March 6, 1997 among the Parent and the purchasers named therein.
1.2.154. "Series D Preferred Stock" means the 4% Series D Redeemable
------------------------
Preferred Stock, par value $0.01 per share, of the Parent issuable upon
conversion of the Series C Preferred Stock.
1.2.155. "Subsidiary" means any Person of which the Company (or other
----------
specified Person) shall at the time, directly or indirectly through one or
more of its Subsidiaries, (a) own at least 50% of the outstanding capital
stock (or other shares of beneficial interest) entitled to vote generally,
(b) hold at least 50% of the partnership, joint venture or similar
interests or (c) be a general partner or joint venturer.
1.2.156. "Syndication Agent" means BancBoston Securities Inc.
-----------------
1.2.157. "Tax" means any present or future tax, levy, duty, impost,
---
deduction, withholding or other charges of whatever nature at any time
required by any Legal Requirement (a) to be paid by any Lender or (b) to be
withheld or deducted from any payment otherwise required hereby to be made
to any Lender, in each case on or with respect to its obligations
hereunder, the Loan, any payment in respect of the Credit Obligations or
any Funding Liability not included in the foregoing; provided, however,
-------- -------
that the term "Tax" shall not include taxes imposed upon or measured by the
net income of such Lender (other than withholding taxes) or franchise taxes
that are imposed in lieu of income taxes.
1.2.158. "Tower Company" means a corporation or any other entity
-------------
engaged primarily in the business of owning, managing, leasing and/or
operating Towers and leasing space thereon to tenants.
1.2.159. "Tower Threshold Date" means the date on which the Company
--------------------
and its Subsidiaries first (a) own, manage or lease in their entirety at
least 400 Towers
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<PAGE>
and (b) have spent after March 1, 1998 for the construction and acquisition
of Towers and the acquisition of Tower Companies an amount equal to the net
proceeds received by the Parent from the issuance of the Parent Discount
Notes minus $10,000,000.
-----
1.2.160. "Towers" means towers, rooftops or other structures on
------
which are affixed antennas for wireless telecommunications carriers and/or
broadcasting services.
1.2.161. "Tranche" means each of the Revolving Loan, the
-------
Incremental Revolving Loan and the Incremental Term Loan, considered as a
separate credit facility.
1.2.162. "Uniform Customs and Practice" is defined in
----------------------------
Section 2.3.7.
1.2.163. "United States Funds" means such coin or currency of the
-------------------
United States of America as at the time shall be legal tender therein for
the payment of public and private debts.
1.2.164. "Wholly Owned Subsidiary" means any Subsidiary of which
-----------------------
all of the outstanding capital stock (or other shares of beneficial
interest) entitled to vote generally (other than directors' qualifying
shares and, in the case of Foreign Subsidiaries, shares required by Legal
Requirements to be held by foreign nationals) is owned by the Company (or
other specified Person) directly, or indirectly through one or more Wholly
Owned Subsidiaries.
2. THE CREDITS.
-----------
2.1. Revolving Credit.
----------------
2.1.1. Revolving Loan. Subject to all the terms and conditions
--------------
of this Agreement and so long as no Default exists, from time to time on and
after the Revolving Loan Availability Date (so long as the Company is then in
compliance with Section 6.20.3) and prior to the Final Maturity Date the Lenders
will, severally in accordance with their respective Commitments in the Revolving
Loan, make loans to the Company in such amounts as may be requested by the
Company in accordance with Section 2.1.3. The sum of the aggregate principal
amount of loans made under this Section 2.1.1 at any one time outstanding shall
in no event exceed the Maximum Amount of Revolving Credit. In no event will the
principal amount of loans at any one time outstanding made by any Lender
pursuant to this Section 2.1 exceed such Lender's Commitment with respect to the
Revolving Loan; provided, however, that loans in an aggregate amount not
-------- -------
exceeding $1,000 may be outstanding under this Section 2.1.1 prior to the
Revolving Loan Availability Date.
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<PAGE>
2.1.2. Maximum Amount of Revolving Credit. The term "Maximum Amount of
---------------------------------- -----------------
Revolving Credit" means the lesser of:
- ----------------
(1) the remainder of (i) (A) $25,000,000 on any date prior to the
Tower Threshold Date; and (B) on any date thereafter, the amount specified
for such date in the table below:
Period Amount
------ ------
Prior to March 31, 2001 $55,000,000
On or after March 31, 2001 $52,250,000
and prior to June 30, 2001
On or after June 30, 2001 $49,500,000
and prior to September 30, 2001
On or after September 30, 2001 $46,750,000
and prior to December 31, 2001
On or after December 31, 2001 $44,000,000
and prior to March 31, 2002
On or after March 31, 2002 $41,250,000
and prior to June 30, 2002
On or after June 30, 2002 $38,500,000
and prior to September 30, 2002
On or after September 30, 2002 $35,750,000
and prior to December 31, 2002
On or after December 31, 2002 $33,000,000
and prior to March 31, 2003
On or after March 31, 2003 $30,250,000
and prior to June 30, 2003
On or after June 30, 2003 $27,500,000
and prior to September 30, 2003
-29-
<PAGE>
On or after September 30, 2003 $24,750,000
and prior to December 31, 2003
On or after December 31, 2003 $22,000,000
and prior to March 31, 2004
On or after March 31, 2004 $19,250,000
and prior to June 30, 2004
On or after June 30, 2004 $16,500,000
and prior to September 30, 2004
On or after September 30, 2004 $13,750,000
and prior to December 31, 2004
On or after December 31, 2004 $11,000,000
and prior to the Final Maturity Date
Final Maturity Date $0
minus (ii) in each case to the extent allocable to the Revolving Loan in
-----
accordance with Section 4.6.2, Net Asset Sale Proceeds described in Section
4.3.2 and Net Debt Proceeds described in Section 4.3.3,
minus (iii) after the Incremental Conversion Date to the extent allocable
-----
to the Revolving Loan in accordance with Section 4.6.2, Net Equity Proceeds
described in Section 4.3.4 and the percentage of Consolidated Excess Cash
Flow described in Section 4.3.5 or
(b) the amount (in an integral multiple of $1,000,000) to which the
then applicable amount set forth in clause (a) above shall have been
irrevocably reduced from time to time by notice from the Company to the
Agent. The Company shall not give a notice reducing the amount applicable
to any period in the table above unless it shall also reduce the amounts
applicable to all subsequent periods in such table to at least the same
specified lower amount, so that the Maximum Amount of Revolving Credit for
any subsequent period shall not exceed the reduced Maximum Amount of
Revolving Credit applicable to any prior period.
2.1.3. Borrowing Requests. The Company may from time to time request
------------------
a loan under Section 2.1.1 by providing to the Agent a notice (which may be
given by a telephone call received by a Lending Officer if promptly confirmed in
writing). Such notice must be not later than noon (Boston time) on the first
Banking Day (third Banking Day if any portion of such loan will be subject to a
Eurodollar
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<PAGE>
Pricing Option on the requested Closing Date) prior to the requested
Closing Date for such loan. The notice must specify (a) the amount of the
requested revolving loan (which shall be not less than $100,000 and an
integral multiple of $10,000) and (b) the requested Closing Date therefor
(which shall be a Banking Day). Upon receipt of such notice, the Agent will
promptly inform each other Lender (by telephone or otherwise). Each such
loan will be made at the Boston Office by depositing the amount thereof to
the general account of the Company with the Agent. In connection with each
such loan, the Company shall furnish to the Agent a certificate in
substantially the form of Exhibit 5.2.1.
2.1.4. Revolving Notes. The aggregate principal amount of the loans
---------------
outstanding from time to time under this Section 2.1 is referred to as the
"Revolving Loan". The Agent shall keep a record of the Revolving Loan as
--------------
part of the Register. The Revolving Loan shall be deemed owed to each
Lender having a Commitment therein severally in accordance with such
Lender's Percentage Interest therein, and all payments thereon shall be for
the account of each Lender in accordance with its Percentage Interest
therein. The Company's obligations to pay each Lender's Percentage Interest
in the Revolving Loan shall be evidenced by a separate note of the Company
in substantially the form of Exhibit 2.1.4 (the "Revolving Notes"), payable
---------------
to each Lender in accordance with such Lender's Percentage Interest in the
Revolving Loan.
2.2. Incremental Credit.
------------------
2.2.1. Request for Incremental Facility. Subject to all the terms of
--------------------------------
this Agreement and so long as no Default exists, after the Revolving Loan
Availability Date and prior to March 31, 2000, the Company may request, by
written notice to the Agent a revolving credit loan facility (the
"Incremental Facility") in a specified aggregate amount (the "Maximum
-------------------- -------
Amount of Incremental Credit") that does not exceed $55,000,000, and the
----------------------------
proposed amortization for the Incremental Term Loan. Upon receipt of such
request, the Agent will promptly notify each other Lender (by telephone or
otherwise). Within 30 calendar days after receipt by the Lenders of such
request, each Lender interested in participating in the Incremental
Facility shall notify the Agent and the Company of its intent to
participate and the maximum amount of its proposed Commitment with respect
to the Incremental Facility (an "Incremental Commitment Notice"); provided,
----------------------------- --------
however, that each Lender may participate in the Incremental Facility in
-------
its sole discretion, no Lender shall be deemed to have committed to
participate in the Incremental Facility as of the date hereof, no Lender
shall have any obligation to participate in the Incremental Facility unless
and until it commits to do so as provided in this Section 2.2.1 and any
Lender failing to provide an Incremental Commitment Notice within the time
period contemplated above shall be deemed to have declined to participate
in such Incremental Facility; and provided, further, however,
-------- ------- -------
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<PAGE>
that the Incremental Credit Facility must be consented to in writing by the
Required Lenders. Following receipt of such Incremental Commitment Notices,
the Agent shall allocate the Commitments with respect to the Incremental
Facility in accordance with the Lenders' relative requested Commitments
therein and shall advise each Lender of the amount of such Lender's
Commitment with respect to the Incremental Facility.
2.2.2. Incremental Facility. Subject to all the terms and
--------------------
conditions of this Agreement and so long as no Default exists, from time to
time on and after the establishment of the Incremental Facility in
accordance with Section 2.3.1 (the "Incremental Closing Date") and prior to
------------------------
the Banking Day on (or immediately prior to) the second anniversary of the
Incremental Closing Date (but in no event later than the Final Maturity
Date (the "Incremental Conversion Date"), any of the Lenders agreeing to
---------------------------
participate in the Incremental Facility as provided in Section 2.2.1 will,
severally in accordance with their respective Commitments therein, make
loans to the Company with respect to the Incremental Facility as may be
requested by the Company in accordance with Section 2.2.4. The aggregate
principal amount of outstanding loans under the Incremental Facility shall
in no event exceed the Maximum Amount of Incremental Credit.
2.2.3. Incremental Borrowing Requests. The Company may from time to
------------------------------
time on or after the Incremental Closing Date and prior to the Incremental
Conversion Date, request a loan under Section 2.2.2 by providing to the
Agent a notice (which may be given by a telephone call received by a
Lending Officer if promptly confirmed in writing). Such notice must be not
later than noon (Boston time) on the first Banking Day (third Banking Day
if any portion of such loan will be subject to a Eurodollar Pricing Option
on the requested Closing Date) prior to the requested Closing Date for such
loan. The notice must specify (a) the amount of the requested Incremental
Revolving Loan (which shall be not less than $100,000 and an integral
multiple of $10,000 and (b) the requested Closing Date therefor (which
shall be a Banking Day). Upon receipt of such notice, the Agent will
promptly inform each other Lender having a Commitment therein (by telephone
or otherwise). Each such loan will be made at the Boston Office by
depositing the amount thereof to the general account of the Company with
the Agent. In connection with each such loan, the Company shall furnish to
the Agent a certificate in substantially the form of Exhibit 5.2.1 and
shall enter into any modifications of the Mortgages or other collateral
agreements and documents reasonably requested by the Agent.
2.2.4. Incremental Revolving Notes. The aggregate principal amount
---------------------------
of the loans outstanding from time to time under Section 2.2.2 is referred
to as the "Incremental Revolving Loan". The Agent shall keep a record of
--------------------------
the Incremental Revolving Loan as part of the Register. The Incremental
Revolving Loan shall be deemed owed to each Lender having a Commitment
therein severally in accordance
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<PAGE>
with such Lender's Percentage Interest therein, and all payments thereon
shall be for the account of each Lender in accordance with its Percentage
Interest therein. The Company's obligations to pay each Lender's Percentage
Interest in the Incremental Revolving Loan shall be evidenced by a separate
note of the Company in substantially the form of Exhibit 2.2.4 (the
"Incremental Revolving Notes"), payable to each Lender in accordance with
---------------------------
such Lender's Percentage Interest in the Incremental Revolving Loan.
2.2.5. Incremental Term Loan. Subject to all the terms and
---------------------
conditions of this Agreement and so long as no Default exists, on the
Incremental Conversion Date the Lenders will, in accordance with their
respective Percentage Interests in the Incremental Facility, severally lend
to the Company as a term loan the aggregate amount of the Incremental
Revolving Loan outstanding on such date. The aggregate principal amount of
the loans made pursuant to this Section 2.2.5 at any one time outstanding
is referred to as the "Incremental Term Loan". In connection with the
---------------------
Incremental Term Loan, the Company shall furnish to the Agent a certificate
in substantially the form of Exhibit 5.2.1. The amortization schedule for
the Incremental Term Loan shall be as agreed among the Company and the
Required Lenders as of the Incremental Closing Date.
2.2.6. Incremental Term Notes. The Incremental Term Loan shall be
----------------------
made at the Boston Office by crediting the amount of such loan to the
Incremental Revolving Loan against delivery to the Agent of the separate
term notes of the Company (the "Incremental Term Notes") payable to the
----------------------
respective Lenders in accordance with their respective Percentage Interests
in the Incremental Facility. The Incremental Term Note issued to each
Lender shall be in substantially the form of Exhibit 2.2.6.
2.3. Letters of Credit.
-----------------
2.3.1. Issuance of Letters of Credit. Subject to all the terms and
-----------------------------
conditions of this Agreement and so long as no Default exists, from time to
time on and after the Effective Date and prior to the Final Maturity Date,
the Letter of Credit Issuer will issue for the account of the Company one
or more irrevocable documentary or standby letters of credit (the "Letters
-------
of Credit"). Letter of Credit Exposure plus the Revolving Loan shall not at
--------- ----
any time exceed the Maximum Amount of Revolving Credit. Letter of Credit
Exposure shall not at any time exceed $50,000,000.
2.3.2. Requests for Letters of Credit. The Company may from time to
------------------------------
time request a Letter of Credit to be issued by providing to the Letter of
Credit Issuer (and the Agent if the Letter of Credit Issuer is not the
Agent) a notice (which may be given by a telephone call received by a
Lending Officer if promptly confirmed in
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<PAGE>
writing). Such notice must be not less than three Banking Days prior to the
requested Closing Date for such Letter of Credit specifying (a) the amount
of the requested Letter of Credit, (b) the beneficiary thereof, (c) the
requested Closing Date and (d) the principal terms of the text for such
Letter of Credit. Each Letter of Credit will be issued by forwarding it to
the Company or to such other Person as directed in writing by the Company.
In connection with the issuance of any Letter of Credit, the Company shall
furnish to the Letter of Credit Issuer (and the Agent if the Letter of
Credit Issuer is not the Agent) a certificate in substantially the form of
Exhibit 5.2.1 and any customary application forms required by the Letter of
Credit Issuer. In the event of any inconsistency between such application
forms and this Agreement, this Agreement shall govern.
2.3.3. Form and Expiration of Letters of Credit. Each Letter of
----------------------------------------
Credit issued under this Section 2.3 and each draft accepted or paid under
such a Letter of Credit shall be issued, accepted or paid, as the case may
be, by the Letter of Credit Issuer at its principal office. No Letter of
Credit shall provide for the payment of drafts drawn thereunder, and no
draft shall be payable, at a date which is later than the earlier of (a)
the date 12 months after the date of issuance (which may be extended by the
Letter of Credit Issuer) or (b) the Final Maturity Date. Each Letter of
Credit and each draft accepted under a Letter of Credit shall be in such
form and minimum amount, and shall contain such terms, as the Company may
request; provided, however, that such form, amount and terms shall be
-------- -------
subject to the consent of the Letter of Credit Issuer, which consent shall
not be unreasonably withheld.
2.3.4. Lenders' Participation in Letters of Credit. Upon the
-------------------------------------------
issuance of any Letter of Credit, a participation therein, in an amount
equal to each Lender's Percentage Interest in the Revolving Loan, shall
automatically be deemed granted by the Letter of Credit Issuer to each such
Lender on the date of such issuance and such Lenders shall automatically be
obligated, as set forth in Section 10.4, to reimburse the Letter of Credit
Issuer to the extent of their respective Percentage Interests in the
Revolving Loan for all obligations incurred by the Letter of Credit Issuer
to third parties in respect of such Letter of Credit not reimbursed by the
Company. The Letter of Credit Issuer will send to each Lender (and the
Agent if the Letter of Credit Issuer is not the Agent) a confirmation
regarding the participations in Letters of Credit outstanding during such
month. The failure of any Lender to reimburse the Letter of Credit Issuer
as required hereunder shall not relieve the Letter of Credit Issuer from
its obligations to accept or pay any draft properly presented under such
Letter of Credit or to issue any subsequently requested Letter of Credit.
2.3.5. Presentation. The Letter of Credit Issuer may accept or pay
------------
any draft presented to it which appears on its face to be in order if such
draft, the other required documents and any transmittal advice are
presented to the Letter of Credit
-34-
<PAGE>
Issuer and dated on or before the expiration date of the Letter of Credit
under which such draft is drawn. Except insofar as a particular Letter of
Credit contains express, contrary instructions, the Letter of Credit Issuer
may honor as complying with the terms of any Letter of Credit and with this
Agreement any drafts or other documents otherwise in order signed or issued
by an administrator, executor, conservator, trustee in bankruptcy, debtor
in possession, assignee for benefit of creditors, liquidator, receiver or
other legal representative of the party authorized under such Letter of
Credit to draw or issue such drafts or other documents.
2.3.6. Payment of Drafts. At such time as a Letter of Credit Issuer
-----------------
makes any payment on a draft presented or accepted under a Letter of
Credit, the Company will on demand pay to such Letter of Credit Issuer in
immediately available funds the amount of such payment or notify the Letter
of Credit Issuer of its intent to treat such amount as a loan under Section
2.1.1, in which event such amount shall be considered a loan under Section
2.1.1 and part of the Revolving Loan as if the Company had paid in full the
amount required with respect to the Letter of Credit by borrowing such
amount under Section 2.1.1 to the extent such amount does not cause the
Revolving Loan to exceed the Maximum Amount of Revolving Credit. To the
extent such amount causes the Revolving Loan to exceed the Maximum Amount
of Revolving Credit, the Company will on demand pay to such Letter of
Credit Issuer in immediately available funds the amount of such excess.
2.3.7. Uniform Customs and Practice. The Uniform Customs and
----------------------------
Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500, and any subsequent revisions thereof approved
by a Congress of the International Chamber of Commerce and adhered to by
the Letter of Credit Issuer (the "Uniform Customs and Practice"), shall be
----------------------------
binding on the Company and the Letter of Credit Issuer except to the extent
otherwise provided herein, in any Letter of Credit or in any other Credit
Document. Anything in the Uniform Customs and Practice to the contrary
notwithstanding:
(1) Neither the Company nor any beneficiary of any Letter of Credit
shall be deemed an agent of any Letter of Credit Issuer.
(2) With respect to each Letter of Credit, neither the Letter of
Credit Issuer nor its correspondents shall be responsible for or shall have
any duty to ascertain (unless the Letter of Credit Issuer or such
correspondent is grossly negligent or willful in failing so to ascertain):
(1) the genuineness of any signature;
(2) the validity, genuineness or legal effect of any
endorsements;
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<PAGE>
(3) delay in giving, or failure to give, notice of arrival,
notice of refusal of documents or of discrepancies in respect of which
any Letter of Credit Issuer refuses the documents or any other notice,
demand or protest;
(4) the performance by any beneficiary under any Letter of
Credit of such beneficiary's obligations to the Company (other than
such beneficiary's obligation to present such items as are required to
draw on the Letter of Credit);
(5) inaccuracy in any notice or demand that appears on its
face to comply with the requirements of the Letter of Credit received
by the Letter of Credit Issuer;
(6) the validity, form, sufficiency, accuracy, genuineness or
legal effect of any instrument, draft, certificate or other document
required by such Letter of Credit to be presented before payment of a
draft if such instrument, draft, certificate or other document appears
on its face to comply with the requirements of the Letter of Credit,
or the office held by or the authority of any Person signing any of
the same; or
(7) failure of any instrument to bear adequate reference to
such Letter of Credit appearing on its face otherwise to be in order,
or failure of any Person to note the amount of any instrument on the
reverse of such Letter of Credit or to surrender such Letter of
Credit.
(3) The occurrence of any of the events referred to in the Uniform
Customs and Practice or in the preceding clauses of this Section 2.3.7
shall not affect or prevent the vesting of any of the Letter of Credit
Issuer's rights or powers hereunder or the Company's obligation to make
reimbursement of amounts paid under any Letter of Credit or any draft
accepted thereunder.
(4) The Company will promptly examine (i) each Letter of Credit (and
any amendments thereof) sent to it by the Letter of Credit Issuer and (ii)
all instruments and documents delivered to it from time to time by the
Letter of Credit Issuer. The Company will notify the Letter of Credit
Issuer of any claim of noncompliance by notice actually received within
three Banking Days after receipt of any of the foregoing documents, the
Company being conclusively deemed to have waived any such claim against
such Letter of Credit Issuer and its correspondents unless such notice is
given. The Letter of Credit Issuer shall have no obligation or
responsibility to send any such Letter of Credit or any such instrument or
document to the Company.
(5) In the event of any conflict between the provisions of this
Agreement and the Uniform Customs and Practice, the provisions of this
Agreement shall govern.
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2.3.8. Subrogation. Upon any payment by a Letter of Credit Issuer
-----------
under any Letter of Credit and until the reimbursement of such Letter of
Credit Issuer by the Company with respect to such payment, the Letter of
Credit Issuer shall be entitled to be subrogated to, and to acquire and
retain, the rights which the Person to whom such payment is made may have
against the Company, all for the benefit of the Lenders. The Company will
take such action as the Letter of Credit Issuer may reasonably request,
including requiring the beneficiary of any Letter of Credit to execute such
documents as the Letter of Credit Issuer may reasonably request, to assure
and confirm to the Letter of Credit Issuer such subrogation and such
rights, including the rights, if any, of the beneficiary to whom such
payment is made in accounts receivable, inventory and other properties and
assets of any Obligor.
2.3.9. Modification, Consent, etc. If the Company requests or
--------------------------
consents in writing to any modification or extension of any Letter of
Credit, or waives in writing any failure of any draft, certificate or other
document to comply with the terms of such Letter of Credit, and if the
Letter of Credit Issuer consents thereto, the Letter of Credit Issuer shall
be entitled to rely on such written request, consent or waiver. This
Agreement shall be binding upon the Company with respect to such Letter of
Credit as so modified or extended, and with respect to any action taken or
omitted by such Letter of Credit Issuer pursuant to any such written
request, consent or waiver.
2.4. Application of Proceeds.
-----------------------
2.4.1. Revolving Loan. Subject to Section 2.4.4, the Company will
--------------
apply the proceeds of the Revolving Loan for the acquisition of Towers and
Tower Companies and construction of Towers, working capital and other
lawful corporate purposes of the Company and its Subsidiaries.
2.4.2. Incremental Facility. The Company will apply the proceeds of
--------------------
the Incremental Revolving Loan for the acquisition of Towers and Tower
Companies and construction of Towers, working capital and other lawful
corporate purposes of the Company and its Subsidiaries. The Company will
apply the proceeds of the Incremental Term Loan solely to repay in full the
Incremental Revolving Loan.
2.4.3. Letters of Credit. Letters of Credit shall be issued only to
-----------------
provide credit support for its payment or performance obligations related
to the acquisition of Towers and Tower Companies or construction of Towers
or for such other lawful corporate purposes as the Company has requested in
writing and to which the Letter of Credit Issuer agrees.
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2.4.4. Specifically Prohibited Applications. The Company will not,
------------------------------------
directly or indirectly, apply any part of the proceeds of any extension of
credit made pursuant to the Credit Documents (a) to purchase or to carry
Margin Stock or (b) to engage in any transaction prohibited by Legal
Requirements applicable to the Lenders or by the Credit Documents.
2.5. Nature of Obligations of Lenders to Make Extensions of Credit. The
-------------------------------------------------------------
Lenders' obligations to extend credit under this Agreement are several and are
not joint or joint and several. If on any Closing Date any Lender shall fail to
perform its obligations under this Agreement, the aggregate amount of
Commitments to make the extensions of credit under this Agreement shall be
reduced by the amount of unborrowed Commitment of the Lender so failing to
perform and the Percentage Interests shall be appropriately adjusted. Lenders
that have not failed to perform their obligations to make the extensions of
credit contemplated by Section 2 may, if any such Lender so desires, assume, in
such proportions as such Lenders may agree, the obligations of any Lender who
has so failed and the Percentage Interests shall be appropriately adjusted. The
failure of any Lender to perform its obligations under this Agreement, including
its obligation to make the extensions of credit contemplated by Section 2, shall
not relieve any other Lender from its obligations under this Agreement,
including its obligation to make the extensions of credit contemplated by
Section 2, or relieve any Lender (including the Lender who failed to perform its
obligation) of its obligations to extend credit contemplated by Section 2 as
part of any subsequent extension of credit. A waiver by the Company or any of
its Subsidiaries of the performance by any Lender of any of its obligations
under the Credit Documents, including its obligation to make any extensions of
credit contemplated by Section 2, shall not constitute a waiver by the Company
or any of its Subsidiaries of any obligations of any other Lender of its
obligations under the Credit Documents, including its obligations to make the
extensions of credit contemplated by Section 2, or relieve the Lender who failed
to fulfill its obligations of its obligations with respect to any subsequent
request for an extension of credit under the Credit Documents.
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3. INTEREST; EURODOLLAR PRICING OPTIONS; FEES.
------------------------------------------
3.1. Interest. The Loan shall accrue and bear interest at a rate per annum
--------
which shall at all times equal the Applicable Rate. Prior to any stated or
accelerated maturity of the Loan, the Company will, on each Payment Date, pay
the accrued and unpaid interest on the portion of the Loan which was not subject
to a Eurodollar Pricing Option. On the last day of each Eurodollar Interest
Period or on any earlier termination of any Eurodollar Pricing Option, the
Company will pay the accrued and unpaid interest on the portion of the Loan
which was subject to the Eurodollar Pricing Option which expired or terminated
on such date. In the case of any Eurodollar Interest Period longer than three
months, the Company will also pay the accrued and unpaid interest on the portion
of the Loan subject to the Eurodollar Pricing Option having such Eurodollar
Interest Period at three-month intervals, the first such payment to be made on
the last Banking Day of the three-month period which begins on the first day of
such Eurodollar Interest Period. On the stated or any accelerated maturity of
the Loan, the Company will pay all accrued and unpaid interest on the Loan,
including any accrued and unpaid interest on any portion of the Loan which is
subject to a Eurodollar Pricing Option. Upon the occurrence and during the
continuance of an Event of Default, the Lenders may require accrued interest to
be payable on demand or at regular intervals more frequent than each Payment
Date. All payments of interest hereunder shall be made to the Agent for the
account of each Lender in accordance with such Lender's Percentage Interest.
3.2. Eurodollar Pricing Options.
--------------------------
3.2.1. Election of Eurodollar Pricing Options. Subject to all of
--------------------------------------
the terms and conditions hereof and so long as no Default exists, the Company
may from time to time, by irrevocable notice (which notice may be given by a
telephone call received by a Lending Officer if promptly confirmed in writing)
to the Agent actually received by noon (Boston time) not less than three Banking
Days prior to the commencement of the Eurodollar Interest Period selected in
such notice, elect to have such portion of the Loan as the Company may specify
in such notice accrue and bear interest during the Eurodollar Interest Period so
selected at the Applicable Rate computed on the basis of the Eurodollar Rate. In
the event the Company at any time does not elect a Eurodollar Pricing Option
under this Section 3.2.1 for any portion of the Loan (upon termination of a
Eurodollar Pricing Option or otherwise), then such portion of the Loan will
accrue and bear interest at the Applicable Rate based on the Base Rate. A single
Eurodollar Option may include any portion of the Revolving Loan, Incremental
Revolving Loan or Incremental Term Loan designated by the Company in the notice
referred to above. No election of a Eurodollar Pricing Option shall become
effective:
(1) if, prior to the commencement of any such Eurodollar Interest
Period, the Agent determines and notifies the Company (which notice may be
given by a
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<PAGE>
telephone call received by a Lending Officer if promptly confirmed in
writing) that (i) the electing or granting of the Eurodollar Pricing Option
in question would violate a Legal Requirement, (ii) Eurodollar deposits in
an amount comparable to the principal amount of the Loan as to which such
Eurodollar Pricing Option has been elected and which have a term
corresponding to the proposed Eurodollar Interest Period are not readily
available in the inter-bank Eurodollar market, or (iii) by reason of
circumstances affecting the inter-bank Eurodollar market, adequate and
reasonable methods do not exist for ascertaining the interest rate
applicable to such deposits for the proposed Eurodollar Interest Period; or
(2) if the Required Lenders shall have advised the Agent by
telephone or otherwise at or prior to noon (Boston time) on the second
Banking Day prior to the commencement of such proposed Eurodollar Interest
Period (and shall have subsequently confirmed in writing) that, after
reasonable efforts to determine the availability of such Eurodollar
deposits, the Required Lenders reasonably anticipate that Eurodollar
deposits in an amount equal to the Percentage Interest of the Required
Lenders in the portion of the Loan as to which such Eurodollar Pricing
Option has been elected and which have a term corresponding to the
Eurodollar Interest Period in question will not be offered in the
Eurodollar market to the Required Lenders at a rate of interest that does
not exceed the anticipated Eurodollar Basic Rate and the Agent shall have
notified the Company thereof (which notice may be given by a telephone call
received by a Financial Officer if promptly confirmed in writing).
3.2.2. Notice to Lenders and Company. The Agent will promptly
-----------------------------
inform each Lender (by telephone or otherwise) of each notice received by
it from the Company pursuant to Section 3.2.1 and of the Eurodollar
Interest Period specified in such notice. Upon determination by the Agent
of the Eurodollar Rate for such Eurodollar Interest Period or in the event
such election shall not become effective, the Agent will promptly notify
the Company and each Lender (by telephone or otherwise) of the Eurodollar
Rate so determined or why such election did not become effective, as the
case may be.
3.2.3. Selection of Eurodollar Interest Periods. Eurodollar
----------------------------------------
Interest Periods shall be selected so that:
(1) the minimum portion of the Loan subject to any Eurodollar
Pricing Option shall be $500,000 and an integral multiple of $100,000;
(2) no more than 12 Eurodollar Pricing Options shall be outstanding
at any one time;
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<PAGE>
(3) a portion of the Loan equal to or greater than the amount of the
next mandatory prepayment required by Section 4.2 shall not be subject to a
Eurodollar Pricing Option on the date such mandatory prepayment is required
to be made; and
(4) no Eurodollar Interest Period shall expire later than the Final
Maturity Date.
3.2.4. Additional Interest. If any portion of the Loan subject to a
-------------------
Eurodollar Pricing Option is repaid, or any Eurodollar Pricing Option is
terminated for any reason (including acceleration of maturity), on a date
which is prior to the last Banking Day of the Eurodollar Interest Period
applicable to such Eurodollar Pricing Option, the Company will pay to the
Agent for the account of each Lender in accordance with such Lender's
Percentage Interest, in addition to any amounts of interest otherwise
payable hereunder, an amount equal to the present value (calculated in
accordance with this Section 3.2.4) of interest for the unexpired portion
of such Eurodollar Interest Period on the portion of the Loan so repaid, or
as to which a Eurodollar Pricing Option was so terminated, at a per annum
rate equal to the excess, if any, of (a) the rate applicable to such
Eurodollar Pricing Option minus (b) the rate of interest obtainable by the
-----
Agent upon the purchase of debt securities customarily issued by the
Treasury of the United States of America which have a maturity date
approximating the last Banking Day of such Eurodollar Interest Period. The
present value of such additional interest shall be calculated by
discounting the amount of such interest for each day in the unexpired
portion of such Eurodollar Interest Period from such day to the date of
such repayment or termination at a per annum interest rate equal to the
interest rate determined pursuant to clause (b) of the preceding sentence,
and by adding all such amounts for all such days during such period. The
determination by the Agent of such amount of interest shall, in the absence
of manifest error, be conclusive. For purposes of this Section 3.2.4, if
any portion of the Loan which was to have been subject to a Eurodollar
Pricing Option is not outstanding on the first day of the Eurodollar
Interest Period applicable to such Eurodollar Pricing Option other than for
reasons described in Section 3.2.1 or the failure of one or more Lenders to
fulfill their obligations hereunder, the Company shall be deemed to have
terminated such Eurodollar Pricing Option.
3.2.5. Violation of Legal Requirements. If any Legal Requirement
-------------------------------
shall prevent any Lender from funding or maintaining through the purchase
of deposits in the interbank Eurodollar market any portion of the Loan
subject to a Eurodollar Pricing Option or otherwise from giving effect to
such Lender's obligations as contemplated by Section 3.2, (a) the Agent may
by notice to the Company terminate all of the affected Eurodollar Pricing
Options, (b) the portion of the Loan subject to such terminated Eurodollar
Pricing Options shall immediately bear interest thereafter at the
Applicable
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<PAGE>
Rate computed on the basis of the Base Rate and (c) the Company shall make
any payment required by Section 3.2.4.
3.2.6. Funding Procedure. The Lenders may fund any portion of the
-----------------
Loan subject to a Eurodollar Pricing Option out of any funds available to
the Lenders. Regardless of the source of the funds actually used by any of
the Lenders to fund any portion of the Loan subject to a Eurodollar Pricing
Option, however, all amounts payable hereunder, including the interest rate
applicable to any such portion of the Loan and the amounts payable under
Sections 3.2.4 and 3.5, shall be computed as if each Lender had actually
funded such Lender's Percentage Interest in such portion of the Loan
through the purchase of deposits in such amount of the type by which the
Eurodollar Basic Rate was determined with a maturity the same as the
applicable Eurodollar Interest Period relating thereto and through the
transfer of such deposits from an office of the Lender having the same
location as the applicable Eurodollar Office to one of such Lender's
offices in the United States of America.
3.3. Commitment Fees.
---------------
3.3.1. Revolving Loan. In consideration of the Lenders' commitments
--------------
to make the extensions of credit provided for in Section 2.1, while such
commitments are outstanding, the Company will pay to the Agent for the
account of the Lenders in accordance with the Lenders' respective
Commitments in the Revolving Loan, on each Payment Date and on the Final
Maturity Date, an amount equal to interest computed at the Commitment Fee
Rate on the amount by which (a) the average daily Maximum Amount of
Revolving Credit during the three-month period or portion thereof ending on
such Payment Date exceeded (b) the average daily Revolving Loan during such
period or portion thereof; provided, however, that with respect to the
-------- -------
first Payment Date after the date hereof such period shall be calculated
from the date hereof to such Payment Date.
3.3.2. Incremental Revolving Loan. In consideration of the Lenders'
--------------------------
commitments to make the extensions of credit provided for in Section 2.2,
while such commitments are outstanding, the Company will pay to the Agent
for the account of the Lenders in accordance with the Lenders' respective
Commitments in the Incremental Revolving Loan, on each Payment Date after
the Incremental Closing Date and on the Incremental Conversion Date, an
amount equal to interest computed at the Commitment Fee Rate on the amount
by which (a) the average daily Maximum Amount of Incremental Credit during
the three-month period or portion thereof ending on such Payment Date
exceeded (b) the average daily Incremental Revolving Loan during such
period or portion thereof.
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<PAGE>
3.4. Letter of Credit Fees. The Company will pay to the Agent for the
---------------------
account of each of the Lenders, in accordance with the Lenders' respective
Percentage Interests, on each Payment Date, a Letter of Credit fee equal to
interest at a rate per annum equal to the Applicable Margin indicated for the
Eurodollar Rate on the average daily Letter of Credit Exposure during the three-
month period or portion thereof ending on such Payment Date. The Company will
pay to the Letter of Credit Issuer customary service charges and expenses for
its services in connection with the Letters of Credit at the times and in the
amounts from time to time in effect in accordance with its general rate
structure, including fees and expenses relating to issuance, amendment,
negotiation, cancellation and similar operations.
3.5. Changes in Circumstances; Yield Protection.
------------------------------------------
3.5.1. Reserve Requirements, etc. If any Legal Requirement shall
-------------------------
(a) impose, modify, increase or deem applicable any insurance assessment,
reserve, special deposit or similar requirement against any Funding
Liability or the Letters of Credit, (b) impose, modify, increase or deem
applicable any other requirement or condition with respect to any Funding
Liability or the Letters of Credit, or (c) change the basis of taxation of
Funding Liabilities or payments in respect of any Letter of Credit (other
than changes in the rate of taxes measured by the overall net income of
such Lender) and the effect of any of the foregoing shall be to increase
the cost to any Lender of issuing, making, funding or maintaining its
respective Percentage Interest in any portion of the Loan subject to a
Eurodollar Pricing Option or any Letter of Credit, to reduce the amounts
received or receivable by such Lender under this Agreement or to require
such Lender to make any payment or forego any amounts otherwise payable to
such Lender under this Agreement (other than any Tax or any reserves that
are included in computing the Eurodollar Reserve Rate), then such Lender
may claim compensation from the Company under Section 3.5.5.
3.5.2. Taxes. All payments of the Credit Obligations shall be made
-----
without set-off or counterclaim and free and clear of any deductions,
including deductions for Taxes, unless the Company is required by law to
make such deductions. If (a) any Lender shall be subject to any Tax with
respect to any payment of the Credit Obligations or its obligations
hereunder or (b) the Company shall be required to withhold or deduct any
Tax on any payment on the Credit Obligations, then such Lender may claim
compensation from the Company under Section 3.5.5 to the extent such Lender
is then in compliance with any applicable requirements of Section 13.
Whenever Taxes must be withheld by the Company with respect to any payments
of the Credit Obligations, the Company shall promptly furnish to the Agent
for the account of the applicable Lender official receipts (to the extent
that the relevant governmental authority delivers such receipts) evidencing
payment of any such Taxes so withheld. If the Company fails to pay any such
Taxes when due or fails to remit to the Agent for the account of the
applicable Lender the required receipts evidencing payment of any such
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<PAGE>
Taxes so withheld or deducted, following a written request from the Agent
with respect thereto, the Company shall indemnify the affected Lender for
any incremental Taxes and interest or penalties that may become payable by
such Lender as a result of any such failure. In the event any Lender
receives a refund of any Taxes for which it has received payment from the
Company under this Section 3.5.2, such Lender shall promptly pay the amount
of such refund to the Company, together with any interest thereon actually
earned by such Lender.
3.5.3. Capital Adequacy. If any Lender shall determine that
----------------
compliance by such Lender with any Legal Requirement regarding capital
adequacy of banks or bank holding companies has or would have the effect of
reducing the rate of return on the capital of such Lender and its
Affiliates as a consequence of such Lender's commitment to make the
extensions of credit contemplated hereby, or such Lender's maintenance of
the extensions of credit contemplated hereby, to a level below that which
such Lender could have achieved but for such compliance (taking into
consideration the policies of such Lender and its Affiliates with respect
to capital adequacy immediately before such compliance and assuming that
the capital of such Lender and its Affiliates was fully utilized prior to
such compliance) by an amount deemed by such Lender to be material, then
such Lender may claim compensation from the Company under Section 3.5.5.
3.5.4. Regulatory Changes. If any Lender shall determine that (a)
------------------
any change in any Legal Requirement (including any new Legal Requirement)
after the date hereof shall directly or indirectly (i) reduce the amount of
any sum received or receivable by such Lender with respect to the Loan or
the Letters of Credit or the return to be earned by such Lender on the Loan
or the Letters of Credit, (ii) impose a cost on such Lender or any
Affiliate of such Lender that is attributable to the making or maintaining
of, or such Lender's commitment to make, its portion of the Loan or the
Letters of Credit, or (iii) require such Lender or any Affiliate of such
Lender to make any payment on, or calculated by reference to, the gross
amount of any amount received by such Lender under any Credit Document
(other than Taxes or income or franchise taxes), and (b) such reduction,
increased cost or payment shall not be fully compensated for by an
adjustment in the Applicable Rate or the Letter of Credit fees, then such
Lender may claim compensation from the Company under Section 3.5.5.
3.5.5. Compensation Claims. Within 30 days after the receipt by the
-------------------
Company of a certificate from any Lender setting forth why it is claiming
compensation under this Section 3.5 and computations (in reasonable detail)
of the amount thereof, the Company shall pay to such Lender such additional
amounts as such Lender sets forth in such certificate as sufficient fully
to compensate it on account of the foregoing provisions of this Section
3.5, together with interest on such amount from the 15th day after receipt
of such certificate until payment in full thereof at the Overdue
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<PAGE>
Reimbursement Rate. The determination by such Lender of the amount to be
paid to it and the basis for computation thereof hereunder shall be
conclusive so long as (a) such determination is made in good faith, (b) no
manifest error appears therein and (c) the Lender uses reasonable averaging
and attribution methods. The Company shall be entitled to replace any such
Lender in accordance with Section 11.3. Notwithstanding any provision to
the contrary contained in any Credit Document, no Lender shall be entitled
to compensation hereunder in the event any reduction, increased costs,
payment or the like which serves as the basis for a claim hereunder is
fully compensated for by an adjustment in the Applicable Rate or the Letter
of Credit fees.
3.5.6. Mitigation. Each Lender shall take such commercially
----------
reasonable steps as it may determine are not disadvantageous to it,
including changing lending offices to the extent feasible, in order to
reduce amounts otherwise payable by the Company to such Lender pursuant to
Sections 3.2.4 and 3.5 or to make Eurodollar Pricing Options available
under Sections 3.2.1 and 3.2.5. In addition, the Company shall not be
responsible for costs (a) under Section 3.5 arising more than 90 days prior
to receipt by the Company of the certificate from the affected Lender
pursuant to such Section 3.5 or (b) under Section 3.2.4 arising from the
termination of Eurodollar Pricing Options more than 90 days prior to the
demand by the Agent for payment under Section 3.2.4.
3.6. Computations of Interest and Fees. For purposes of this Agreement,
---------------------------------
interest, commitment fees and Letter of Credit fees (and any other amount
expressed as interest or such fees) shall be computed on the basis of a 365-day
year for actual days elapsed; provided, however, that interest based on the
-------- -------
Eurodollar Rate shall be computed on the basis of a 360-day year for actual days
elapsed. If any payment required by this Agreement becomes due on any day that
is not a Banking Day, such payment shall, except as otherwise provided in the
Eurodollar Interest Period, be made on the next succeeding Banking Day. If the
due date for any payment of principal is extended as a result of the immediately
preceding sentence, interest shall be payable for the time during which payment
is extended at the Applicable Rate.
4. PAYMENT.
-------
4.1. Payment at Maturity. On the Final Maturity Date or any accelerated
-------------------
maturity of the Loan, the Company will pay to the Agent an amount equal to the
Loan then due, together with all accrued and unpaid interest and fees with
respect thereto and all other Credit Obligations then outstanding.
4.2. Scheduled Required Prepayments. On each Payment Date after the
------------------------------
Incremental Conversion Date, the Company will pay to the Agent as a prepayment
of the Incremental Term Loan the lesser of (a) an amount equal to the percentage
of the Incremental Term Loan outstanding at the opening of business on the
Incremental Conversion Date as agreed among
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<PAGE>
the Company and the Required Lenders as of the Incremental Closing Date and (b)
the amount of the Incremental Term Loan then outstanding.
4.3. Contingent Required Prepayments.
-------------------------------
4.3.1. Excess Credit Exposure. If at any time the Revolving Loan or
----------------------
the Incremental Revolving Loan, as the case may be, exceeds the limits set
forth in Section 2.1 or Section 2.2, respectively, the Company shall within
one Banking Day pay the amount of such excess to the Agent as a prepayment
of the Revolving Loan or the Incremental Revolving Loan, as appropriate. If
at any time the Letter of Credit Exposure exceeds the limits set forth in
Section 2.3, the Company shall within one Banking Day pay the amount of
such excess to the Agent to be applied as provided in Section 4.5.
4.3.2. Net Asset Sale Proceeds. Within five days prior to the sale
-----------------------
or other disposition of any assets by the Company or its Subsidiaries that
would result in Net Asset Sale Proceeds, the Company shall provide written
notice to the Lenders of the anticipated closing date for such asset sale
or disposition and the amount of such Net Asset Sale Proceeds. Upon receipt
of Net Asset Sale Proceeds by the Company or any of its Subsidiaries, the
Company shall within one Banking Day pay to the Agent as a prepayment of
the Loan to be applied as provided in Section 4.6.2 the lesser of (a) the
amount of such Net Asset Sale Proceeds or (b) the amount of the Loan.
4.3.3. Net Debt Proceeds. Within five days prior to the incurrence
-----------------
of Designated Financing Debt by the Company or any of its Subsidiaries, the
Company shall provide written notice to the Lenders of the anticipated
closing date for such Designated Financing Debt and the amount of the Net
Debt Proceeds. Within one Banking Day after the incurrence of Designated
Financing Debt by the Company or any of its Subsidiaries, the Company shall
pay to the Agent as a prepayment of the Loan to be applied as provided in
Section 4.6.2 the lesser of (a) the amount of such Net Debt Proceeds or (b)
the amount of the Loan.
4.3.4. Net Equity Proceeds. Within five days prior to the
-------------------
consummation of any transaction on or after the Incremental Conversion Date
that would result in Net Equity Proceeds, the Company shall provide written
notice to the Lenders of the anticipated closing date for such transaction
and the amount of the Net Equity Proceeds. Within one Banking Day after the
receipt of Net Equity Proceeds by any Obligor on or after the Incremental
Conversion Date, the Company shall pay to the Agent as a prepayment of the
Loan to be applied as provided in Section 4.6.2 the lesser of (a) the
amount of such Net Equity Proceeds or (b) the amount of the Loan.
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4.3.5. Excess Cash Flow. Within 120 days after the end of each
----------------
fiscal year of the Company, but only if the Incremental Conversion Date has
occurred prior to such 120th day, the Company shall pay to the Agent as a
prepayment of the Loan, to be applied as provided in Section 4.6.2, an
amount equal to the lesser of (a) 50% of Consolidated Excess Cash Flow for
its then most recently completed fiscal year or (b) the amount of the Loan.
4.4. Voluntary Prepayments. In addition to the prepayments required by
---------------------
Sections 4.2 and 4.3, the Company may from time to time prepay all or any
portion of the Loan (in a minimum amount of $100,000 and an integral multiple of
$10,000, or such lesser amount as is then outstanding), without premium or
penalty of any type (except as provided in Section 3.2.4 with respect to the
early termination of Eurodollar Pricing Options). The Company shall give the
Agent at least one Banking Day prior notice of its intention to prepay the
Revolving Loan or the Incremental Revolving Loan under this Section 4.4,
specifying the date of payment and the total amount of the Revolving Loan or the
Incremental Revolving Loan to be paid on such date. The Company shall give the
Agent at least three Banking Day's prior notice of its intention to prepay the
Incremental Term Loan under this Section 4.4, specifying the date of payment,
the total amount of the Incremental Term Loan to be paid on such date and the
amount of interest to be paid with such prepayment.
4.5. Letters of Credit. If on the Final Maturity Date or any accelerated
-----------------
maturity of the Credit Obligations the Lenders shall be obligated in respect of
a Letter of Credit or a draft accepted under a Letter of Credit, the Company
will either:
(1) prepay such obligation by depositing cash with the Agent,
or
(2) deliver to the Agent a standby letter of credit
(designating the Agent as beneficiary and issued by a bank and on
terms reasonably acceptable to the Agent),
in each case in an amount equal to the portion of the then Letter of Credit
Exposure issued for the account of the Company. Any such cash so deposited and
the cash proceeds of any draw under any standby Letter of Credit so furnished,
including any interest thereon, shall be returned by the Agent to the Company
only when, and to the extent that, the amount of such cash held by the Agent
exceeds the Letter of Credit Exposure at such time and no Default then exists;
provided, however, that if an Event of Default occurs and the Credit Obligations
- -------- -------
become or are declared immediately due and payable, the Agent may apply such
cash, including any interest thereon, to the payment of any of the Credit
Obligations as provided in section 3.5.6 of the Guarantee and Security
Agreement.
4.6. Reborrowing; Application of Payments, etc.
------------------------------------------
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<PAGE>
4.6.1. Reborrowing. The amounts of the Revolving Loan prepaid
-----------
pursuant to Section 4.4 may be reborrowed from time to time prior to the Final
Maturity Date in accordance with Section 2.1, subject to the limits set forth
therein. The amounts of the Incremental Revolving Loan prepaid pursuant to
Section 4.4 may be reborrowed from time to time prior to the Incremental
Conversion Date in accordance with Section 2.2, subject to the limits set forth
therein. No portion of the Incremental Term Loan prepaid hereunder may be
reborrowed.
4.6.2. Order of Application. Any prepayment of the Loan pursuant
--------------------
to Sections 4.3.2, 4.3.3, 4.3.4, 4.3.5 or 4.4 shall be applied first to the
Incremental Revolving Loan or Incremental Term Loan (whichever, if any, is then
outstanding), with any balance to the Revolving Loan (and to the permanent
reduction of the Maximum Amount of Revolving Credit and the corresponding
Revolving Loan Commitments whether or not any Revolving Loan is then
outstanding). Prepayments of the Incremental Term Loan pursuant to Sections 4.3
or 4.4 shall be applied in the inverse order of the maturity thereof so that no
partial prepayment of the Incremental Term Loan shall affect the obligation of
the Company to make the prepayments required by Section 4.2. Subject to the
foregoing, any prepayment of the Loan shall be applied first to the portion of
the Loan then subject to Eurodollar Pricing Options, then the balance of any
such prepayment shall be applied to the portion of the Loan not then subject to
Eurodollar Pricing Options, in chronological order of the respective maturities
thereof (or as the Company may otherwise specify in writing), together with any
payments required by Section 3.2.4.
4.6.3. Payment with Accrued Interest, etc. Upon all prepayments
----------------------------------
of the Incremental Term Loan, the Company shall pay to the Agent the principal
amount to be prepaid, together with unpaid interest in respect thereof accrued
to the date of prepayment. Notice of prepayment having been given in accordance
with Section 4.4, and whether or not notice is given of prepayments pursuant to
Sections 4.2 and 4.3, the amount specified to be prepaid shall become due and
payable on the date specified for prepayment.
4.6.4. Payments for Lenders. All payments of principal hereunder
--------------------
shall be made to the Agent for the account of the Lenders in accordance with the
Lenders' respective Percentage Interests.
5. CONDITIONS TO EXTENDING CREDIT.
------------------------------
5.1. Conditions on Effective Date. The obligations of the Lenders to make
----------------------------
any extension of credit pursuant to Section 2 shall be subject to the
satisfaction, on or before the Effective Date, of the conditions set forth in
this Section 5.1 as well as the further conditions in Section 5.2. If the
conditions set forth in this Section 5.1 are not met on or prior to the
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Effective Date, the Lenders shall have no obligation to make any extensions of
credit hereunder.
5.1.1. Notes. The Company shall have duly executed and delivered to
-----
the Agent a Revolving Note for each Lender having a Commitment with respect
thereto.
5.1.2. Payment of Fees. The Company shall have paid to the Agent
---------------
and to the Syndication Agent the fees contemplated by separate agreements
between the Company and each of the Agent and the Syndication Agent, dated on or
prior to the date hereof.
5.1.3. Legal Opinions. On the Effective Date, the Lenders shall
--------------
have received from the following counsel their respective opinions with respect
to the transactions contemplated by the Credit Documents, which opinions shall
be in form and substance reasonably satisfactory to the Required Lenders:
(1) Gunster, Yoakley, Valdes-Fauli & Stewart, P.A., special counsel
for the Company and its Subsidiaries.
(2) Ropes & Gray, special counsel for the Agent.
The Company authorizes and directs its special counsel to furnish the
foregoing opinions.
5.1.4. Guarantee and Security Agreement; Parent Pledge and
---------------------------------------------------
Subordination Agreement, etc. Each of the Company and the Guarantors shall
----------------------------
have duly authorized, executed and delivered to the Agent an Amended and
Restated Guarantee and Security Agreement in substantially the form of
Exhibit 5.1.4A (the "Guarantee and Security Agreement"), as well as patent
--------------------------------
and trademark security agreements and copyright security agreements
(collectively, "Intellectual Property Security Agreements") contemplated
-----------------------------------------
therein. The Parent, the Company and its Subsidiaries shall have duly
authorized, executed and delivered to the Agent a Parent Pledge and
Subordination Agreement in substantially the form of Exhibit 5.1.4B (the
"Parent Pledge and Subordination Agreement") and the Parent shall have duly
-----------------------------------------
authorized, executed and delivered to the Agent Intellectual Property
Security Agreements with respect to the patents and trademarks owned by it.
Each of the Parent and the Company shall have duly authorized, executed and
delivered to the Agent the Borrower Assumption Agreement.
5.1.5. Perfection of Security. Each Obligor shall have duly
----------------------
authorized, executed, acknowledged, delivered, filed, registered and
recorded such security
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agreements, notices, financing statements and other instruments as the
Agent may have reasonably requested in order to perfect the Liens purported
or required pursuant to the Credit Documents to be created in the Credit
Security and shall have paid all filing or recording fees or taxes required
to be paid in connection therewith, including any recording, mortgage,
documentary, transfer or intangible taxes.
5.1.6. Solvency. After giving effect to the incurrence of the
--------
Credit Obligations, the Company and its Subsidiaries, taken as a whole:
(1) will be solvent;
(2) will have assets having a fair saleable value in excess of the
amount required to pay their probable liability on their existing debts as
such debts become absolute and mature;
(3) will have access to adequate capital for the conduct of their
business; and
(4) will have the ability to pay their debts from time to time
incurred as such debts mature.
The Company shall have furnished to the Lenders a certificate of a
Financial Officer to such effect.
5.1.7. No Material Adverse Change in Syndication Market. Since
------------------------------------------------
February 15, 1998, no material adverse change shall have occurred (a) in
the syndication market for credit facilities similar in nature to the
credit facility provided hereunder or (b) in the financial, banking or
capital markets that would have a materially adverse effect on such
syndication market.
5.1.8. Proper Proceedings. This Agreement, each other Credit
------------------
Document and the transactions contemplated hereby and thereby shall have
been authorized by all necessary corporate or other proceedings. All
necessary consents, approvals and authorizations of any governmental or
administrative agency or any other Person of any of the transactions
contemplated hereby or by any other Credit Document shall have been
obtained and shall be in full force and effect.
5.1.9. General. All legal and corporate proceedings in connection
-------
with the transactions contemplated by this Agreement shall be reasonably
satisfactory in form and substance to the Agent and the Agent shall have
received copies of all documents, including certified copies of the Charter
and By-Laws of the Company and the other Obligors, records of corporate
proceedings, certificates as to signatures and incumbency of officers and
opinions of counsel, which the Agent may have reasonably
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<PAGE>
requested in connection therewith, such documents where appropriate to be
certified by proper corporate or governmental authorities.
5.2. Conditions to Each Extension of Credit. The obligations of the
--------------------------------------
Lenders to make any extension of credit pursuant to Section 2 shall be subject
to the satisfaction, on or before the Closing Date for such extension of credit,
of the following conditions:
5.2.1. Officer's Certificate. The representations and warranties
---------------------
contained in Section 7 shall be true and correct on and as of such Closing
Date with the same force and effect as though made on and as of such date
(except as to any representation or warranty which refers to a specific
earlier date); no Default shall exist on such Closing Date prior to or
immediately after giving effect to the requested extension of credit;
except as otherwise disclosed in writing to the Lenders prior to the date
hereof, no Material Adverse Change shall have occurred since December 31,
1997; and the Company shall have furnished to the Agent in connection with
the requested extension of credit a certificate to these effects, in
substantially the form of Exhibit 5.2.1, signed by a Financial Officer.
5.2.2. Legality, etc. The making of the requested extension of
-------------
credit shall not (a) subject any Lender to any penalty or special tax
(other than a Tax for which the Company is required to reimburse the
Lenders under Section 3.5), (b) be prohibited by any Legal Requirement or
(c) violate any credit restraint program of the executive branch of the
government of the United States of America, the Board of Governors of the
Federal Reserve System or any other governmental or administrative agency
so long as any Lender reasonably believes that compliance therewith is
customary commercial practice.
6. GENERAL COVENANTS. Each of the Company, the Guarantors and (only with
-----------------
respect to Sections 6.2.1, 6.4, 6.6, 6.7, 6.8, 6.9, 6.11, 6.21 and 6.22) the
Parent covenants that, until all of the Credit Obligations shall have been paid
in full and until the Lenders' commitments to extend credit under this Agreement
and any other Credit Document shall have been irrevocably terminated, each of
the Company, the Parent and their respective Subsidiaries will comply with the
following provisions that are expressly applicable to it:
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<PAGE>
6.1. Taxes and Other Charges; Accounts Payable.
-----------------------------------------
6.1.1. Taxes and Other Charges. Each of the Company and its
-----------------------
Subsidiaries shall duly pay and discharge, or cause to be paid and
discharged, before the same becomes in arrears, all taxes, assessments and
other governmental charges imposed upon such Person and its properties,
sales or activities, or upon the income or profits therefrom, as well as
all claims for labor, materials or supplies which if unpaid might by law
become a Lien upon any of its property; provided, however, that any such
-------- -------
tax, assessment, charge or claim need not be paid if the validity or amount
thereof shall at the time be contested in good faith by appropriate
proceedings and if such Person shall, in accordance with GAAP, have set
aside on its books adequate reserves with respect thereto; and provided,
--------
further, that each of the Company and its Subsidiaries shall pay or bond,
-------
or cause to be paid or bonded, all such taxes, assessments, charges or
other governmental claims immediately upon the commencement of proceedings
to foreclose any Lien which may have attached as security therefor (except
to the extent such proceedings have been dismissed or stayed).
6.1.2. Accounts Payable. Each of the Company and its Subsidiaries
----------------
shall promptly pay when due, or in conformity with customary trade terms,
all accounts payable incident to the operations of such Person not referred
to in Section 6.1.1; provided, however, that any such accounts payable need
-------- -------
not be paid if the validity or amount thereof shall at the time be
contested in good faith and if such Person shall, in accordance with GAAP,
have set aside on its books adequate reserves with respect thereto.
6.2. Conduct of Business, etc.
------------------------
6.2.1. Types of Business. The Company, its Subsidiaries and the
-----------------
Parent shall engage only in the business of (a) constructing, owning,
operating, leasing, managing and acquiring Towers and Tower Companies,
leasing space on such Towers to tenants, managing the construction of,
ownership of and leasing of space on Towers for third parties, and
providing site administration and development services to wireless
telecommunications carriers and (b) other activities related thereto.
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<PAGE>
6.2.2. Maintenance of Properties. Each of the Company and its
-------------------------
Subsidiaries:
(1) shall keep its properties in such repair, working order and
condition, and shall from time to time make such repairs, replacements,
additions and improvements thereto, as are necessary for the efficient
operation of its businesses and shall comply at all times in all material
respects with all material franchises, licenses and leases to which it is
party so as to prevent any loss or forfeiture thereof or thereunder, except
where (i) compliance is at the time being contested in good faith by
appropriate proceedings and (ii) failure to comply with the provisions
being contested has not resulted, and does not create a reasonable risk of
resulting, in the aggregate in any Material Adverse Change; and
(2) shall do all things necessary to preserve, renew and keep in
full force and effect and in good standing its legal existence and
authority necessary to continue its business; provided, however, that this
-------- -------
Section 6.2.2(b) shall not prevent the merger, consolidation or liquidation
of Subsidiaries permitted by Section 6.11.
6.2.3. Statutory Compliance. Each of the Company and its
--------------------
Subsidiaries shall comply in all material respects with all valid and
applicable statutes, laws, ordinances, zoning and building codes and other
rules and regulations of the United States of America, of the states and
territories thereof and their counties, municipalities and other
subdivisions and of any foreign country or other jurisdictions applicable
to such Person, except where (a) compliance therewith shall at the time be
contested in good faith by appropriate proceedings and (b) failure so to
comply with the provisions being contested has not resulted, and does not
create a reasonable risk of resulting, in the aggregate in any Material
Adverse Change.
6.2.4. Compliance with Material Agreements. Each of the Company and
-----------------------------------
its Subsidiaries shall comply in all material respects with the Material
Agreements (to the extent not in violation of the other provisions of this
Agreement or any other Credit Document). Without the prior written consent
of the Required Lenders, no Material Agreement shall be amended, modified,
waived or terminated in any manner that would have in any material respect
an adverse effect on the interests of the Lenders under the Credit
Documents.
6.3. Insurance.
---------
6.3.1. Property Insurance. Each of the Company and its Subsidiaries
------------------
shall keep its assets which are of an insurable character insured by
financially sound and reputable insurers against theft and fraud and
against loss or damage by fire, explosion and hazards insured against by
extended coverage to the extent, in amounts
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<PAGE>
and with deductibles at least as favorable as those generally maintained by
businesses of similar size engaged in similar activities.
6.3.2. Liability Insurance. Each of the Company and its
-------------------
Subsidiaries shall maintain with financially sound and reputable insurers
insurance against liability for hazards, risks and liability to persons and
property to the extent, in amounts and with deductibles at least as
favorable as those generally maintained by businesses of similar size
engaged in similar activities; provided, however, that it may effect
-------- -------
workers' compensation insurance or similar coverage with respect to
operations in any particular state or other jurisdiction through an
insurance fund operated by such state or jurisdiction or by meeting the
self-insurance requirements of such state or jurisdiction.
6.3.3. Key Executive Life Insurance. The Company shall maintain
----------------------------
with financially sound and reputable insurers life insurance policies on
Steven E. Bernstein in an amount of at least $3,000,000 in form reasonably
satisfactory to the Agent.
6.3.4. Flood Insurance. To the extent necessary to ensure that the
---------------
Lenders are in compliance with all applicable banking regulations, each of
the Company and its Subsidiaries shall at all times keep each parcel of
real property owned or leased by it which is (a) encumbered by a lien in
favor of the Lenders, (b) in an area determined by the Director of the
Federal Emergency Management Agency to be subject to special flood hazard
and (c) in a community participating in the National Flood Insurance
Program, insured against such special flood hazards in an amount equal to
the lesser of the value of the insurable improvements located upon such
real property or the maximum limit of coverage available for the particular
type of property under the federal National Flood Insurance Act of 1968.
6.4. Financial Statements and Reports. Each of the Company and its
--------------------------------
Subsidiaries and the Parent shall maintain a system of accounting in which
correct entries shall be made of all transactions in relation to their business
and affairs in accordance with generally accepted accounting practice. The
fiscal year of the Company and its Subsidiaries and the Parent shall end on
December 31 in each year and the fiscal quarters of the Company and its
Subsidiaries and the Parent shall end on March 31, June 30, September 30 and
December 31 in each year.
6.4.1. Annual Reports. The Company shall furnish to the Lenders as
--------------
soon as available, and in any event within 120 days after the end of each
fiscal year, the Consolidated and Consolidating balance sheets of the
Company and its Subsidiaries and the Parent and its Subsidiaries as at the
end of such fiscal year, the Consolidated and Consolidating statements of
income and Consolidated statements of changes in shareholders' equity and
of cash flows of the Company and its Subsidiaries and the Parent and its
Subsidiaries for such fiscal year (all in reasonable detail) and together,
in
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<PAGE>
the case of Consolidated financial statements, with comparative figures for
the immediately preceding fiscal year, all accompanied by:
(1) Reports of Arthur Andersen LLP (or, if they cease to be auditors
of the Company and its Subsidiaries and the Parent and its Subsidiaries,
other independent certified public accountants of recognized national
standing reasonably satisfactory to the Required Lenders), containing no
material qualification, to the effect that they have audited the foregoing
Consolidated financial statements in accordance with GAAP and that such
Consolidated financial statements present fairly, in all material respects,
the financial position of the Company and its Subsidiaries and the Parent
and its Subsidiaries covered thereby at the dates thereof and the results
of their operations for the periods covered thereby in conformity with
GAAP.
(2) The statement of such accountants that they have caused this
Agreement to be reviewed and that in the course of their audit of the
Company and its Subsidiaries no facts have come to their attention that
cause them to believe that any Default exists under Section 6.5 or, if such
is not the case, specifying such Default and the nature thereof. This
statement is furnished by such accountants with the understanding that the
examination of such accountants cannot be relied upon to give such
accountants knowledge of any such Default except as it relates to
accounting or auditing matters within the scope of their audit.
(3) A certificate of the Company signed by a Financial Officer to
the effect that such officer has caused this Agreement to be reviewed and
has no knowledge of any Default, or if such officer has such knowledge,
specifying such Default and the nature thereof, and what action the Company
has taken, is taking or proposes to take with respect thereto.
(4) Computations by the Company comparing the financial statements
referred to above with the most recent budget for such fiscal year
furnished to the Lenders in accordance with Section 6.4.5.
(5) Computations by the Company in substantially the form of Exhibit
6.4 demonstrating, as of the end of such fiscal year, compliance with the
Computation Covenants, certified by a Financial Officer.
(6) Calculations, as at the end of such fiscal year, of (i) the
Accumulated Benefit Obligations for each Plan (other than Multiemployer
Plans) and (ii) the fair market value of the assets of such Plan allocable
to such benefits.
(7) A schedule, certified by a Financial Officer, showing as of the
end of such fiscal year (i) the location of all Towers, whether such Tower
or the real property
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<PAGE>
on which it is located is owned or leased by the Company and its
Subsidiaries, the contribution by each Tower to Consolidated Site Leasing
Revenues as then estimated in good faith by the Company, which Towers were
acquired during the most recently completed fiscal quarter and the status
of all Towers under construction and (ii) an open bid summary report and a
site development backlog report with respect to Towers.
(8) Supplements to Exhibits 7.1 and 7.3 showing any changes in the
information set forth in such exhibits not previously furnished to the
Lenders in writing, as well as any changes in the Charter, By-laws or
incumbency of officers of the Obligors from those previously certified to
the Agent.
(9) In the event of a change in GAAP after December 31, 1997,
computations by the Company, certified by a Financial Officer, reconciling
the financial statements referred to above with financial statements
prepared in accordance with GAAP as applied to the other covenants in
Section 6 and related definitions.
6.4.2. Quarterly Reports. The Company shall furnish to the Agent as
-----------------
soon as available and, in any event, within 45 days after the end of each
of the first three fiscal quarters of the Company, the internally prepared
Consolidated balance sheets of the Company and its Subsidiaries and the
Parent and its Subsidiaries as of the end of such fiscal quarter, the
Consolidated statements of income and Consolidated statements of changes in
shareholders' equity and of cash flows of the Company and its Subsidiaries
and the Parent and its Subsidiaries for such fiscal quarter and for the
portion of the fiscal year then ended (all in reasonable detail) and
together, in the case of Consolidated statements, with comparative figures
for the same period in the preceding fiscal year, all accompanied by:
(1) A certificate of the Company signed by a Financial Officer to
the effect that such Consolidated financial statements have been prepared
in accordance with GAAP and present fairly, in all material respects, the
financial position of the Company and its Subsidiaries and the Parent and
its Subsidiaries covered thereby at the dates thereof and the results of
their operations for the periods covered thereby, subject only to normal
year-end audit adjustments and the addition of footnotes.
(2) A certificate of the Company signed by a Financial Officer to
the effect that such officer has caused this Agreement to be reviewed and
has no knowledge of any Default, or if such officer has such knowledge,
specifying such Default and the nature thereof and what action the Company
has taken, is taking or proposes to take with respect thereto.
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<PAGE>
(3) Computations by the Company comparing the financial statements
referred to above with the most recent budget for the period covered
thereby furnished to the Lenders in accordance with Section 6.4.5.
(4) Computations by the Company in substantially the form of Exhibit
6.4 demonstrating, as of the end of such quarter, compliance with the
Computation Covenants, certified by a Financial Officer.
(5) A schedule, certified by a Financial Officer, showing as of the
end of such fiscal quarter (i) the location of all Towers, whether such
Tower or the real property on which it is located is owned or leased by the
Company and its Subsidiaries, the contribution by each Tower to
Consolidated Site Leasing Revenues as then estimated in good faith by the
Company, which Towers were acquired during such fiscal quarter and the
status of all Towers under construction and (ii) an open bid summary report
and a site development backlog report with respect to Towers.
(6) Supplements to Exhibits 7.1 and 7.3 showing any changes in the
information set forth in such exhibits not previously furnished to the
Lenders in writing, as well as any changes in the Charter, By-laws or
incumbency of officers of the Obligors from those previously certified to
the Agent.
6.4.3. Monthly Reports. The Company shall furnish to the Agent as
---------------
soon as available and, in any event, (a) within 30 days after the end of
each month, the monthly management report of the Company and its
Subsidiaries in the form prepared by the Company's management for its own
internal purposes, which report shall include at least an income statement
and balance sheet for such month and (b) prior to the end of each month the
Company's plans for the construction of "build-to-suit" Towers for the next
month.
6.4.4. Tower Acquisition Reports. The Company will deliver to the
-------------------------
Agent seven Banking Days' (two Banking Days' if the proposed cost is less
than $2,500,000 for any acquisition or series of related acquisitions)
prior written notice of the proposed acquisition of any new Towers
(including real property sites for Towers) if the proposed cost exceeds
$1,000,000 for any acquisition or series of related acquisitions and the
proposed cost and projected revenue thereof (whether or not the costs of
such acquisition are to be funded by the Company from its own sources or
from the proceeds of the Loan). Such notice shall specify a description and
the locations of the new Towers (including Towers owned by Tower
Companies), the name and address of the owner or lessee, as appropriate, of
the real property on which they are located and, if the proposed cost
exceeds $2,500,000 for any acquisition or series of related acquisitions, a
memorandum summarizing the results of the due diligence review of such
acquisition or series of related acquisitions and such other documents or
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information owned or within the control of the Company and its Subsidiaries
as the Required Lenders may reasonably require.
6.4.5. Other Reports. The Company shall promptly furnish to the
-------------
Lenders:
(1) As soon as prepared and in any event within 30 days after the
beginning of each fiscal year, an annual budget and operating projections
for such fiscal year of the Company and its Subsidiaries, prepared in a
manner consistent with the manner in which the financial projections
described in Section 7.2.1 were prepared.
(2) Any material updates of such budget and projections.
(3) Any management letters furnished to the Company or any of its
Subsidiaries or the Parent or any of its Subsidiaries by the Company's
auditors.
(4) All budgets, projections, statements of operations and other
reports furnished generally to the shareholders of the Parent.
(5) Such registration statements, proxy statements and reports,
including Forms S-1, S-2, S-3, S-4, 10-K, 10-Q and 8-K, as may be filed by
the Company or any of its Subsidiaries or the Parent or any of its
Subsidiaries with the Securities and Exchange Commission.
(6) Any 90-day letter or 30-day letter from the federal Internal
Revenue Service (or the equivalent notice received from state or other
taxing authorities) asserting tax deficiencies against the Company or any
of its Subsidiaries or the Parent or any of its Subsidiaries.
6.4.6. Notice of Litigation, Defaults, etc. The Company shall
-----------------------------------
promptly furnish to the Lenders notice of any litigation or any
administrative or arbitration proceeding (a) which creates a reasonable
risk of resulting, after giving effect to any applicable insurance, in the
payment by the Parent and its Subsidiaries of more than $500,000 or (b)
which results, or creates a reasonable risk of resulting, in a Material
Adverse Change. Promptly upon acquiring knowledge thereof, the Company
shall notify the Lenders of the existence of any Default or Material
Adverse Change, specifying the nature thereof and what action the Parent or
any of its Subsidiaries has taken, is taking or proposes to take with
respect thereto.
6.4.7. ERISA Reports. The Company shall furnish to the Lenders as
-------------
soon as available the following items with respect to any Plan:
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(1) any request for a waiver of the funding standards or an
extension of the amortization period,
(2) any reportable event (as defined in section 4043 of ERISA),
unless the notice requirement with respect thereto has been waived by
regulation,
(3) any notice received by any ERISA Group Person that the PBGC has
instituted or intends to institute proceedings to terminate any Plan, or
that any Multiemployer Plan is insolvent or in reorganization,
(4) notice of the possibility of the termination of any Plan by its
administrator pursuant to section 4041 of ERISA, and
(5) notice of the intention of any ERISA Group Person to withdraw,
in whole or in part, from any Multiemployer Plan.
6.4.8. Other Information. From time to time at reasonable intervals
-----------------
(but in no event more often than quarterly, unless an Event of Default has
occurred and is continuing) upon written request of any authorized officer
of any Lender, each of the Company and its Subsidiaries shall furnish to
the Lenders such other information regarding the business, assets,
financial condition, income or prospects of the Company and its
Subsidiaries as such officer may reasonably request, including copies of
all tax returns, licenses, agreements, leases and instruments to which any
of the Company or its Subsidiaries is party. The Lenders' authorized
officers and representatives shall have the right during normal business
hours upon reasonable notice and at reasonable intervals (but in no event
more often than quarterly, unless an Event of Default has occurred and is
continuing) to examine the books and records of the Company and its
Subsidiaries, to make copies and notes therefrom for the purpose of
ascertaining compliance with or obtaining enforcement of this Agreement or
any other Credit Document. The Lenders shall take reasonable steps to
coordinate any such visits to the Company and its Subsidiaries so as to
minimize disruption to the Company's operations.
6.5. Certain Financial Tests.
-----------------------
6.5.1. Consolidated Total Debt to Consolidated Adjusted EBITDA.
-------------------------------------------------------
Consolidated Total Debt shall not on any date set forth in the table below
exceed the percentage set forth in the table below of Consolidated Adjusted
EBITDA for the most recently completed period of four consecutive fiscal
quarters for which financial reports have been (or are required to have
been) furnished to the Lenders in accordance with Section 6.4.1 or 6.4.2.
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Period Percentage
------ ----------
Prior to Tower Threshold Date 500%
Tower Threshold Date through March 31, 2000 600%
April 1, 2000 through March 31, 2001 500%
April 1, 2001 through March 31, 2002 400%
April 1, 2002 and thereafter 300%
6.5.2. Consolidated Adjusted EBITDA to Consolidated Pro Forma
------------------------------------------------------
Interest Expense. As of the last day of each fiscal quarter of the
----------------
Company, Consolidated Adjusted EBITDA for the period of four consecutive
fiscal quarters then ending shall exceed 250% of Consolidated Pro Forma
Interest Expense for the period of four consecutive fiscal quarters
commencing immediately after such date.
6.5.3. Consolidated EBITDA to Consolidated Fixed Charges. For each
-------------------------------------------------
period of four consecutive fiscal quarters of the Company, commencing with
the period ending on June 30, 1999, Consolidated EBITDA shall exceed 120%
of Consolidated Fixed Charges.
6.5.4. Consolidated Adjusted EBITDA. For each period of four
----------------------------
consecutive fiscal quarters of the Company, commencing with the period
ending on the earlier of (a) the last day of the fiscal quarter during
which the Revolving Loan is first outstanding in accordance with Section
2.1.1 and (b) June 30, 1999, Consolidated Adjusted EBITDA shall equal or
exceed the amount specified in such table.
Period Ending Amount
------------- ------
September 30, 1998 $ 2,500,000
October 1, 1998 through December 31, 1998 $ 2,500,000
January 1, 1999 through March 31, 1999 $ 4,250,000
April 1, 1999 through June 30, 1999 $ 8,000,000
July 1, 1999 through September 30, 1999 $ 9,500,000
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October 1, 1999 through December 31, 1999 $11,500,000
January 1, 2000 through March 31, 2000 $16,000,000
April 1, 2000 through June 30, 2000 $20,000,000
July 1, 2000 through September 30, 2000 $25,000,000
October 1, 2000 through December 31, 2000 $28,500,000
January 1, 2001 through March 31, 2002 $30,000,000
April 1, 2002 through March 31, 2003 $35,000,000
April 1, 2003 and thereafter $40,000,000
6.5.5. Consolidated Adjusted EBITDA to Consolidated Pro Forma Fixed
------------------------------------------------------------
Charges. On the last day of each fiscal quarter of the Company,
-------
commencing with the fiscal quarter ending in March 2002, Consolidated
Adjusted EBITDA for the period of four consecutive fiscal quarters then
ending shall exceed 110% of Consolidated Pro Forma Fixed Charges for the
12-month period beginning immediately after such date.
6.5.6. Overdue Tower Construction Receivables. Accounts receivable
--------------------------------------
that are more than 60 days overdue owing to the Company and its
Subsidiaries with respect to any third-party construction (including
construction of Towers, site work and installation of antenna and other
operating equipment) shall not exceed $1,500,000 in the aggregate at any
one time outstanding.
6.5.7. Capital Expenditures. Capital Expenditures by the Company
--------------------
and its Subsidiaries with respect to Towers to be constructed and owned by
the Company and its Subsidiaries shall not exceed (a) $125,000,000 in the
aggregate for the fiscal year ending December 31, 1998, (b) $140,000,000 in
the aggregate for the fiscal year ending December 31, 1999, and (c)
$5,000,000 in the aggregate in any fiscal year thereafter.
6.5.8. Executive Management Compensation. Salaries, cash bonuses,
---------------------------------
management and consulting fees and other compensation expenses payable by
the Company and its Subsidiaries to Executive Management shall not exceed
(a) $2,750,000 in fiscal year 1998, and (b) in any fiscal year thereafter,
115% of the maximum amount permitted by this Section 6.5.8 for the then
previous fiscal year.
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6.6. Indebtedness. Neither the Company nor any of its Subsidiaries nor the
------------
Parent nor any of its Subsidiaries shall create, incur, assume or otherwise
become or remain liable with respect to any Indebtedness (or become
contractually committed to do so), except the following:
6.6.1. Indebtedness in respect of the Credit Obligations.
6.6.2. Guarantees permitted by Section 6.7.
6.6.3. Current liabilities, other than Financing Debt, incurred in
the ordinary course of business.
6.6.4. To the extent that payment thereof shall not at the time be
required by Section 6.1, Indebtedness in respect of taxes, assessments,
governmental charges and claims for labor, materials and supplies.
6.6.5. Indebtedness secured by Liens of carriers, warehouses,
mechanics and landlords permitted by Sections 6.8.5 and 6.8.6.
6.6.6. Indebtedness in respect of judgments or awards (a) which have
been in force for less than the applicable appeal period or (b) in respect
of which the Company or any Subsidiary shall at the time in good faith be
prosecuting an appeal or proceedings for review and, in the case of each of
clauses (a) and (b), the Company or such Subsidiary shall have taken
appropriate reserves therefor in accordance with GAAP or such liability
shall be covered by insurance and execution of such judgment or award shall
not be levied.
6.6.7. To the extent permitted by Section 6.8.7, Indebtedness in
respect of Capitalized Lease Obligations or secured by purchase money
security interests; provided, however, that the aggregate principal amount
-------- -------
of all Indebtedness under this Section 6.6.7 plus Indebtedness under
----
Sections 6.6.8(a), 6.6.14 and 6.6.15 at any one time outstanding shall not
exceed $5,000,000.
6.6.8. Unsecured Indebtedness owing to sellers of Towers and Tower
Companies so long as either (a) such Indebtedness is subordinated to the
Credit Obligations on substantially the terms of Exhibit 6.6.8 and the
aggregate principal amount of all Indebtedness under this clause (a) plus
----
Indebtedness under Sections 6.6.7, 6.6.14 and 6.6.15 at any one time
outstanding shall not exceed $5,000,000 or (b) the aggregate principal
amount of Indebtedness owing to such sellers is covered by Letters of
Credit.
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6.6.9. Indebtedness in respect of deferred taxes arising in the
ordinary course of business and deferred insurance expense financed for a
period not to exceed 12 months.
6.6.10. Indebtedness in respect of inter-company loans and advances
among the Company and its Subsidiaries which are not prohibited by Section
6.9.
6.6.11. Unsecured Indebtedness of the Company or the Parent
subordinated to the prior payment of the Credit Obligations upon customary
terms reasonably satisfactory to the Lenders, including a final maturity
date of at least one year after the Final Maturity Date, covenants less
restrictive on the Company and its Subsidiaries other than the covenants
contained in this Agreement and customary subordination provisions;
provided, however, that the proceeds of such Indebtedness are used to fund
-------- -------
the acquisition or construction of Towers; and provided further, that the
--------
aggregate principal amount of all Indebtedness permitted by this Section
6.6.11 at any one time outstanding shall not exceed $100,000,000.
6.6.12. Unfunded pension liabilities and obligations with respect to
Plans so long as the Company and all other ERISA Group Persons are in
compliance with Section 6.16.
6.6.13. Indebtedness (in addition to the foregoing) outstanding on
the date hereof and described in Exhibit 7.3 and all renewals and
extensions thereof not in excess of the amount thereof outstanding
immediately prior to such renewal or extension.
6.6.14. Indebtedness of Foreign Subsidiaries in an aggregate
principal amount not exceeding $1,000,000 at any one time outstanding in an
equivalent amount of United States Funds; provided, however, that the
-------- -------
aggregate principal amount of all Indebtedness under this Section 6.6.14
plus Indebtedness under Sections 6.6.7, 6.6.8(a) and 6.6.15 at any one time
----
outstanding shall not exceed $5,000,000.
6.6.15. Indebtedness (other than Financing Debt) in addition to the
other Indebtedness permitted by this Section 6.6; provided, however, that
-------- -------
the aggregate amount of all Indebtedness under this Section 6.6.15 plus
----
Indebtedness under Sections 6.6.7, 6.6.8(a) and 6.6.14 at any one time
outstanding shall not exceed $5,000,000.
6.6.16. Indebtedness incurred by the Parent with respect to the
Parent Discount Notes.
6.7 Guarantees; Letters of Credit. Neither the Company nor any of its
-----------------------------
Subsidiaries nor the Parent nor any of its Subsidiaries shall become or remain
liable with respect to any
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Guarantee, including reimbursement obligations, whether contingent or matured,
under letters of credit or other financial guarantees by third parties (or
become contractually committed do to so), except the following:
6.7.1. Letters of Credit and Guarantees of the Credit Obligations.
6.7.2. Guarantees by the Company of Indebtedness and other
obligations incurred by its Subsidiaries and permitted by Section 6.6.
6.8. Liens. Neither the Company nor any of its Subsidiaries nor the
-----
Parent nor any of its Subsidiaries shall create, incur or enter into, or suffer
to be created or incurred or to exist, any Lien (or become contractually
committed to do so), except the following:
6.8.1. Liens on the Credit Security that secure the Credit
Obligations.
6.8.2. Liens to secure taxes, assessments and other governmental
charges, to the extent that payment thereof shall not at the time be
required by Section 6.1.
6.8.3. Deposits or pledges made (a) in connection with, or to secure
payment of, workers' compensation, unemployment insurance, old age pensions
or other social security, (b) in connection with casualty insurance
maintained in accordance with Section 6.3, (c) to secure the performance of
bids, tenders, contracts (other than contracts relating to Financing Debt)
or leases, (d) to secure statutory obligations or surety or appeal bonds,
(e) to secure indemnity, performance or other similar bonds or guarantees
in the ordinary course of business or (f) in connection with contested
amounts to the extent that payment thereof shall not at that time be
required by Section 6.1.
6.8.4. Liens in respect of judgments or awards, to the extent that
such judgments or awards are permitted by Section 6.6.6 but only to the
extent that such Liens are junior to the Liens on the Credit Security
granted to secure the Credit Obligations.
6.8.5. Liens of carriers, warehouses, mechanics and similar Liens,
in each case (a) in existence less than 90 days from the date of creation
thereof or (b) being contested in good faith by the Company or any
Subsidiary or the Parent in appropriate proceedings (so long as the Company
or such Subsidiary shall, in accordance with GAAP, have set aside on its
books adequate reserves with respect thereto).
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<PAGE>
6.8.6. Encumbrances in the nature of (a) zoning restrictions,
(b) easements and reservations of mineral rights, (c) restrictions of
record on the use of real property, (d) landlords' and lessors' Liens on
rented premises and (e) restrictions on transfers or assignment of leases
and (f) title irregularities, in all such cases that do not in the
aggregate materially detract from the value of the Towers taken as a whole
and that do not result, or create a reasonable risk of resulting, in a
Material Adverse Change.
6.8.7. Liens constituting (a) purchase money security interests
(including mortgages, conditional sales, Capitalized Leases and any other
title retention or deferred purchase devices) in real property, interests
in leases or tangible personal property (other than inventory) existing or
created on the date on which such property is acquired, and (b) the
renewal, extension or refunding of any security interest referred to in the
foregoing clause (a) in an amount not to exceed the amount thereof
remaining unpaid immediately prior to such renewal, extension or refunding;
provided, however, that (i) each such security interest shall attach solely
-------- -------
to the particular item of property so acquired, and the principal amount of
Indebtedness (including Indebtedness in respect of Capitalized Lease
Obligations) secured thereby shall not exceed the cost (including all such
Indebtedness secured thereby, whether or not assumed) of such item of
property; and (ii) the aggregate principal amount of all Indebtedness
secured by Liens permitted by this Section 6.8.7 shall not exceed the
amount permitted by Section 6.6.7.
6.8.8. Restrictions under federal and state securities laws on the
transfer of securities.
6.8.9. Liens as in effect on the date hereof described in
Exhibit 7.3 and securing Indebtedness permitted by Section 6.6.13.
6.9 Investments and Acquisitions. Neither the Company nor any of its
----------------------------
Subsidiaries nor the Parent nor any of its Subsidiaries shall have outstanding,
acquire or hold any Investment (including any Investment consisting of the
acquisition of any business) (or become contractually committed to do so),
except the following:
6.9.1. Investments of the Company and its Subsidiaries or the Parent
in (a) Wholly Owned Subsidiaries which are Guarantors as of the date hereof
and (b) Persons that have become Wholly Owned Subsidiaries and Guarantors
after the date hereof in accordance with Section 6.9.5; provided, however,
-------- -------
that (i) no such Investment shall involve the transfer by the Company of
any material assets other than cash and (ii) no such Investments shall be
made after the date hereof in Foreign Subsidiaries.
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6.9.2. Intercompany loans and advances from any Wholly Owned
Subsidiary to the Company but in each case only to the extent reasonably
necessary for Consolidated tax planning and working capital management;
provided, however, that loans and advances from a Foreign Subsidiary
------- -------
to the Company or a Domestic Subsidiary must be subordinated to the Credit
Obligations pursuant to a subordination agreement in substantially the same
form as the Subordination Agreement provided for in Section 5.1.6.
6.9.3. Investments in Cash Equivalents.
6.9.4. Guarantees permitted by Section 6.7.
6.9.5. So long as immediately before and after giving effect thereto
no Default exists, Investments of the Company and its Wholly Owned
Subsidiaries and the Parent consisting of the acquisition of Towers and
all or a portion of the equity of Tower Companies; provided, however, that:
-------- -------
(1) at least seven Banking Days (two Banking Days in the case of
acquisitions or series of related acquisitions with a cost to the Company
and its Subsidiaries and the Parent less than $2,500,000) prior to any such
acquisition with a cost exceeding $1,000,000, the Lenders shall receive
computations provided by a Financial Officer demonstrating pro forma
compliance with the Computation Covenants after giving effect to such
acquisition and, in the case of any acquisition (or series of related
acquisitions) involving consideration exceeding $2,500,000 by the Company
and its Subsidiaries and the Parent, the materials required by Section
6.4.4,
(2) the Company and the Parent shall take all necessary action to
cause any such newly acquired Tower Company that is a Subsidiary owned at
least 80% by the Parent and its Subsidiaries to become a Guarantor and to
perfect the Lenders' security interests in the newly acquired Towers and
Designated Real Properties to the extent necessary to comply with
Section 6.20.3,
(3) no more than 25% of the revenues anticipated to be derived from
such acquired Towers or Tower Companies shall derive from PCS C-Block
Providers, and
(4) in the case of any acquisition (or series of related
acquisitions) involving consideration exceeding $6,000,000 by the Company
and its Subsidiaries and the Parent, the Lenders holding at least a
majority of the Percentage Interests shall have provided their prior
written consent, and
(5) minority investments in the equity of Tower Companies shall in
no event exceed $15,000,000 in the aggregate at any one time outstanding.
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6.9.6. $3,500,000 loan from the Parent to Steven E. Bernstein
evidenced by a note dated March 8, 1997.
6.10 Distributions. Neither the Company nor any of its Subsidiaries shall
-------------
make any Distribution (or become contractually committed to do so), except the
following:
6.10.1. So long as immediately before and after giving effect thereto
no Default exists, Subsidiaries of the Company may make Distributions to
the Company or any Wholly Owned Subsidiary of the Company and the Company
and its Subsidiaries may make Investments permitted by Sections 6.9.1 and
6.9.2.
6.10.2. So long as immediately before and after giving effect thereto
no Default exists, and so long as immediately after giving effect thereto
the Company and its Subsidiaries are in pro forma compliance with the
Computation Covenants, the Company may make Distributions to the Parent in
an amount and at the time necessary for the Parent to redeem outstanding
shares of the Parent's Series A, Series B, Series C and Series D Preferred
Stock to the extent such redemptions are permitted by section 4.07 of the
Parent Discount Notes Indenture as in effect on the date hereof without any
subsequent amendment or modification.
6.10.3. To the extent permitted by the applicable subordination
terms, the Company may make (or make Distributions to the Parent to the
extent necessary for the Parent to make) regularly scheduled, mandatory
payments of interest on and principal of the subordinated Indebtedness
permitted by Sections 6.6.8 and 6.6.11.
6.10.4. So long as immediately before and after giving effect thereto
no Event of Default exists, the Company may make Distributions to the
Parent (i) to enable the Parent (a) to pay its general and administrative
expenses in the ordinary course of business; provided, however, that the
-------- -------
aggregate amount of all such Distributions shall in no event exceed
$2,500,000 in any year and (b) to pay mandatory cash interest on the Parent
Discount Notes in accordance with their terms; provided, however, that no
-------- -------
such Distributions shall be made prior to the fifth anniversary of the
consummation of the offering of the Parent Discount Notes.
6.10.5. So long as immediately before and after giving effect
thereto no Event of Default under Section 8.1.1 exists, the Company may
make Distributions to the Parent in an amount and at the times necessary to
enable the Parent to pay income taxes due that are properly allocable to
the operations of the Company and its Subsidiaries under the consolidated
tax returns of the Parent and its Subsidiaries.
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6.11. Asset Dispositions and Mergers. Neither the Company nor any of its
------------------------------
Subsidiaries nor the Parent nor any of its Subsidiaries shall merge or enter
into a consolidation or sell, lease, exchange, sell and lease back, sublease or
otherwise dispose of any of its assets (or become contractually committed to do
so), except the following:
6.11.1. The Company and any of its Subsidiaries may sell or
otherwise dispose of (a) inventory and Cash Equivalents in the ordinary
course of business and (b) tangible assets to be replaced in the ordinary
course of business within 12 months by other tangible assets of equal or
greater value or (c) tangible assets (other than Towers) that are no longer
used or useful in the business of the Company or such Subsidiary.
6.11.2. Any Wholly Owned Subsidiary of the Company may merge or be
liquidated into the Company or any other Wholly Owned Subsidiary of the
Company so long as after giving effect to any such merger to which the
Company is a party the Company shall be the surviving or resulting Person.
6.11.3. Mergers constituting Investments permitted by Section 6.9.5.
6.11.4. Licensing of and leasing of Tower space and intangible
assets for fair value in the ordinary course of business.
6.11.5. So long as immediately before and after giving effect
thereto no Default exists, transfers for fair value to any Person who sells
or leases a Tower or Tower Company to the Company or one of its
Subsidiaries of such portions of the real property on which the applicable
Towers are located as are not necessary for the operation of the Towers.
6.11.6. So long as the Net Asset Sale Proceeds thereof are applied
to repay the Loan as required by Section 4.3.2 and so long as immediately
before and after giving effect thereto no Default exists, the Company and
its Subsidiaries may sell for fair value during any year either (a) Towers
contributing not more than 5% of Consolidated Site Leasing Revenues for the
Company's most recently completed fiscal year; provided, however, that the
-------- -------
sum of the foregoing percentages of Consolidated Site Leasing Revenues for
all Towers sold pursuant to this Section 6.11.6(a) since the date hereof
shall not exceed 15% or (b) Towers in barter or exchange transactions for
replacement Towers, or the cash proceeds from the sale or other disposition
of which are used by the Company or any of its Subsidiaries within 180 days
to acquire or construct Towers.
6.11.7. So long as immediately before and after giving effect
thereto no Default exists, the Company and its Subsidiaries may enter into
sale and leaseback transactions with respect to the real property upon
which the Towers are located (but
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not with respect to the Towers themselves) in an aggregate amount not to
exceed $200,000.
6.12. Issuance of Stock by Subsidiaries or the Company; Subsidiary
------------------------------------------------------------
Distributions.
- -------------
6.12.1. Issuance of Stock by Subsidiaries or the Company. Neither
------------------------------------------------
any Subsidiary nor the Company shall issue or sell any shares of its
capital stock or other evidence of beneficial ownership to any Person other
than (a) the Company or any Wholly Owned Subsidiary of the Company or the
Parent, which shares shall have been pledged to the Agent as part of the
Credit Security to the extent required by the Guarantee and Security
Agreement or the Parent Pledge and Subordination Agreement, as the case may
be, and (b) directors of Subsidiaries as qualifying shares to the extent
required by Legal Requirements and, in the case of Foreign Subsidiaries,
shares required by Legal Requirements to be held by foreign nationals and
(c) other equity owners of Subsidiaries acquired and owned in accordance
with Section 6.9.5.
6.12.2. No Restrictions on Subsidiary Distributions. Except for
-------------------------------------------
this Agreement and the Credit Documents, neither the Company nor any
Subsidiary shall enter into or be bound by any agreement (including
covenants requiring the maintenance of specified amounts of net worth or
working capital) restricting the right of any Subsidiary to make
Distributions or extensions of credit to the Company (directly or
indirectly through another Subsidiary); provided, however, that
-------- -------
Foreign Subsidiaries may become subject to such restrictions pursuant to
loan agreements with respect to Indebtedness permitted by Section 6.6.14.
6.13. Voluntary Prepayments of Other Indebtedness. Neither the Company
-------------------------------------------
nor any of its Subsidiaries shall make any voluntary prepayment of principal of
or interest on any Financing Debt (other than the Credit Obligations) or make
any voluntary redemptions or repurchases of Financing Debt (other than the
Credit Obligations); provided, however, that Company may make the payments
permitted by Section 6.10.3 on subordinated Indebtedness permitted by
Sections 6.6.8 and 6.6.11.
6.14. Derivative Contracts. Neither the Company nor any of its
--------------------
Subsidiaries shall enter into any Interest Rate Protection Agreement, foreign
currency exchange contract or other financial or commodity derivative contracts
except to provide hedge protection for an underlying economic transaction in the
ordinary course of business.
6.15. Negative Pledge Clauses. Neither the Company nor any of its
-----------------------
Subsidiaries shall enter into any agreement, instrument, deed or lease which
prohibits or limits the ability of the Company or any of its Subsidiaries to
create, incur, assume or suffer to exist any Lien upon any of their respective
properties, assets or revenues, whether now owned or hereafter
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acquired, or which requires the grant of any collateral for such obligation if
collateral is granted for another obligation, except the following:
6.15.1. This Agreement and the other Credit Documents.
6.15.2. Covenants in documents creating Liens permitted by
Section 6.8 prohibiting further Liens on the assets encumbered thereby.
6.16. ERISA, etc. Each of the Company and its Subsidiaries shall comply,
----------
and shall cause all ERISA Group Persons to comply, in all material respects,
with the provisions of ERISA and the Code applicable to each Plan. Each of the
Company and its Subsidiaries shall meet, and shall cause all ERISA Group Persons
to meet, all minimum funding requirements applicable to them with respect to any
Plan pursuant to section 302 of ERISA or section 412 of the Code, without giving
effect to any waivers of such requirements or extensions of the related
amortization periods which may be granted. At no time shall the Accumulated
Benefit Obligations under any Plan that is not a Multiemployer Plan exceed the
fair market value of the assets of such Plan allocable to such benefits by more
than $1,000,000. The Company and its Subsidiaries shall not withdraw, and shall
cause all other ERISA Group Persons not to withdraw, in whole or in part, from
any Multiemployer Plan so as to give rise to withdrawal liability exceeding
$1,000,000 in the aggregate. At no time shall the actuarial present value of
unfunded liabilities for post-employment health care benefits (other than COBRA
continuation coverage benefits), whether or not provided under a Plan,
calculated in a manner consistent with Statement No. 106 of the Financial
Accounting Standards Board, exceed $1,000,000.
6.17. Transactions with Affiliates. Neither the Company nor any of its
----------------------------
Subsidiaries shall effect any transaction with any of their respective
Affiliates (except for the Company and its Subsidiaries) on a basis less
favorable to the Company and its Subsidiaries than would be the case if such
transaction had been effected with a non-Affiliate.
6.18. Interest Rate Protection. From and after the date the Loan first
------------------------
equals or exceeds $37,500,000, the Company shall obtain and thereafter keep in
effect one or more Interest Rate Protection Agreements conforming to
International Securities Dealers Association standards, each in form and
substance reasonably satisfactory to the Agent, covering a notional amount of at
least 50% of the Loan, in each case for an aggregate period of not less than
three years.
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6.19. Environmental Laws.
------------------
6.19.1. Compliance with Law and Permits. Each of the Company and
-------------------------------
its Subsidiaries shall use and operate all of its facilities and properties
in material compliance with all Environmental Laws, keep in effect all
necessary permits, approvals, certificates, licenses and other
authorizations relating to environmental matters and remain in material
compliance therewith, and handle all Hazardous Materials in material
compliance with all applicable Environmental Laws.
6.19.2. Notice of Claims, etc. Each of the Company and its
---------------------
Subsidiaries shall immediately notify the Agent, and provide copies upon
receipt, of all written claims, complaints, notices or inquiries from
governmental authorities relating to the condition of its facilities and
properties or compliance with Environmental Laws, and shall promptly cure
and have dismissed with prejudice to the reasonable satisfaction of the
Agent any actions and proceedings relating to compliance with Environmental
Laws.
6.20. Tower Matters.
-------------
6.20.1. Tower Construction Requirements. Prior to commencement of
-------------------------------
construction of any Tower to be owned by the Company or any of its
Subsidiaries, if at the time Credit Exposure exceeds $1,000,000, the
Company shall enter into a standard lease agreement with respect to such
Tower with a licensed cellular operator, PCS A-F Block Provider or ESMR
Operator as the anchor tenant. The anchor tenant shall be reasonably
acceptable to the Agent.
6.20.2. No Removal of Towers. None of the Towers located on
--------------------
Designated Real Property shall be removed from their locations without the
prior written consent of the Required Lenders, which consent shall not be
unreasonably withheld or delayed, unless: (a) (i) such removal is in the
ordinary course of business, (ii) such actions and filings of record as may
be necessary to continue the first priority perfected Lien of the Lenders
in the real property or leasehold upon which such Tower is finally located
have been taken and (iii) in the case of leaseholds, the Agent has received
Estoppel and Consent Letters relating to the new locations, or (b) such
removal is necessary to satisfy any Legal Requirement or a properly issued
order or mandate of any governmental authority or (c) any Tower so removed
has been damaged and the Lenders have required the insurance proceeds
relating thereto be applied to repayment of the Loan in accordance with
Section 4.3.2.
6.20.3. Pledged Towers. On the date the Revolving Loan is first
--------------
outstanding in accordance with Section 2.1.1 in an amount exceeding $1,000,
Pledged Towers on such date shall have contributed at least 80% of
Consolidated Site Leasing
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Revenues for the period of four consecutive fiscal quarters of the Company
then most recently ended for which financial reports have been furnished to
the Lenders in accordance with Section 6.4.1 or 6.4.2. For each period of
four consecutive fiscal quarters of the Company thereafter, Pledged Towers
as of the date 45 days after the end of such period shall have contributed
at least 80% of Consolidated Site Leasing Revenues for such period.
The Company and its Subsidiaries shall have the right to obtain
releases and discharges of any Mortgages and Estoppel and Consent Letters
with respect to Pledged Towers upon 10 Banking Days prior notice to the
Agent so long as after giving effect to any such releases and discharges
Pledged Towers shall have contributed at least 80% of Consolidated Site
Leasing Revenues for the period of four consecutive fiscal quarters of the
Company then most recently ended.
With respect to each Pledged Tower, the Obligors shall have duly
authorized, executed, acknowledged and delivered to the Agent a mortgage
(or deed of trust) on each real property on which such Pledged Tower is
located in substantially the form of Exhibit 6.20.3A and a leasehold
mortgage (or leasehold deed of trust) on each real property leased by the
Company and its Subsidiaries on which such Pledged Tower is located in
substantially the form of Exhibit 6.20.3B, with Estoppel and Consent
Letters from the lessors in substantially the form of Exhibit 6.20.3C
(each, an "Estoppel and Consent Letter"), lessor waivers and any other
---------------------------
documents required to allow for the recording or filing of a leasehold
mortgage, in each case in form and substance reasonably satisfactory to the
Agent, together with, for each such real property: (a) copies of title
insurance policies to the extent obtained by the Company or any of its
Subsidiaries, (b) to the extent obtained by the Company or any of its
Subsidiaries, an environmental site assessment report in such form, with
such conclusions and from such environmental engineering firm as are
reasonably satisfactory to the Agent, (c) to the extent obtained by the
Company or any of its Subsidiaries, a survey on such real property that is
reasonably satisfactory to the Agent and (d) a legal opinion of local
counsel with respect to the recording and enforceability of such mortgages
and leasehold mortgages in substantially the form of Exhibit 6.20.3D.
6.21. Series A Preferred Stock Redemptions. The terms of any redemption
------------------------------------
by the Parent of Series A Preferred Stock shall be consistent with the
restrictions on such redemption as set forth in the Parent Discount Notes
Indenture as in effect on the date hereof without giving effect to any
subsequent amendment or modification.
6.22. Restricted Operations of Parent. The Parent will conduct no
-------------------------------
operations other than acquiring and owning the capital stock of the Company,
advancing funds to the Company and holding evidence of such Indebtedness,
maintaining ownership of trademarks and tradenames
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that are pledged to the Agent in accordance with an Intellectual Property
Security Agreement and activities incidental thereto. The Parent will own no
material assets other than the stock and Indebtedness of the Company, the
trademarks and trade names described above and cash expected to be spent within
90 days in the ordinary course of business.
7. REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders to extend
------------------------------
credit to the Company hereunder, each of the Company and the Guarantors jointly
and severally represents and warrants as follows:
7.1 Organization and Business.
-------------------------
7.1.1. The Company. The Company is a duly organized and validly
-----------
existing corporation in good standing under the laws of Florida, with all
corporate power and authority necessary to (a) enter into and perform this
Agreement and each other Credit Document to which it is party, (b)
guarantee the Credit Obligations, (c) grant the Agent for the benefit of
the Lenders the security interests in the Credit Security owned by it to
secure the Credit Obligations and (d) own its properties and carry on the
business now conducted or proposed to be conducted by it. Certified copies
of the Charter and By-laws of the Company have been previously delivered to
the Agent and are correct and complete. Exhibit 7.1, as from time to time
hereafter supplemented in accordance with Sections 6.4.1 and 6.4.2, sets
forth, as of the later of the date hereof or the end of the most recent
fiscal quarter for which financial statements are required to be furnished
in accordance with such Sections, (i) the jurisdiction of incorporation of
the Company, (ii) the address of the Company's principal executive office
and chief place of business, (iii) each name, including any trade name,
under which the Company conducts its business and (iv) the jurisdictions in
which the Company owns real or tangible personal property.
7.1.2. Subsidiaries. Each Subsidiary of the Company is duly
------------
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized, with all corporate power and
authority necessary to (a) enter into and perform this Agreement and each
other Credit Document to which it is party, (b)guarantee the Credit
Obligations, (c) grant the Agent for the benefit of the Lenders the
security interest in the Credit Security owned by such Subsidiary to secure
the Credit Obligations and (d) own its properties and carry on the business
now conducted or proposed to be conducted by it. Certified copies of the
Charter and By-laws of each Subsidiary of the Company have been previously
delivered to the Agent and are correct and complete. Exhibit 7.1, as from
time to time hereafter supplemented in accordance with Sections 6.4.1 and
6.4.2, sets forth, as of the later of the date hereof or the end of the
most recent fiscal quarter for which financial statements are required to
be furnished in accordance with such Sections, (i) the name and
jurisdiction of organization of each Subsidiary of the Company, (ii) the
address of the chief executive office and principal
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place of business of each such Subsidiary, (iii) each name under which each
such Subsidiary conducts its business, (iv) each jurisdiction in which each
such Subsidiary owns real or tangible personal property, and (v) the number
of authorized and issued shares and ownership of each such Subsidiary.
7.1.3. The Parent. The Parent is a duly organized and validly
----------
existing corporation in good standing under the laws of Florida, with all
corporate power and authority necessary to (a) enter into and perform this
Agreement and each other Credit Document to which it is party, (b) grant
the Agent for the benefit of the Lenders the security interests in the
Credit Security owned by it to secure the Credit Obligations and (c) own
its properties and carry on the business now conducted or proposed to be
conducted by it. Certified copies of the Charter and By-laws of the Parent
have been previously delivered to the Agent and are correct and complete.
Exhibit 7.1, as from time to time hereafter supplemented in accordance with
Sections 6.4.1 and 6.4.2, sets forth, as of the later of the date hereof or
the end of the most recent fiscal quarter for which financial statements
are required to be furnished in accordance with such Sections, (i) the
jurisdiction of incorporation of the Parent, (ii) the address of the
Parent's principal executive office and chief place of business, (iii) each
name, including any trade name, under which the Parent conducts its
business and (iv) the jurisdictions in which the Parent owns real or
tangible personal property.
7.1.4. Qualification. Each of the Company, its Subsidiaries and
-------------
the Parent is duly and legally qualified to do business as a foreign
corporation or other entity and is in good standing in each state or
jurisdiction in which such qualification is required and is duly
authorized, qualified and licensed under all laws, regulations, ordinances
or orders of public authorities, or otherwise, to carry on its business in
the places and in the manner in which it is conducted, except for failures
to be so qualified, authorized or licensed which would not in the aggregate
result, or create a material risk of resulting, in any Material Adverse
Change.
7.1.5. Capitalization. No options, warrants, conversion rights,
--------------
preemptive rights or other statutory or contractual rights to purchase
shares of capital stock or other securities of any Subsidiary now exist,
nor has any Subsidiary authorized any such right, nor is any Subsidiary
obligated in any other manner to issue shares of its capital stock or other
securities.
7.2. Financial Statements and Other Information; Material Agreements.
---------------------------------------------------------------
7.2.1. Financial Statements and Other Information. The Company has
------------------------------------------
previously furnished to the Lenders copies of the following:
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(1) The audited Consolidated balance sheets of the Parent and its
Subsidiaries as at December 31 in each of 1995, 1996 and 1997 and the
audited Consolidated statements of income, of changes in shareholders'
equity and of cash flows of the Parent and its Subsidiaries for the fiscal
years then ended.
(2) The unaudited Consolidated balance sheet of the Parent and its
Subsidiaries as at March 31, 1998 and the unaudited Consolidated statements
of income, of changes in shareholders' equity and of cash flows of the
Parent and its Subsidiaries for the fiscal quarter then ended.
(3) The five-year financial and operational projections for the
Parent and its Subsidiaries dated May 1998.
(4) Offering Memorandum dated February 25, 1998 with respect to the
Parent Discount Notes (the "Offering Memorandum").
-------------------
The financial statements (including the notes thereto) referred to in
clauses (a) and (b) above were prepared in accordance with GAAP and fairly
present in all material respects the financial position of the Parent and
its Subsidiaries on a Consolidated basis at the respective dates thereof
and the results of their operations for the periods covered thereby,
subject in the case off interim financial statements to the addition of
footnotes and normal year-end audit adjustments. Neither the Parent nor
any of its Subsidiaries has any known contingent liability material to the
Parent and its Subsidiaries on a Consolidated basis which is not reflected
in the balance sheets referred to in clauses (a) and (b) above (or
delivered pursuant to Sections 6.4.1 or 6.4.2) or in the notes thereto.
In the Parent's judgment, the financial and operational projections
referred to in clause (c) above constitute a reasonable basis as of the
Effective Date for the assessment of the future performance of the Parent
and its Subsidiaries during the periods indicated therein (on a cash
accounting basis), it being understood that any projected financial
information represents an estimate, based on various assumptions, of future
results of operations which may or may not in fact occur.
As of the date thereof, the Offering Memorandum did not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not misleading
in light of the circumstances under which they were made; provided,
--------
however, that the descriptions in the Offering Memorandum of other
-------
documents and agreements are intended to be summaries only and do not
provide comprehensive descriptions of the terms and conditions contained in
such documents and agreements.
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7.2.2. Material Agreements. The Company has previously furnished
-------------------
to the Lenders correct and complete copies, including all exhibits,
schedules and amendments thereto, of the agreements and instruments, each
as in effect on the date hereof, listed in Exhibit 7.2.2, which constitute
all agreements and instruments material to the Parent and its Subsidiaries
on a Consolidated basis (the "Material Agreements").
-------------------
7.3. Agreements Relating to Financing Debt, Investments, etc. Exhibit
-------------------------------------------------------
7.3, as from time to time hereafter supplemented in accordance with Sections
6.4.1 and 6.4.2, sets forth:
7.3.1. The amounts (as of the dates indicated in Exhibit 7.3, as so
supplemented) of all Financing Debt of the Company and its Subsidiaries and
all agreements which relate to such Financing Debt.
7.3.2. All Liens and Guarantees with respect to such Financing
Debt.
7.3.3. All agreements which directly or indirectly require the
Company or any Subsidiary to make any Investment.
7.3.4. Material license agreements with respect to the assets of
the Company and its Subsidiaries, including the parties thereto and the
expiration dates thereof.
7.3.5. All trademarks, tradenames, service marks, service names and
patents owned by the Company and its Subsidiaries that are registered with
the federal Patent and Trademark Office (or with respect to which
applications for such registration have been filed).
7.3.6. All copyrights owned by the Company and its Subsidiaries
that are registered with the federal Copyright Office.
7.3.7. All financial institutions (other than the Lenders) with
whom bank and deposit accounts are owned by the Company and its
Subsidiaries.
The Company has furnished the Lenders correct and complete copies of any
agreements described above in this Section 7.3 requested by the Required
Lenders.
7.4. Changes in Condition. Except as otherwise disclosed in writing to
--------------------
the Lenders prior to the date hereof, since December 31, 1997, no Material
Adverse Change has occurred and between December 31, 1997 and the date hereof,
neither the Company nor any Subsidiary of the Company has entered into any
material transaction outside the ordinary course of business except for the
transactions contemplated by this Agreement and the Material Agreements.
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<PAGE>
7.5. Title to Assets. The Company, its Subsidiaries and the Parent have
---------------
good title to all assets necessary for or used in the operations of their
business as now conducted by them and reflected in the most recent balance sheet
referred to in Section 7.2.1 (or the balance sheet most recently furnished to
the Lenders pursuant to Sections 6.4.1 or 6.4.2), and to all assets acquired
subsequent to the date of such balance sheet, subject to no Liens except for
Liens permitted by Section 6.8 and except for assets disposed of as permitted by
Section 6.11.
7.6. Operations in Conformity With Law, etc. The operations of the
--------------------------------------
Company, its Subsidiaries and the Parent as now conducted or proposed to be
conducted are not in violation of, nor is the Company, its Subsidiaries or the
Parent in default under, any Legal Requirement presently in effect, except for
such violations and defaults as do not and will not, in the aggregate, result,
or create a material risk of resulting, in any Material Adverse Change. Neither
the Company, any of its Subsidiaries nor the Parent has received notice of any
such violation or default or has knowledge of any basis on which the operations
of the Company, any of its Subsidiaries or the Parent, as now conducted and as
currently proposed to be conducted after the date hereof, would be held so as to
violate or to give rise to any such violation or default.
7.7. Litigation. No litigation, at law or in equity, or any proceeding
----------
before any court, board or other governmental or administrative agency or any
arbitrator is pending or, to the knowledge of the Company or any Guarantor,
threatened which involves any material risk of any final judgment, order or
liability which, after giving effect to any applicable insurance, has resulted,
or creates a material risk of resulting, in any Material Adverse Change or which
seeks to enjoin the consummation, or which questions the validity, of any of the
transactions contemplated by this Agreement or any other Credit Document. No
judgment, decree or order of any court, board or other governmental or
administrative agency or any arbitrator has been issued against or binds the
Company or any of its Subsidiaries which has resulted, or creates a material
risk of resulting, in any Material Adverse Change.
7.8. Authorization and Enforceability. Each of the Company and each other
--------------------------------
Obligor has taken all corporate action required to execute, deliver and perform
this Agreement and each other Credit Document to which it is party. No consent
of stockholders of the Company which has not been obtained is necessary in order
to authorize the execution, delivery or performance of this Agreement or any
other Credit Document to which the Company is party. Each of this Agreement and
each other Credit Document constitutes the legal, valid and binding obligation
of each Obligor party thereto and is enforceable against such Obligor in
accordance with its terms.
7.9. No Legal Obstacle to Agreements. Neither the execution and delivery
-------------------------------
of this Agreement or any other Credit Document, nor the making of any borrowings
hereunder, nor the guaranteeing of the Credit Obligations, nor the securing of
the Credit Obligations with the
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<PAGE>
Credit Security, nor the consummation of any transaction referred to in or
contemplated by this Agreement or any other Credit Document, nor the fulfillment
of the terms hereof or thereof or of any other agreement, instrument, deed or
lease contemplated by this Agreement or any other Credit Document, has
constituted or resulted in or will constitute or result in:
(1) any breach or termination of the provisions of any agreement,
instrument, deed or lease to which the Company, any of its Subsidiaries,
the Parent or any other Obligor is a party or by which it is bound, or of
the Charter or By-laws of the Company, any of its Subsidiaries, the Parent
or any other Obligor;
(2) the violation of any law, statute, judgment, decree or
governmental order, rule or regulation applicable to the Company, any of
its Subsidiaries, the Parent or any other Obligor;
(3) the creation under any agreement, instrument, deed or lease of
any Lien (other than Liens on the Credit Security which secure the Credit
Obligations) upon any of the assets of the Company, any of its
Subsidiaries, the Parent or any other Obligor; or
(4) any redemption, retirement or other repurchase obligation of the
Company, any of its Subsidiaries, the Parent or any other Obligor under any
Charter, By-law, agreement, instrument, deed or lease.
No approval, authorization or other action by, or declaration to or filing with,
any governmental or administrative authority or any other Person which has not
been obtained is required to be obtained or made by the Company, any of its
Subsidiaries or any other Obligor in connection with the execution, delivery and
performance of this Agreement, the Notes or any other Credit Document, the
transactions contemplated hereby or thereby, the making of any borrowing
hereunder, the guaranteeing of the Credit Obligations or the securing of the
Credit Obligations with the Credit Security (other than filings necessary to
perfect the Agent's security interest in the Credit Security).
7.10. Defaults. Neither the Company nor any of its Subsidiaries nor the
--------
Parent is in default under any provision of its Charter or By-laws or of this
Agreement or any other Credit Document. Neither the Company nor any of its
Subsidiaries nor the Parent is in default under any provision of any agreement,
instrument, deed or lease to which it is party or by which it or its property is
bound so as to result, or create a material risk of resulting, in any Material
Adverse Change. Neither the Company nor any of its Subsidiaries nor the Parent
has violated any law, judgment, decree or governmental order, rule or
regulation, in each case so as to result, or create a material risk of
resulting, in any Material Adverse Change.
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7.11. Licenses, etc. The Company and its Subsidiaries have all patents,
-------------
patent applications, patent licenses, patent rights, trademarks, trademark
rights, trade names, trade name rights, copyrights, licenses, franchises,
permits, authorizations and other rights as are necessary for the conduct of the
business of the Company and its Subsidiaries as now conducted by them and the
lack of which would result, or create a material risk of resulting, in any
Material Adverse Change. All of the foregoing are in full force and effect in
all material respects, and each of the Company and its Subsidiaries is in
substantial compliance with the foregoing without any known conflict with the
valid rights of others which has resulted, or creates a material risk of
resulting, in any Material Adverse Change. No event has occurred which permits,
or after notice or lapse of time or both would permit, the revocation or
termination of any such license, franchise or other right or which affects the
rights of any of the Company and its Subsidiaries thereunder so as to result, or
to create a material risk of resulting, in any Material Adverse Change. No
litigation or other proceeding or dispute exists with respect to the validity
or, where applicable, the extension or renewal, of any of the foregoing which
has resulted, or creates a material risk of resulting, in any Material Adverse
Change.
7.12. Tax Returns. Each of the Company and its Subsidiaries has filed all
-----------
material tax and information returns which are required to be filed by it and
has paid, or made adequate provision for the payment of, all taxes which have or
may become due pursuant to such returns or to any assessment received by it,
other than taxes and assessments being contested by the Company and its
Subsidiaries in good faith by appropriate proceedings and for which adequate
reserves have been taken in accordance with GAAP. Neither the Company nor any
of its Subsidiaries knows of any material additional assessments or any basis
therefor. The Company reasonably believes that the charges, accruals and
reserves on the books of the Company and its Subsidiaries in respect of taxes or
other governmental charges are adequate.
7.13. Certain Business Representations.
--------------------------------
7.13.1. Labor Relations. No dispute or controversy between the
---------------
Company or any of its Subsidiaries and any of their respective employees has
resulted, or is reasonably likely to result, in any Material Adverse Change, and
neither the Company nor any of its Subsidiaries anticipates that its
relationships with its unions or employees will result, or are reasonably likely
to result, in any Material Adverse Change. The Company and each of its
Subsidiaries is in compliance in all material respects with all federal and
state laws with respect to (a) non-discrimination in employment with which the
failure to comply, in the aggregate, has resulted, or creates a material risk of
resulting, in a Material Adverse Change and (b) the payment of wages.
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7.13.2. Antitrust. Each of the Company and its Subsidiaries is in
---------
compliance in all material respects with all federal and state antitrust laws
relating to its business and the geographic concentration of its business.
7.13.3. Tower Sites. At least a majority of the Towers that do not
-----------
constitute Pledged Towers are constructed so as to be capable of being moved
from their present locations and except to the extent recordation of any
renewal, extension, amendment, assignment or other instrument in connection with
any lease of real property in the applicable public records may be required in
order to permit removal of a Tower, the Company and its Subsidiaries have the
right to remove such Towers from their present locations.
7.13.4. Real Property Leases. The present and contemplated use of
--------------------
the real property owned or leased by the Company for the operation of Towers is
in compliance in all material respects with all applicable zoning ordinances and
regulations and other laws and regulations where failure so to comply would
result, or create reasonable risk of resulting, in a Material Adverse Change.
Each Lease is in full force and effect, the Company or one of its Subsidiaries
has all rights of the lessee thereunder, there has been no default in the
performance of any of its terms or conditions by any party thereto, and no
claims of default have been asserted with respect thereto where such default
would result, or create a reasonable risk of resulting, in a Material Adverse
Change.
7.13.5. FCC and FAA Matters. The Company (a) has duly and timely
-------------------
filed all material reports, registrations and other material filings, if any,
which are required to be filed by it or any of its Subsidiaries under the
Communications Act or any other applicable law, rule or regulation of any
governmental authority, including the FCC and the FAA, the non-filing of which
would not result, or be reasonably likely to result, in a Material Adverse
Change, and (b) is in compliance with all such laws, rules, regulations and
ordinances, including those promulgated by the FCC and the FAA, to the extent
the noncompliance with which would result, or be reasonably likely to result, in
a Material Adverse Change. All information provided by or on behalf of the
Company or any Affiliate in any material filing, if any, with the FCC and the
FAA relating to the business of the Company and its Subsidiaries was, to the
knowledge of such Person at the time of filing, complete and correct in all
material respects when made, and the FCC and the FAA have been notified of any
substantial or significant changes in such information as may be required in
accordance with applicable Legal Requirements.
7.13.6. Year 2000 Issues. Based on a review of the operations of the
----------------
Company and its Subsidiaries as they relate to the processing, storage and
retrieval of data, the Company does not believe that a Material Adverse Change
is reasonably likely
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to occur as a result of computer software and hardware that will not function
with respect to periods commencing January 1, 2000 at least as effectively as
with respect to periods ending on or prior to December 31, 1999.
7.14. Environmental Regulations.
-------------------------
7.14.1. Environmental Compliance. To the knowledge of the Company
------------------------
and its Subsidiaries, each of the Company and its Subsidiaries is in compliance
in all material respects with the Clean Air Act, the Federal Water Pollution
Control Act, the Marine Protection Research and Sanctuaries Act, RCRA, CERCLA
and any other Environmental Law in effect in any jurisdiction in which any
properties of the Company or any of its Subsidiaries are located or where any of
them conducts its business, and with all applicable published rules and
regulations (and applicable standards and requirements) of the federal
Environmental Protection Agency and of any similar agencies in states or foreign
countries in which the Company or its Subsidiaries conducts its business other
than those which in the aggregate have not resulted, and do not create a
material risk of resulting, in a Material Adverse Change.
7.14.2. Environmental Litigation. No suit, claim, action or
------------------------
proceeding of which the Company or any of its Subsidiaries has been given notice
or otherwise has knowledge is now pending before any court, governmental agency
or board or other forum, or to the Company's or any of its Subsidiaries
knowledge, threatened by any Person (nor to the Company's or any of its
Subsidiaries' knowledge, does any factual basis exist therefor) for, and neither
the Company nor any of its Subsidiaries have received written correspondence
from any federal, state or local governmental authority with respect to:
(1) noncompliance by the Company or any of its Subsidiaries with any
Environmental Law;
(2) personal injury, wrongful death or other tortious conduct
relating to materials, commodities or products used, generated, sold,
transferred or manufactured by the Company or any of its Subsidiaries
(including products made of, containing or incorporating asbestos, lead or
other Hazardous Material, commodities or toxic substances); or
(3) the release into the environment by the Company or any of its
Subsidiaries of any Hazardous Material generated by the Company or any of
its Subsidiaries whether or not occurring at or on a site owned, leased or
operated by the Company or any of its Subsidiaries.
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7.14.3. Hazardous Material. To the knowledge of the Company and its
------------------
Subsidiaries, any waste disposal or dump sites at which Hazardous Material
generated by either the Company or any of its Subsidiaries has been
disposed of directly by the Company or any of its Subsidiaries and all
independent contractors to whom the Company or any of its Subsidiaries have
delivered Hazardous Material, or to the Company's or any of its
Subsidiaries' knowledge, where Hazardous Material finally came to be
located, has not resulted, and does not create a material risk of
resulting, in a Material Adverse Change.
7.14.4. Environmental Condition of Properties. To the knowledge of
-------------------------------------
the Company and its Subsidiaries, none of the properties owned or leased by
the Company or any of its Subsidiaries has been used as a treatment,
storage or disposal site, other than as disclosed in Exhibit 7.14. Except
as disclosed in Exhibit 7.14, to the knowledge of the Company and its
Subsidiaries, no Hazardous Material is present in any real property
currently or formerly owned or operated by the Company or any of its
Subsidiaries except that which has not resulted, and does not create a
material risk of resulting, in a Material Adverse Change.
7.15. Pension Plans. Each Plan (other than a Multiemployer Plan) and, to
-------------
the knowledge of the Company and its Subsidiaries, each Multiemployer Plan is in
material compliance with the applicable provisions of ERISA and the Code. Each
Multiemployer Plan and each Plan that constitutes a "defined benefit plan" (as
defined in ERISA) are set forth in Exhibit 7.15. Each ERISA Group Person has
met all of the funding standards applicable to all Plans that are not
Multiemployer Plans, and no condition exists which would permit the institution
of proceedings to terminate any Plan that is not a Multiemployer Plan under
section 4042 of ERISA. To the best knowledge of the Company and each
Subsidiary, no Plan that is a Multiemployer Plan is currently insolvent or in
reorganization or has been terminated within the meaning of ERISA.
7.16. Government Regulation; Margin Stock.
-----------------------------------
7.16.1. Government Regulation. Neither the Company nor any of its
---------------------
Subsidiaries, nor any Person controlling the Company or any of its
Subsidiaries or under common control with the Company or any of its
Subsidiaries, is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Investment Company Act, the
Interstate Commerce Act or any statute or regulation which regulates the
incurring by the Company or any of its Subsidiaries of Financing Debt as
contemplated by this Agreement and the other Credit Documents.
7.16.2. Margin Stock. Neither the Company nor any of its Subsidiaries
------------
owns any Margin Stock.
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7.17. Disclosure. Neither this Agreement nor any other Credit Document to
----------
be furnished to the Lenders by or on behalf of the Company or any of its
Subsidiaries in connection with the transactions contemplated hereby or by such
Credit Document contains any untrue statement of material fact or omits to state
a material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.
No fact is actually known to the Company or any of its Subsidiaries which has
resulted, or in the future (so far as the Company or any of its Subsidiaries can
reasonably foresee) will result, or creates a material risk of resulting, in any
Material Adverse Change, except to the extent that present or future general
economic conditions may result in a Material Adverse Change.
8. DEFAULTS.
--------
8.1. Events of Default. The following events are referred to as "Events of
----------------- ---------
Default":
- -------
8.1.1. Payment. The Company shall fail to make any payment in respect
-------
of: (a) interest or any fee on or in respect of any of the Credit
Obligations owed by it as the same shall become due and payable, and such
failure shall continue for a period of three Banking Days, or (b) any
Credit Obligation with respect to payments made by any Letter of Credit
Issuer under any Letter of Credit or any draft drawn thereunder within
three Banking Days after demand therefor by such Letter of Credit Issuer or
(c) principal of any of the Credit Obligations owed by it as the same shall
become due, whether at maturity or by acceleration or otherwise.
8.1.2. Specified Covenants. The Company or any of its Subsidiaries or
-------------------
the Parent shall fail to perform or observe any of the provisions of
Section 6.4.6 or Sections 6.5 through 6.22 applicable to it.
8.1.3. Other Covenants. The Company, any of its Subsidiaries or any
---------------
other Obligor shall fail to perform or observe any other covenant,
agreement or provision to be performed or observed by it under this
Agreement or any other Credit Document, and such failure shall not be
rectified or cured to the satisfaction of the Required Lenders within 30
days after the earlier of (a) notice thereof by the Agent to the Company or
(b) a Financial Officer shall have actual knowledge thereof.
8.1.4. Representations and Warranties. Any representation or warranty
------------------------------
of or with respect to the Company, any of its Subsidiaries or any other
Obligor made to the Lenders or the Agent in or pursuant to this Agreement
or any other Credit Document, or in any financial statement, report,
notice, mortgage, assignment, UCC financing statement or certificate
delivered to the Agent or any of the Lenders by the Company, any of its
Subsidiaries or any other Obligor in connection herewith or therewith,
shall be false in any material respect on the date as of which it was made.
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8.1.5. Cross Default, etc.
------------------
(1) The Company or any of its Subsidiaries or the Parent shall fail
to make any payment when due (after giving effect to any applicable grace
periods) in respect of any Financing Debt (other than the Credit
Obligations) outstanding in an aggregate amount of principal (whether or
not due) and accrued interest exceeding $1,000,000;
(2) the Company or any of its Subsidiaries or the Parent shall fail
to perform or observe the terms of any agreement or instrument relating to
such Financing Debt, and such failure shall continue, without having been
duly cured, waived or consented to, beyond the period of grace, if any,
specified in such agreement or instrument, and such failure shall permit
the acceleration of such Financing Debt;
(3) all or any part of such Financing Debt of the Company or any of
its Subsidiaries or the Parent shall be accelerated or shall become due or
payable prior to its stated maturity (except with respect to voluntary
prepayments thereof) for any reason whatsoever;
(4) any Lien on any property of the Company or any of its
Subsidiaries or the Parent securing any such Financing Debt shall be
enforced by foreclosure or similar action; or
(5) any holder of any such Financing Debt shall exercise any right
of rescission with respect to the issuance thereof or put, mandatory
prepayment or repurchase rights against any Obligor with respect to such
Financing Debt (other than any such rights that may be satisfied with
"payment in kind" notes or other similar securities).
8.1.6. Ownership; Liquidation; etc. Except as permitted by
---------------------------
Section 6.11:
(1) the Company shall cease to own, directly or indirectly, all the
capital stock of its Subsidiaries, except to the extent permitted by
Section 6.12.1; or
(2) prior to the initial closing of an initial underwritten public
offering of Parent Stock registered under the Securities Act, Steven E.
Bernstein, ABS Capital Partners II, L.P., ABS Employees' Venture Fund
Limited Partnership, TA Venture Investors Limited Partnership, Advent VII,
L.P., Advent Atlantic and Pacific III, LP and various members of the
Hillman family (or trusts established for their benefit) shall cease to
own, beneficially and of record, at least a majority of the voting stock
and of the total equity capital of the Parent; or
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(3) the Parent shall cease to own, directly or indirectly, all the
capital stock of the Company; or
(4) Steven E. Bernstein shall cease to be actively involved in the
executive management of the Company and a replacement reasonably
satisfactory to the Required Lenders has not been hired within six months
thereof; or
(5) the Company or any of its Subsidiaries or any other Obligor
shall initiate any action to dissolve, liquidate or otherwise terminate its
existence.
8.1.7. Enforceability, etc. Any Credit Document shall cease for any
-------------------
reason (other than the scheduled termination thereof in accordance with its
terms) to be enforceable in accordance with its terms or in full force and
effect; or any party to any Credit Document shall so assert in a judicial or
similar proceeding; or the security interests created by this Agreement or any
other Credit Documents shall cease to be enforceable and of the same effect and
priority purported to be created hereby.
8.1.8. Judgments. A final judgment (a) which, with other outstanding
---------
final judgments against the Company and its Subsidiaries, exceeds an aggregate
of $1,000,000 in excess of applicable insurance coverage shall be rendered
against the Company or any of its Subsidiaries, or (b) which grants injunctive
relief that results, or creates a material risk of resulting, in a Material
Adverse Change and in either case if (i) within 60 days after entry thereof,
such judgment shall not have been discharged or execution thereof stayed pending
appeal or (ii) within 60 days after the expiration of any such stay, such
judgment shall not have been discharged.
8.1.9. ERISA. Any "reportable event" (as defined in section 4043 of
-----
ERISA) shall have occurred that reasonably could be expected to result in
termination of a Plan or the appointment by the appropriate United States
District Court of a trustee to administer any Plan or the imposition of a Lien
in favor of a Plan; or any ERISA Group Person shall fail to pay when due amounts
aggregating in excess of $1,000,000 which it shall have become liable to pay to
the PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate
a Plan shall be filed under Title IV of ERISA by any ERISA Group Person or
administrator; or the PBGC shall institute proceedings under Title IV of ERISA
to terminate or to cause a trustee to be appointed to administer any Plan or a
proceeding shall be instituted by a fiduciary of any Plan against any ERISA
Group Person to enforce section 515 or 4219(c)(5) of ERISA and such proceeding
shall not have been dismissed within 30 days thereafter; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Plan must be terminated.
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8.1.10. Bankruptcy, etc. The Company, any of its Subsidiaries or any
---------------
other Obligor shall:
(1) commence a voluntary case under the Bankruptcy Code or
authorize, by appropriate proceedings of its board of directors or other
governing body, the commencement of such a voluntary case;
(2) (i) have filed against it a petition commencing an involuntary
case under the Bankruptcy Code that shall not have been dismissed within 60
days after the date on which such petition is filed, or (ii) file an answer
or other pleading within such 60-day period admitting or failing to deny
the material allegations of such a petition or seeking, consenting to or
acquiescing in the relief therein provided, or (iii) have entered against
it an order for relief in any involuntary case commenced under the
Bankruptcy Code;
(3) seek relief as a debtor under any applicable law, other than the
Bankruptcy Code, of any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or alteration of the
rights of creditors, or consent to or acquiesce in such relief;
(4) have entered against it an order by a court of competent
jurisdiction (i) finding it to be bankrupt or insolvent, (ii) ordering or
approving its liquidation or reorganization as a debtor or any modification
or alteration of the rights of its creditors or (iii) assuming custody of,
or appointing a receiver or other custodian for, all or a substantial
portion of its property; or
(5) make an assignment for the benefit of, or enter into a
composition with, its creditors, or appoint, or consent to the appointment
of, or suffer to exist a receiver or other custodian for, all or a
substantial portion of its property.
8.2. Certain Actions Following an Event of Default. If any one or more
---------------------------------------------
Events of Default shall occur, then in each and every such case:
8.2.1. Terminate Obligation to Extend Credit. Upon written request of
-------------------------------------
the Required Lenders, the Agent shall terminate the obligations of the
Lenders to make any further extensions of credit under the Credit Documents
by furnishing notice of such termination to the Company; provided, however,
-------- -------
that if a Bankruptcy Default shall have occurred, the obligations of the
Lenders to make any further extensions of credit under the Credit Documents
shall automatically terminate.
8.2.2. Specific Performance; Exercise of Rights. Upon written request
----------------------------------------
of the Required Lenders, the Agent shall proceed to protect and enforce the
Lenders' rights by suit in equity, action at law and/or other appropriate
proceeding, either for
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specific performance of any covenant or condition contained in this
Agreement or any other Credit Document (other than Interest Rate Protection
Agreements) or in any instrument or assignment delivered to the Lenders
pursuant to this Agreement or any other Credit Document (other than
Interest Rate Protection Agreements), or in aid of the exercise of any
power granted in this Agreement or any other Credit Document (other than
Interest Rate Protection Agreements) or any such instrument or assignment.
8.2.3. Acceleration. Upon written request of the Required Lenders,
------------
the Agent shall by notice in writing to the Company (a) declare all or any
part of the unpaid balance of the Credit Obligations (other than amounts
under Interest Rate Protection Agreements) then outstanding to be
immediately due and payable, and (b) require the Company immediately to
deposit with the Agent in cash an amount equal to the then Letter of Credit
Exposure (which cash shall be held and applied as provided in Section 4.5),
and thereupon such unpaid balance or part thereof and such amount equal to
the Letter of Credit Exposure shall become so due and payable without
presentation, protest or further demand or notice of any kind, all of which
are hereby expressly waived; provided, however, that if a Bankruptcy
-------- -------
Default shall have occurred, the unpaid balance of the Credit Obligations
(other than amounts under Interest Rate Protection Agreements) shall
automatically become immediately due and payable.
8.2.4. Enforcement of Payment; Credit Security; Setoff. Upon written
-----------------------------------------------
request of the Required Lenders, the Agent shall proceed to enforce payment
of the Credit Obligations in such manner as it may elect, to cancel, or
instruct other Letter of Credit Issuers to cancel, any outstanding Letters
of Credit which permit the cancellation thereof and to realize upon any and
all rights in the Credit Security. The Lenders may offset and apply toward
the payment of the Credit Obligations (and/or toward the curing of any
Event of Default) any Indebtedness from the Lenders to the respective
Obligors, including any Indebtedness represented by deposits in any account
maintained with the Lenders, regardless of the adequacy of any security for
the Credit Obligations. The Lenders shall have no duty to determine the
adequacy of any such security in connection with any such offset.
8.2.5. Cumulative Remedies. To the extent not prohibited by
-------------------
applicable law which cannot be waived, all of the Lenders' rights hereunder
and under each other Credit Document shall be cumulative.
8.3. Annulment of Defaults. Once an Event of Default has occurred, such
---------------------
Event of Default shall be deemed to exist and be continuing for all purposes of
the Credit Documents (other than Interest Rate Protection Agreements) until the
Required Lenders or the Agent (with the consent of the Required Lenders) shall
have waived such Event of Default in writing, stated in writing that the same
has been cured to such Lenders' reasonable satisfaction or entered into an
amendment to this Agreement which by its express terms cures such Event of
Default, at
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which time such Event of Default shall no longer be deemed to exist or to have
continued. No such action by the Lenders or the Agent shall extend to or affect
any subsequent Event of Default or impair any rights of the Lenders upon the
occurrence thereof. The making of any extension of credit during the existence
of any Default or Event of Default shall not constitute a waiver thereof.
8.4. Waivers. To the extent that such waiver is not prohibited by the
-------
provisions of applicable law that cannot be waived, each of the Company and the
other Obligors waives:
(1) all presentments, demands for performance, notices of
nonperformance (except to the extent required by this Agreement or any
other Credit Document), protests, notices of protest and notices of
dishonor;
(2) any requirement of diligence or promptness on the part of the
Agent or any Lender in the enforcement of its rights under this Agreement,
the Notes or any other Credit Document;
(3) any and all notices of every kind and description which may be
required to be given by any statute or rule of law; and
(4) any defense (other than indefeasible payment in full) which it
may now or hereafter have with respect to its liability under this
Agreement, the Notes or any other Credit Document or with respect to the
Credit Obligations.
9. EXPENSES; INDEMNITY.
-------------------
9.1 Expenses. Whether or not the transactions contemplated hereby shall
--------
be consummated, the Company will pay:
(1) all reasonable expenses of the Agent and the Syndication Agent
(including the out-of-pocket expenses related to forming the group of
Lenders and reasonable fees and disbursements of the counsel to the Agent
and the Syndication Agent) in connection with the negotiation, preparation
and duplication of this Agreement and each other Credit Document,
examinations by and reports of the Agent's commercial financial examiners,
fixed asset appraisers and environmental consultants, the transactions
contemplated hereby and thereby and amendments, waivers, consents and other
operations hereunder and thereunder;
(2) all recording and filing fees and transfer and documentary stamp
and similar taxes at any time payable in respect of this Agreement, any
other Credit Document, any Credit Security or the incurrence of the Credit
Obligations; and
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(3) all other reasonable expenses incurred by the Lenders or the
holder of any Credit Obligation in connection with the enforcement of any
rights hereunder or under any other Credit Document or any work-out
negotiations relating to the Credit Obligations, including costs of
collection and reasonable attorneys' fees and expenses.
9.2. General Indemnity. The Company shall indemnify the Lenders and the
-----------------
Agent and hold them harmless from any liability, loss or damage resulting from
the violation by the Company of Section 2.4. In addition, the Company shall
indemnify each Lender, the Agent, the Syndication Agent, each of the Lenders' or
the Agent's or the Syndication Agent's directors, officers, employees, agents,
attorneys, accountants, consultants and each Person, if any, who controls any
Lender or the Agent or the Syndication Agent (each Lender, the Agent, the
Syndication Agent and each of such directors, officers, employees, agents,
attorneys, accountants, consultants and control Persons is referred to as an
"Indemnified Party") and hold each of them harmless from and against any and all
-----------------
claims, damages, liabilities and reasonable expenses (including reasonable fees
and disbursements of counsel with whom any Indemnified Party may consult in
connection therewith and all reasonable expenses of litigation or preparation
therefor) which any Indemnified Party may incur or which may be asserted against
any Indemnified Party in connection with (a) the Indemnified Party's compliance
with or contest of any subpoena or other process issued against it in any
proceeding involving the Company or any of its Subsidiaries or their Affiliates,
(b) any litigation or investigation involving the Company, any of its
Subsidiaries or their Affiliates, or any officer, director or employee thereof,
(c) the existence or exercise of any security rights with respect to the Credit
Security in accordance with the Credit Documents, or (d) this Agreement, any
other Credit Document or any transaction contemplated hereby or thereby;
provided, however, that the foregoing indemnity shall not apply to litigation
- -------- -------
commenced by the Company against the Lenders or the Agent or the Syndication
Agent which seeks enforcement of any of the rights of the Company hereunder or
under any other Credit Document and is determined adversely to the Lenders or
the Agent or the Syndication Agent in a final nonappealable judgment or to the
extent such claims, damages, liabilities and expenses result from a Lender's or
the Agent's or the Syndication Agent's gross negligence or willful misconduct.
9.3. Indemnity With Respect to Letters of Credit. The Company shall
-------------------------------------------
indemnify each Letter of Credit Issuer and its correspondents and hold each of
them harmless from and against any and all claims, losses, liabilities, damages
and reasonable expenses (including reasonable attorneys' fees) arising from or
in connection with any Letter of Credit, including any such claim, loss,
liability, damage or expense arising out of any transfer, sale, delivery,
surrender or endorsement of any invoice, bill of lading, warehouse receipt or
other document at any time held by the Agent, any other Letter of Credit Issuer
or held for their respective accounts by any of their correspondents, in
connection with any Letter of Credit, except to the extent such claims, losses,
liabilities, damages and expenses result from gross negligence or willful
misconduct on the part of the Agent or any other Letter of Credit Issuer.
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10. OPERATIONS; AGENT.
-----------------
10.1. Interests in Credits. The Percentage Interest of each Lender in the
--------------------
Loan and Letters of Credit, and the related Commitments, shall be computed based
on the maximum principal amount for each Lender as set forth in the Register, as
from time to time in effect. The current Percentage Interests are set forth in
Exhibit 10.1, which may be updated by the Agent from time to time to conform to
the Register.
10.2. Agent's Authority to Act, etc. Each of the Lenders appoints and
-----------------------------
authorizes BankBoston to act for the Lenders as the Lenders' Agent in connection
with the transactions contemplated by this Agreement and the other Credit
Documents (other than Interest Rate Protection Agreements) on the terms set
forth herein and therein. In acting hereunder, the Agent is acting for its own
account to the extent of its Percentage Interest and for the account of each
other Lender to the extent of the Lenders' respective Percentage Interests, and
all action in connection with the enforcement of, or the exercise of any
remedies (other than the Lenders' rights of set-off as provided in Section 8.2.4
or in any Credit Document) in respect of the Credit Obligations and Credit
Documents shall be taken by the Agent. In particular, the Agent is specifically
authorized to execute and deliver on behalf of the Lenders the Borrower
Assumption Agreement.
10.3. Company to Pay Agent, etc. The Company and each Guarantor shall be
-------------------------
fully protected in making all payments in respect of the Credit Obligations
(other than payments under Interest Rate Protection Agreements) to the Agent, in
relying upon consents, modifications and amendments executed by the Agent
purportedly on the Lenders' behalf, and in dealing with the Agent as herein
provided. The Agent may charge the accounts of the Company, on the dates when
the amounts thereof become due and payable, with the amounts of the principal of
and interest on the Loan, any amounts paid by the Letter of Credit Issuers to
third parties under Letters of Credit or drafts presented thereunder, commitment
fees, Letter of Credit fees and all other fees and amounts owing under any
Credit Document (other than Interest Rate Protection Agreements).
10.4. Lender Operations for Advances, Letters of Credit, etc.
------------------------------------------------------
10.4.1. Advances. On each Closing Date, each Lender shall advance to
--------
the Agent in immediately available funds such Lender's Percentage Interest
in the portion of the Loan advanced on such Closing Date prior to 12:00 noon
(Boston time). If such funds are not received at such time, but all
applicable conditions set forth in Section 5 have been satisfied, each
Lender authorizes and requests the Agent to advance for the Lender's
account, pursuant to the terms hereof, the Lender's respective Percentage
Interest in such portion of the Loan and agrees to reimburse the Agent in
immediately available funds for the amount thereof prior to 2:00 p.m.
(Boston time) on the day any portion of the Loan is advanced hereunder;
provided, however, that the
-------- -------
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Agent is not authorized to make any such advance for the account of
any Lender who has previously notified the Agent in writing that such
Lender will not be performing its obligations to make further advances
hereunder; and provided, further, that the Agent shall be under no
-------- -------
obligation to make any such advance.
10.4.2. Letters of Credit. Each of the Lenders authorizes and
-----------------
requests each Letter of Credit Issuer to issue the Letters of Credit
provided for in Section 2.3 and to grant each Lender a participation in each
of such Letters of Credit in an amount equal to its Percentage Interest in
the amount of each such Letter of Credit. Promptly upon the request of the
Letter of Credit Issuer, each Lender shall reimburse the Letter of Credit
Issuer in immediately available funds for such Lender's Percentage Interest
in the amount of all obligations to third parties incurred by the Letter of
Credit Issuer in respect of each Letter of Credit and each draft accepted
under a Letter of Credit to the extent not reimbursed by the Company by 2:00
p.m. (Boston time) on the Banking Day when due. The Letter of Credit Issuer
will notify each Lender of the issuance of any Letter of Credit, the amount
and date of payment of any draft drawn or accepted under a Letter of Credit
and whether in connection with the payment of any such draft the amount
thereof was added to the Revolving Loan or was reimbursed by the Company.
10.4.3. Agent to Allocate Payments, etc. All payments of principal
--------------------------------
and interest in respect of the extensions of credit made pursuant to this
Agreement, reimbursement of amounts paid by any Letter of Credit Issuer to
third parties under Letters of Credit or drafts presented thereunder,
commitment fees, Letter of Credit fees and other fees under this Agreement
shall, as a matter of convenience, be made by the Company and the Guarantors
to the Agent in immediately available funds by noon (Boston time) on any
Banking Day. The share of each Lender shall be credited to such Lender by
the Agent in immediately available funds by 2:00 p.m. (Boston time) on such
Banking Day in such manner that the principal amount of the Credit
Obligations to be paid shall be paid proportionately in accordance with the
Lenders' respective Percentage Interests in such Credit Obligations, except
as otherwise provided in this Agreement. Under no circumstances shall any
Lender be required to produce or present its Notes as evidence of its
interests in the Credit Obligations in any action or proceeding relating to
the Credit Obligations.
10.4.4 Delinquent Lenders; Nonperforming Lenders. In the event that
-----------------------------------------
any Lender fails to reimburse the Agent pursuant to Sections 10.4.1 and
10.4.2 for the Percentage Interest of such lender (a "Delinquent Lender") in
-----------------
any credit advanced by the Agent pursuant hereto, overdue amounts (the
"Delinquent Payment") due from the Delinquent Lender to the Agent shall bear
------------------
interest, payable by the Delinquent Lender on demand, at a per annum rate
equal to (a) the Federal Funds Rate for the first three days overdue and (b)
the sum of 2% plus the Federal Funds Rate for any longer period. Such
interest shall be payable to the Agent for its own account for the period
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commencing on the date of the Delinquent Payment and ending on the date the
Delinquent Lender reimburses the Agent on account of the Delinquent Payment
(to the extent not paid by any Obligor as provided below) and the accrued
interest thereon (the "Delinquency Period"), whether pursuant to the
------------------
assignments referred to below or otherwise. Upon notice by the Agent after
any such Delinquent Payment is more than three days overdue, the Company
will pay to the Agent the principal (but not the interest) portion of the
Delinquent Payment. During the Delinquency Period, in order to make
reimbursements for the Delinquent Payment and accrued interest thereon, the
Delinquent Lender shall be deemed to have assigned to the Agent all
interest, commitment fees and other payments made by the Company under
Section 3 that would have thereafter otherwise been payable under the Credit
Documents to the Delinquent Lender. During any other period in which any
Lender is not performing its obligations to extend credit under Section 2 (a
"Nonperforming Lender"), the Nonperforming Lender shall be deemed to have
--------------------
assigned to each Lender that is not a Nonperforming Lender (a "Performing
----------
Lender") all principal and other payments made by the Company under Section
------
4 that would have thereafter otherwise been payable under the Credit
Documents to the Nonperforming Lender. The Agent shall credit a portion of
such payments to each Performing Lender in an amount equal to the Percentage
Interest of such Performing Lender in an amount equal to the Percentage
Interest of such Performing Lender divided by one minus the Percentage
-----
Interest of the Nonperforming Lender until the respective portions of the
Loan owed to all the Lenders are the same as the Percentage Interests of the
Lenders immediately prior to the failure of the Nonperforming Lender to
perform its obligations under Section 2. The foregoing provisions shall be
in addition to any other remedies the Agent, the Performing Lenders or the
Company may have under law or equity against the Delinquent Lender as a
result of the Delinquent Payment or against the Nonperforming Lender as a
result of its failure to perform its obligations under Section 2.
10.5 Sharing of Payments, etc. Each Lender agrees that (a) if by
------------------------
exercising any right of set-off or counterclaim or otherwise, it shall receive
payment of (i) a proportion of the aggregate amount due with respect to its
Percentage Interest in the Loan and Letter of Credit Exposure which is greater
than (ii) the proportion received by any other Lender in respect of the
aggregate amount due with respect to such other Lender's Percentage Interest in
the Loan and Letter of Credit Exposure and (b) if such inequality shall continue
for more than 10 days, the Lender receiving such proportionately greater payment
shall purchase participations in the Percentage Interests in the Loan and Letter
of Credit Exposure held by the other Lenders, and such other adjustments shall
be made from time to time (including rescission of such purchases of
participations in the event the unequal payment originally received is recovered
from such Lender through bankruptcy proceedings or otherwise), as may be
required so that all such payments of principal and interest with respect to the
Loan and Letter of Credit Exposure held by the Lenders shall be shared by the
Lenders pro rata in accordance with their respective Percentage Interests;
provided, however, that this Section 10.5 shall not impair the right of any
- -------- -------
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Lender to exercise any right of set-off or counterclaim it may have and to apply
the amount subject to such exercise to the payment of Indebtedness of any
Obligor other than such Obligor's Indebtedness with respect to the Loan and
Letter of Credit Exposure. Each Lender that grants a participation in the
Credit Obligations to a Credit Participant shall require as a condition to the
granting of such participation that such Credit Participant agree to share
payments received in respect of the Credit Obligations as provided in this
Section 10.5. The provisions of this Section 10.5 are for the sole and
exclusive benefit of the Lenders and no failure of any Lender to comply with the
terms hereof shall be available to any Obligor as a defense to the payment of
the Credit Obligations.
10.6. Agent's Resignation. The Agent may resign at any time by giving at
-------------------
least 60 days' prior written notice of its intention to do so to each of the
Lenders and the Company and upon the appointment by the Required Lenders of a
successor Agent satisfactory to the Company. If no successor Agent shall have
been so appointed and shall have accepted such appointment within 45 days after
the retiring Agent's giving of such notice of resignation, then the retiring
Agent may with the consent of the Company, which shall not be unreasonably
withheld, appoint a successor Agent which shall be a bank or a trust company
organized under the laws of the United States of America or any state thereof
and having a combined capital, surplus and undivided profit of at least
$200,000,000; provided, however, that any successor Agent appointed under this
-------- -------
sentence may be removed upon the written request of the Required Lenders, which
request shall also appoint a successor Agent reasonably satisfactory to the
Company. Upon the appointment of a new Agent hereunder, the term "Agent" shall
for all purposes of this Agreement thereafter mean such successor. After any
retiring Agent's resignation hereunder as Agent, or the removal hereunder of any
successor Agent, the provisions of this Agreement shall continue to inure to the
benefit of such retiring or removed Agent as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement.
10.7. Concerning the Agent.
--------------------
10.7.1. Action in Good Faith, etc. The Agent and its officers,
-------------------------
directors, employees and agents shall be under no liability to any of the
Lenders or to any future holder of any interest in the Credit Obligations
for any action or failure to act taken or suffered in good faith, and any
action or failure to act in accordance with an opinion of its counsel shall
conclusively be deemed to be in good faith. The Agent shall in all cases be
entitled to rely, and shall be fully protected in relying, on instructions
given to the Agent by the Required Lenders.
10.7.2. No Implied Duties, etc. The Agent shall have and may
----------------------
exercise such powers as are specifically delegated to the Agent under this
Agreement or any other Credit Document together with all other powers
incidental thereto. The Agent shall have no implied duties to any Person or
any obligation to take any action under
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this Agreement or any other Credit Document except for action specifically
provided for in this Agreement or any other Credit Document to be taken by
the Agent. Before taking any action under this Agreement or any other Credit
Document, the Agent may request an appropriate specific indemnity reasonably
satisfactory to it from each Lender in addition to the general indemnity
provided for in Section 10.10 (but not extending to actions or omissions by
the Agent constituting gross negligence or willful misconduct). Until the
Agent has received such specific indemnity, the Agent shall not be obligated
to take (although it may in its sole discretion take) any such action under
this Agreement or any other Credit Document. Each Lender confirms that the
Agent does not have a fiduciary relationship to it under the Credit
Documents. Each of the Company and each Guarantor confirms that neither the
Agent nor any other Lender has a fiduciary relationship to it under the
Credit Documents.
10.7.3. Validity, etc. The Agent shall not be responsible to any
-------------
Lender or any future holder of any interest in the Credit Obligations (a)
for the legality, validity, enforceability or effectiveness of this
Agreement or any other Credit Document, (b) for any recitals, reports,
representations, warranties or statements contained in or made in connection
with this Agreement or any other Credit Document, (c) for the existence or
value of any assets included in any security for the Credit Obligations, (d)
for the effectiveness of any Lien purported to be included in the Credit
Security, (e) for the specification or failure to specify any particular
assets to be included in the Credit Security, or (f) unless the Agent shall
have failed to comply with Section 10.7.1, for the perfection of the
security interests in the Credit Security.
10.7.4. Compliance. The Agent shall not be obligated to ascertain or
----------
inquire as to the performance or observance of any of the terms of this
Agreement or any other Credit Document; and in connection with any extension
of credit under this Agreement or any other Credit Document, the Agent shall
be fully protected in relying on a certificate of the Company as to the
fulfillment by the Company of any conditions to such extension of credit.
10.7.5. Employment of Agents and Counsel. The Agent may execute any
--------------------------------
of its duties as Agent under this Agreement or any other Credit Document by
or through employees, agents and attorneys-in-fact and shall not be
responsible to any of the Lenders, the Company or any other Obligor for the
default or misconduct of any such agents or attorneys-in-fact selected by
the Agent acting in good faith. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and
its duties hereunder or under any other Credit Document.
10.7.6. Reliance on Documents and Counsel. The Agent shall be entitled
---------------------------------
to rely, and shall be fully protected in relying, upon any affidavit,
certificate, cablegram, consent, instrument, letter, notice, order,
document, statement, telecopy,
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telegram, telex or teletype message or writing reasonably believed in good
faith by the Agent to be genuine and correct and to have been signed, sent
or made by the Person in question, including any telephonic or oral
statement made by such Person, and, with respect to legal matters, upon an
opinion or the advice of counsel selected by the Agent.
10.7.7. Agent's Reimbursement. Each of the Lenders severally agrees
---------------------
to reimburse the Agent, pro rata in accordance with such Lender's Percentage
Interest, for any reasonable expenses not reimbursed by the Company or the
Guarantors (without limiting the obligation of the Company or the Guarantors
to make such reimbursement): (a) for which the Agent is entitled to
reimbursement by the Company or the Guarantors under this Agreement or any
other Credit Document, and (b) after the occurrence of a Default, for any
other reasonable expenses incurred by the Agent on the Lenders' behalf in
connection with the enforcement of the Lenders' rights under this Agreement
or any other Credit Document; provided, however, that the Agent shall not be
-------- -------
reimbursed for any such expenses arising as a result of its gross negligence
or willful misconduct.
10.8. Rights as a Lender. With respect to any credit extended by it
------------------
hereunder, BankBoston shall have the same rights, obligations and powers
hereunder as any other Lender and may exercise such rights and powers as though
it were not the Agent, and unless the context otherwise specifies, BankBoston
shall be treated in its individual capacity as though it were not the Agent
hereunder. Without limiting the generality of the foregoing, the Percentage
Interest of BankBoston shall be included in any computations of Percentage
Interests. BankBoston and its Affiliates may accept deposits from, lend money
to, act as trustee for and generally engage in any kind of banking or trust
business with the Company, any of its Subsidiaries or any Affiliate of any of
them and any Person who may do business with or own an equity interest in the
Company, any of its Subsidiaries or any Affiliate of any of them, all as if
BankBoston were not the Agent and without any duty to account therefor to the
other Lenders.
10.9. Independent Credit Decision. Each of the Lenders acknowledges that
---------------------------
it has independently and without reliance upon the Agent, based on the financial
statements a nd other documents referred to in Section 7.2, on the other
representations and warranties contained herein and on such other information
with respect to the Company and its Subsidiaries as such Lender deemed
appropriate, made such Lender's own credit analysis and decision to enter into
this Agreement and to make the extensions of credit provided for hereunder. Each
Lender represents to the Agent that such Lender will continue to make its own
independent credit and other decisions in taking or not taking action under this
Agreement or any other Credit Document. Each Lender expressly acknowledges that
neither the Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates has made any representations or warranties to
such Lender, and no act by the Agent taken under this Agreement or any other
Credit Document, including any review of the affairs of the Company and its
Subsidiaries,
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shall be deemed to constitute any representation or warranty by the Agent.
Except for notices, reports and other documents expressly required to be
furnished to each Lender by the Agent under this Agreement or any other Credit
Document, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition, financial or otherwise, or creditworthiness of the Company
or any Subsidiary which may come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
10.10. Indemnification. The Lenders shall severally indemnify the Agent and
---------------
its officers, directors, employees, agents, attorneys, accountants, consultants
and controlling Persons (to the extent not reimbursed by the Obligors and
without limiting the obligation of any of the Obligors to do so), pro rata in
accordance with their respective Percentage Interests, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time be imposed on, incurred by or asserted against the Agent or such Persons
relating to or arising out of this Agreement, any other Credit Document, the
transactions contemplated hereby or thereby, or any action taken or omitted by
the Agent in connection with any of the foregoing; provided, however, that the
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foregoing shall not extend to actions or omissions which are taken by the Agent
with gross negligence or willful misconduct.
11. SUCCESSORS AND ASSIGNS; LENDER ASSIGNMENTS AND PARTICIPATIONS. Any
-------------------------------------------------------------
reference in this Agreement or any other Credit Document to any of the parties
hereto shall be deemed to include the successors and assigns of such party, and
all covenants and agreements by or on behalf of the Company, the other Obligors,
the Agent or the Lenders that are contained in this Agreement or any other
Credit Document shall bind and inure to the benefit of their respective
successors and assigns; provided, however, that (a) the Company and its
-------- -------
Subsidiaries may not assign their rights or obligations under this Agreement or
any other Credit Document except for mergers or liquidations permitted by
Section 6.11, and (b) the Lenders shall be not entitled to assign their
respective Percentage Interests in the credits extended hereunder or their
Commitments except as set forth below in this Section 11.
11.1. Assignments by Lenders.
----------------------
11.1.1. Assignees and Assignment Procedures. Each Lender may (a)
-----------------------------------
without the consent of the Agent or the Company if the proposed assignee is
already a Lender hereunder, a Related Fund or a Wholly Owned Subsidiary of
the same corporate parent of which the assigning Lender or any other Lender
is a Subsidiary, or (b) otherwise with the consent of the Agent and, so long
as no Event of Default exists, with the consent of the Company (which
consent shall not be unreasonably withheld), in compliance with applicable
laws in connection with such assignment, assign to one or more commercial
banks, investment companies other financial institutions or mutual funds
(each, an "Assignee") all or a portion of its interests, rights and
--------
obligations under
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this Agreement and the other Credit Documents, including all or a portion,
which need not be pro rata between the Revolving Loan, Incremental Revolving
Loan, Incremental Term Loan and the Letter of Credit Exposure, of its
Commitment, the portion of the Loan and Letter of Credit Exposure at the
time owing to it and the Notes held by it, but excluding its rights and
obligations as a Letter of Credit Issuer; provided, however, that:
-------- -------
(1) the aggregate amount of the Commitment of the assigning
Lender subject to each such assignment to any Assignee other than
another Lender, a Related Fund or a Wholly Owned Subsidiary of the
same corporate parent of which the assigning Lender or any other
Lender is a Subsidiary (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the Agent)
shall be not less than $2,500,000 and in increments of $1,000,000 (or,
if less, the entire remaining amount of the assigning Lender's
Commitment); and
(2) the parties to each such assignment shall execute and
deliver to the Agent an Assignment and Acceptance (the "Assignment and
--------------
Acceptance") substantially in the form of Exhibit 11.1.1, together
----------
with the Note subject to such assignment and, except in the event of a
transfer pursuant to Section 11.3, a processing and recordation fee of
$3,000 payable to the Agent by the assigning Lender or the Assignee.
Upon acceptance and recording pursuant to Section 11.1.4, from and after
the effective date specified in each Assignment and Acceptance (which
effective date shall be at least five Banking Days after the execution
thereof unless waived by the Agent):
(A) the Assignee shall be a party hereto and, to the extent provided
in such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement and
(B) the assigning Lender shall, to the extent provided in such
assignment, be released from its obligations (but not its accrued
liabilities) under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto but shall
continue to be entitled to the benefits of Sections 3.2.4, 3.5
and 9, as well as to any fees accrued for its account hereunder
and not yet paid).
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11.1.2. Terms of Assignment and Acceptance. By executing and
----------------------------------
delivering an Assignment and Acceptance, the assigning Lender and Assignee
shall be deemed to confirm to and agree with each other and the other
parties hereto as follows:
(1) other than the representation and warranty that it is the legal
and beneficial owner of the interest being assigned thereby free and clear
of any adverse claim, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement
or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, any other Credit Document or any
other instrument or document furnished pursuant hereto;
(2) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Company and its Subsidiaries or the performance or observance by the
Company or any of its Subsidiaries of any of its obligations under this
Agreement, any other Credit Document or any other instrument or document
furnished pursuant hereto;
(3) such Assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 7.2 or Section 6.4 and such other documents
and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance;
(4) such Assignee will independently and without reliance upon the
Agent, such assigning Lender or any other Lender, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement;
(5) such Assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Agent by the terms hereof, together with
such powers as are reasonably incidental thereto; and
(6) such Assignee agrees that it will perform in accordance with the
terms of this Agreement all the obligations which are required to be
performed by it as a Lender.
11.1.3. Register. The Agent shall maintain at the Boston Office a
--------
register (the "Register") for the recordation of (a) the names and
--------
addresses of the Lenders and the Assignees which assume rights and
obligations pursuant to an assignment under Section 11.1.1, (b) the
Percentage Interest of each such Lender as set forth in Exhibit 10.1 and
(c) the amount of the Loan and Letter of Credit Exposure
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owing to each Lender from time to time. The entries in the Register shall
be conclusive, in the absence of manifest error, and the Company, the Agent
and the Lenders may treat each Person whose name is registered therein for
all purposes as a party to this Agreement. The Register shall be available
for inspection by the Company or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
11.1.4. Acceptance of Assignment and Assumption. Upon its receipt of a
---------------------------------------
completed Assignment and Acceptance executed by an assigning Lender and an
Assignee (and any necessary consent of the Company) together with the Note
subject to such assignment, and the processing and recordation fee referred
to in Section 11.1.1, the Agent shall (a) accept such Assignment and
Acceptance, (b) record the information contained therein in the Register
and (c) give prompt notice thereof to the Company. Within five Banking Days
after receipt of notice, the Company, at its own expense, shall execute and
deliver to the Agent, in exchange for the surrendered Note, a new Note to
the order of such Assignee in a principal amount equal to the applicable
Commitment and Loan assumed by it pursuant to such Assignment and
Acceptance and, if the assigning Lender has retained a Commitment and Loan,
a new Note to the order of such assigning Lender in a principal amount
equal to the applicable Commitment and Loan retained by it. Such new Note
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note, and shall be dated the date of the
surrendered Note which it replaces.
11.1.5. Federal Reserve Bank. Notwithstanding the foregoing provisions
--------------------
of this Section 11, any Lender may at any time pledge or assign all or any
portion of such Lender's rights under this Agreement and the other Credit
Documents to a Federal Reserve Bank; provided, however, that no such pledge
-------- -------
or assignment shall release such Lender from such Lender's obligations
hereunder or under any other Credit Document.
11.1.6. Further Assurances. The Company and its Subsidiaries shall
------------------
sign such documents and take such other actions from time to time
reasonably requested by an Assignee to enable it to share in the benefits
of the rights created by the Credit Documents.
11.2. Credit Participants. Each Lender may, without the consent of the
-------------------
Company or the Agent, in compliance with applicable laws in connection with such
participation, sell to one or more commercial banks, other financial
institutions or mutual funds (each a "Credit Participant") participations in all
------------------
or a portion of its interests, rights and obligations under this Agreement and
the other Credit Documents (including all or a portion of its Commitment, the
Loan and Letter of Credit Exposure owing to it and the Note held by it);
provided, however, that:
- -------- -------
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<PAGE>
(1) such Lender's obligations under this Agreement shall remain
unchanged;
(2) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations;
(3) the Credit Participant shall be entitled to the benefit of the
cost protection provisions contained in Sections 3.2.4, 3.5 and 9, but
shall not be entitled to receive any greater payment thereunder than the
selling Lender would have been entitled to receive with respect to the
interest so sold if such interest had not been sold; and
(4) the Company, the Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement, and such Lender shall retain
the sole right as one of the Lenders to vote with respect to the
enforcement of the obligations of the Obligors relating to the Loan and
Letter of Credit Exposure and the approval of any amendment, modification
or waiver of any provision of this Agreement (other than amendments,
modifications, consents or waivers described in clause (b) of the proviso
to Section 10.6).
Each Obligor agrees, to the fullest extent permitted by applicable law, that any
Credit Participant and any Lender purchasing a participation from another Lender
pursuant to Section 10.5 may exercise all rights of payment (including the right
of set-off), with respect to its participation as fully as if such Credit
Participant or such Lender were the direct creditor of the Obligors and a Lender
hereunder in the amount of such participation.
11.3. Replacement of Lender. In the event that any Lender or, to the extent
---------------------
applicable, any Credit Participant (the "Affected Lender"):
---------------
(1) fails to perform its obligations to fund any portion of the
Loan or to issue any Letter of Credit on any Closing Date when required to
do so by the terms of the Credit Documents, or fails to provide its portion
of any Eurodollar Pricing Option pursuant to Section 3.2.1 or on account of
a Legal Requirement as contemplated by Section 3.2.5;
(2) demands payment under the provisions of Section 3.5 in an
amount materially in excess of the amounts with respect thereto demanded by
the other Lenders;
(3) refuses to consent to a proposed extension of the Final
Maturity Date that is consented to by all of the other Lenders; or
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<PAGE>
(4) refuses to consent to a proposed amendment, modification,
waiver or other action requiring consent of the holders of 100% of the
Percentage Interests under Section 10.6(b) that is consented to by all of
the other Lenders;
then, so long as no Event of Default exists, the Company shall have the right to
seek a replacement lender which is reasonably satisfactory to the Agent (the
"Replacement Lender"). The Replacement Lender shall purchase the interests of
- -------------------
the Affected Lender in the Loan, Letters of Credit and its Commitment and shall
assume the obligations of the Affected Lender hereunder and under the other
Credit Documents upon execution by the Replacement Lender of an Assignment and
Acceptance and the tender by it to the Affected Lender of a purchase price
agreed between it and the Affected Lender (or, if they are unable to agree, a
purchase price in the amount of the Affected Lender's Percentage Interest in the
Loan and Letter of Credit Exposure, or appropriate credit support for contingent
amounts included therein, and all other outstanding Credit Obligations then owed
to the Affected Lender). No assignment fee pursuant to Section 11.1.1(ii) shall
be required in connection with such assignment. Such assignment by any Affected
Lender who has performed its obligations under this Agreement shall be deemed an
early termination of any Eurodollar Pricing Option to the extent of the Affected
Lender's portion thereof, and the Company will pay to the Affected Lender any
resulting amounts due under Section 3.2.4. Upon consummation of such
assignment, the Replacement Lender shall become party to this Agreement as a
signatory hereto and shall have all the rights and obligations of the Affected
Lender under this Agreement and the other Credit Documents with a Percentage
Interest equal to the Percentage Interest of the Affected Lender, the Affected
Lender shall be released from its obligations hereunder and under the other
Credit Documents, other than any obligations with respect to any claim that the
Company or any of its Subsidiaries may have against the Affected Lender arising
out of the failure of such Affected Lender to perform its obligations to fund
any portion of the Loan or to issue any Letter of Credit when required to do so
by the terms of the Credit Documents, and no further consent or action by any
party shall be required. Upon the consummation of such assignment, the Company,
the Agent and the Affected Lender shall make appropriate arrangements so that a
new Note is issued to the Replacement Lender if it has acquired a portion of the
Loan. The Company and the Guarantors shall sign such documents and take such
other actions reasonably requested by the Replacement Lender to enable it to
share in the benefits of the rights created by the Credit Documents. Until the
consummation of an assignment in accordance with the foregoing provisions of
this Section 11.3, the Company shall continue to pay to the Affected Lender any
Credit Obligations as they become due and payable.
12. CONFIDENTIALITY. Each Lender will make no disclosure of confidential
---------------
information furnished to it by the Company or any of its Subsidiaries unless
such information shall have become public, except:
(1) in connection with operations under or the enforcement of this
Agreement or any other Credit Document to Persons who have a reasonable
need to be
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<PAGE>
furnished such confidential information and who agree to comply with the
restrictions contained in this Section 12 with respect to such information;
(2) pursuant to any statutory or regulatory requirement or any
mandatory court order, subpoena or other legal process;
(3) to any parent or corporate Affiliate of such Lender or to any
Credit Participant, proposed Credit Participant or proposed Assignee;
provided, however, that any such Person shall agree to comply with the
-------- -------
restrictions set forth in this Section 12 with respect to such information;
(4) to its independent counsel, auditors and other professional
advisors with an instruction to such Person to keep such information
confidential; and
(5) with the prior written consent of the Company, to any other
Person.
13. FOREIGN LENDERS. If any Lender is not created or organized in, or under
---------------
the laws of, the United States of America or any state thereof, such Lender
shall deliver to the Company and the Agent the forms described in one of the
following two clauses:
(1) Two fully completed and duly executed United States Internal
Revenue Service Forms 1001 or Forms 4224 or any successor form, as the case
may be, certifying that such Lender is entitled to receive payments of the
Credit Obligations payable to it without deduction or withholding of any
United States federal income taxes; or
(2) A statement, executed by such Lender under penalty of perjury,
certifying that such Lender is not a "bank" within the meaning of section
881(c)(3)(A) of the Code and two fully completed and duly executed United
States Internal Revenue Service Forms W-8 or any successor form, certifying
that such Lender is not a "United States person" within the meaning of
section 7701(a)(30) of the Code.
Each Lender that delivers any form or statement pursuant to this Section 13
further undertakes to renew such forms and statements by delivering to the
Company and the Agent any updated form, successor form or other certification,
as the case may be, on or before the date that any form or statement previously
delivered pursuant to this Section 13 expires or becomes obsolete or after the
occurrence of any event requiring a change in such most recent form or
statement. If at any time the Company and the Agent have not received all forms
and statements (including any renewals thereof) required to be provided by any
Lender pursuant to this Section 13, Section 3.5 shall not apply with respect to
any amount of United States federal income taxes required to be withheld from
payments of the Credit Obligations to such Lender.
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<PAGE>
14. NOTICES. Except as otherwise specified in this Agreement or any other
-------
Credit Document, any notice required to be given pursuant to this Agreement or
any other Credit Document shall be given in writing. Any notice, consent,
approval, demand or other communication in connection with this Agreement or any
other Credit Document shall be deemed to be given if given in writing (including
telex, telecopy or similar teletransmission) addressed as provided below (or to
the addressee at such other address as the addressee shall have specified by
notice actually received by the addressor), and if either (a) actually delivered
in fully legible form to such address (evidenced in the case of a telex by
receipt of the correct answer back) or (b) in the case of a letter, unless
actual receipt of the notice is required by any Credit Document five days shall
have elapsed after the same shall have been deposited in the United States
mails, with first-class postage prepaid and registered or certified.
If to the Company or any of its Subsidiaries, to it at its address set
forth in Exhibit 7.1 (as supplemented pursuant to Sections 6.4.1 and 6.4.2), to
the attention of the chief financial officer.
If to any Lender or the Agent, to it at its address set forth on the
signature pages of this Agreement or in the Register, with a copy to the Agent.
15. AMENDMENTS, CONSENTS, WAIVERS, ETC.
----------------------------------
15.1. Lender Consents for Amendments. Except as otherwise set forth herein,
------------------------------
the Agent may (and upon the written request of the Required Lenders the Agent
shall) take or refrain from taking any action under this Agreement or any other
Credit Document, including giving its written consent to any modification of or
amendment to and waiving in writing compliance with any covenant or condition
in this Agreement or any other Credit Document (other than an Interest Rate
Protection Agreement) or any Default or Event of Default, all of which actions
shall be binding upon all of the Lenders; provided, however, that:
-------- -------
(1) Except as provided below, without the written consent of the
Lenders owning at least 60% of the Percentage Interests (disregarding the
Percentage Interest of any Delinquent Lender during the existence of a
Delinquency Period or of any Nonperforming Lender so long as such Lender is
treated equally with the other Lenders with respect to any actions
enumerated below), no written modification of, amendment to, consent with
respect to, waiver of compliance with or waiver of a Default under, any of
the Credit Documents (other than an Interest Rate Protection Agreement)
shall be made.
(2) Without the written consent of such Lenders as own 100% of the
Percentage Interests (disregarding the Percentage Interest of any
Delinquent Lender during the existence of a Delinquency Period or of any
Nonperforming Lender so long as such Lender is treated equally with the
other Lenders with respect to any actions enumerated below):
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(1) None of the conditions specified in Section 5 shall be
amended, waived or modified.
(2) No release of all or a material portion of the Credit
Security or release of the Company or any Guarantor shall be made (in
any event, without the written consent of the Lenders, the Agent may
release particular items of Credit Security or particular Guarantors
in dispositions permitted by Section 6.11, as modified by amendments
thereto approved by the Required Lenders, and may release all Credit
Security pursuant to Section 17 upon payment in full of the Credit
Obligations and termination of the Commitments).
(3) No incurrence or existence of any Lien on all or
substantially all of the Credit Security shall be permitted (other
than Liens securing the Credit Obligations).
(4) No alteration shall be made of the Lenders' rights of set-
off contained in Section 8.2.4.
(5) No amendment to or modification of this Section 15.1 or
the definition of "Required Lenders" shall be made.
(3) Without the written consent of each Lender that is directly
affected thereby, as well as such Lenders as own at least 60% of the
Percentage Interests (disregarding the Percentage Interest of any
Delinquent Lender during the existence of a Delinquency Period or of any
Nonperforming Lender so long as such Lender is treated equally with the
other Lenders with respect to any actions enumerated below):
(1) No reduction shall be made in (A) the amount of principal
of the Loan owing to such Lender or reimbursement obligations for
payments made under Letters of Credit payable or participated to such
Lender, (B) the interest rate on the portion of the Loan owing to such
Lender or (C) the Letter of Credit fees or commitment fees owing to
such Lender with respect to the credit facility provided herein (other
than amendments and waivers approved by the Required Lenders that
modify defined terms used in calculating the Applicable Margin or
Consolidated Excess Cash Flow or that waive an increase in the
Applicable Rate as a result of an Event of Default).
(2) No change shall be made in the stated, scheduled time of
payment of any portion of the Loan owing to such Lender or interest
thereon or reimbursement of payments made under Letters of Credit or
fees relating to any of the foregoing payable to such Lender and no
waiver shall be made of any
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Default under Section 8.1.1 with respect to such Lender (other than
amendments and waivers approved by the Required Lenders that modify
defined terms used in calculating the Applicable Margin or
Consolidated Excess Cash Flow).
(3) No increase shall be made in the amount, or extension of
the term, of the stated Commitments of such Lender beyond that
provided for under Section 2.
(4) Without the written consent of such Lenders owning at least 60%
of the Percentage Interests in a particular Tranche (disregarding the
Percentage Interest of any Delinquent Lender during the existence of a
Delinquency Period or of any Nonperforming Lender so long as such Lender is
treated equally with the other Lenders with respect to any actions
enumerated below) voting as a separate class, no change may be made in the
allocation of mandatory prepayments under Section 4.3 between the
respective Tranches.
(5) Without the written consent of the Agent, no amendment or
modification of any Credit Document shall affect the rights or duties of
the Agent under the Credit Documents.
(6) Without the written consent of a Letter of Credit Issuer, no
amendment or modification of any Credit Document shall affect the rights or
duties of such Letter of Credit Issuer under the Credit Documents.
15.2. Course of Dealing; No Implied Waivers. No course of dealing between
-------------------------------------
any Lender or the Agent, on one hand, and the Company or any other Obligor, on
the other hand, shall operate as a waiver of any of the Lenders', the Agent's,
the Company's or any other Obligor's rights under this Agreement or any other
Credit Document or with respect to the Credit Obligations. In particular, no
delay or omission on the part of any Lender, the Agent, the Company or any other
Obligor in exercising any right under this Agreement or any other Credit
Document or with respect to the Credit Obligations shall operate as a waiver of
such right or any other right hereunder or thereunder. A waiver on any one
occasion shall not be construed as a bar to or waiver of any right or remedy on
any future occasion. No waiver, consent or amendment with respect to this
Agreement or any other Credit Document shall be binding unless it is in writing
and signed by the Agent or the Required Lenders.
16. NO STRICT CONSTRUCTION. The parties have participated jointly in the
----------------------
negotiation and drafting of this Agreement and the other Credit Documents with
counsel sophisticated in financing transactions. In the event an ambiguity or
question of intent or interpretation arises, this Agreement and the other Credit
Documents shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or
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disfavoring any party by virtue of the authorship of any provisions of this
Agreement and the other Credit Documents.
17. DEFEASANCE. When all Credit Obligations have been paid, performed and
----------
reasonably determined by the Lenders to have been indefeasibly discharged in
full, and if at the time no Lender continues to be committed to extend any
credit to the Company hereunder or under any other Credit Document, this
Agreement and the other Credit Documents shall terminate and, at the Company's
written request, accompanied by such certificates and other items as the Agent
shall reasonably deem necessary, the Credit Security shall revert to the
Obligors and the right, title and interest of the Lenders therein shall
terminate. Thereupon, on the Obligors' demand and at their cost and expense,
the Agent shall execute proper instruments, acknowledging satisfaction of and
discharging this Agreement and the other Credit Documents, and shall redeliver
to the Obligors any Credit Security then in its possession; provided, however,
-------- -------
that Sections 3.2.4, 3.5, 9, 10.7.7, 10.10, 12, 18 and 19 shall survive the
termination of this Agreement.
18. VENUE; SERVICE OF PROCESS. Each of the Company and the other Obligors:
-------------------------
(1) Irrevocably submits to the nonexclusive jurisdiction of the
state courts of The Commonwealth of Massachusetts and to the nonexclusive
jurisdiction of the United States District Court for the District of
Massachusetts for the purpose of any suit, action or other proceeding
arising out of or based upon this Agreement or any other Credit Document or
the subject matter hereof or thereof.
(2) Waives to the extent not prohibited by applicable law that
cannot be waived, and agrees not to assert, by way of motion, as a defense
or otherwise, in any such proceeding brought in any of the above-named
courts, any claim that it is not subject personally to the jurisdiction of
such court, that its property is exempt or immune from attachment or
execution, that such proceeding is brought in an inconvenient forum, that
the venue of such proceeding is improper, or that this Agreement or any
other Credit Document, or the subject matter hereof or thereof, may not be
enforced in or by such court.
(3) Consents to service of process in any such proceeding in any
manner at the time permitted by Chapter 223A of the General Laws of The
Commonwealth of Massachusetts and agrees that service of process by
registered or certified mail, return receipt requested, at its address
specified in or pursuant to Section 14 and addressed to the attention of
its general counsel is reasonably calculated to give actual notice.
19. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
--------------------
THAT CANNOT BE WAIVED, EACH OF THE COMPANY, THE OTHER OBLIGORS, THE AGENT AND
THE LENDERS WAIVES, AND COVENANTS
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THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY
RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM OR PROCEEDING
ARISING OUT OF THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT OR THE SUBJECT MATTER
HEREOF OR THEREOF OR ANY CREDIT OBLIGATION OR IN ANY WAY CONNECTED WITH THE
DEALINGS OF THE LENDERS, THE AGENT, THE COMPANY OR ANY OTHER OBLIGOR IN
CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING AND WHETHER IN CONTRACT, TORT OR OTHERWISE. Each of the Company and the
other Obligors acknowledges that it has been informed by the Agent that the
provisions of this Section 19 constitute a material inducement upon which each
of the Lenders has relied and will rely in entering into this Agreement and any
other Credit Document, and that it has reviewed the provisions of this Section
19 with its counsel. Each of the Lenders acknowledges that it has been informed
by the Company that the provisions of this Section 19 constitute a material
inducement upon which the Company and each of the other Obligors have relied and
will rely in entering into this Agreement and any other Credit Document, and
that it has reviewed the provisions of this Section 19 with its counsel. Any
Lender, the Agent, the Company or any other Obligor may file an original
counterpart or a copy of this Section 19 with any court as written evidence of
the consent of the Company, the other Obligors, the Agent and the Lenders to the
waiver of their rights to trial by jury.
20. GENERAL. Time is (and shall be) of the essence in this Agreement and the
-------
other Credit Documents. All covenants, agreements, representations and
warranties made in this Agreement or any other Credit Document or in
certificates delivered pursuant hereto or thereto shall be deemed to have been
relied on by each Lender, notwithstanding any investigation made by any Lender
on its behalf, and shall survive the execution and delivery to the Lenders
hereof and thereof. The invalidity or unenforceability of any provision hereof
shall not affect the validity or enforceability of any other provision hereof,
and any invalid or unenforceable provision shall be modified so as to be
enforced to the maximum extent of its validity or enforceability. The headings
in this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof. This Agreement and the other Credit
Documents constitute the entire understanding of the parties with respect to the
subject matter hereof and thereof and supersede all prior and contemporaneous
understandings and agreements, whether written or oral. This Agreement may be
executed in any number of counterparts which together shall constitute one
instrument. This Agreement shall be governed by and construed in accordance
with the laws (other than the conflict of laws rules) of The Commonwealth of
Massachusetts.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
-107-
<PAGE>
Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first above written.
SBA TELECOMMUNICATIONS, INC.
By /s/ Jeffrey A. Stoops
--------------------------------------------
Title: Senior Vice President--Corporate
Development
COMMUNICATION SITE SERVICES, INC.
SBA COMMUNICATIONS INTERNATIONAL, INC.
SBA, INC.
SBA LEASING, INC.
SBA SUBSIDIARY HOLDINGS, INC.
SBA TOWERS, INC.
By /s/ Jeffrey A. Stoops
--------------------------------------------
As Senior Vice President or Vice President
of each of the foregoing corporations
SBA COMMUNICATIONS CORPORATION
By /s/ Jeffrey A. Stoops
--------------------------------------------
Title: Senior Vice President--Corporate
Development
BANKBOSTON, N.A.
By /s/ Donna Fraser
--------------------------------------------
Title:
BANKBOSTON, N.A.
Media & Communications Division
100 Federal Street
Boston, Massachusetts 02110
Telecopy: (617) 434-3401
<PAGE>
Telex: 940581
FIRST UNION NATIONAL BANK
By /s/ Bruce W. Loftin
----------------------------------------
Title:
FIRST UNION NATIONAL BANK
One First Union Center
Charlotte, North Carolina 28288-0735
FLEET NATIONAL BANK
By /s/ Jeffrey J. McLaughlin
----------------------------------------
Title:
FLEET NATIONAL BANK
One Federal Street
MA of D 03D
Boston, Massachusetts 02109
LEHMAN COMMERCIAL PAPER INC.
By /s/ Michele Swanson
----------------------------------------
Title:
LEHMAN COMMERCIAL PAPER INC.
3 World Financial Center, 9th Floor
New York, New York 10285
<PAGE>
EXHIBIT 10.10
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT between SBA COMMUNICATIONS CORPORATION, a Florida
corporation with its principal place of business at 6001 Broken Sound Parkway,
Suite 400, Boca Raton, Florida (the "Company") and JEFFREY A. STOOPS (the
"Executive"), is made and entered into as of this 14th day of March, 1997.
W I T N E S S E T H:
-------------------
WHEREAS, the Company and its subsidiaries engage in the business of
developing, leasing and maintaining wireless telecommunications tower sites; and
WHEREAS, the Executive and the Company wish to provide for the employment
of the Executive by the Company on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, it is hereby agreed by and between the parties as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive and the
----------
Executive hereby agrees to be employed by the Company on the terms and
conditions set forth herein.
2. TERM. The initial term of employment of the Executive by the Company
----
hereunder shall commence as of April 1, 1997 and shall end December 31, 1999
(the "Term"), unless sooner terminated as hereinafter provided. At the end of
such initial Term, this Agreement shall be extended automatically for successive
one (1) year Terms of employment, unless either the Company or the Executive
notifies the other party in writing at least ninety (90) days prior to the end
of the incumbent Term of any intention not to renew this Agreement, in which
case this Agreement will terminate at the end of such incumbent Term. All
references herein to the Term shall refer to both such initial Term and any such
successive Terms.
3. POSITION AND DUTIES. The Executive shall serve as a Senior Vice
-------------------
President and the General Counsel of the Company. The Executive shall perform
the duties generally of a director of acquisitions and general counsel for the
Company and shall have such specific responsibilities, duties and authorities as
shall from time to time be assigned by the Chief Executive Officer or the Board
of Directors of the Company. The Executive shall devote substantially all his
working time and efforts to the business and affairs of the Company and its
subsidiaries.
4. COMPENSATION AND RELATED MATTERS.
--------------------------------
(a) Salary. During the period of the Executive's employment
------
hereunder, the Executive shall be paid an annual salary at a rate determined by
the Board of Directors of the Company of not less than $300,000 per annum (the
"Base Salary"). The Base Salary shall be paid in monthly or semi-monthly
installments as shall be the practice of the Company, and may be paid by the
Company or any of its subsidiaries. Compensation of the Executive by payments of
Base Salary shall not be deemed exclusive and shall not prevent the Executive
from participating in any
<PAGE>
other compensation or benefit plan of the Company or its subsidiaries. The term
"Base Salary" shall be deemed to include any and all regular installment amounts
received by the Executive under this Agreement. The Board of Directors of the
Company, in its sole discretion, may from time to time authorize increases in
the Base Salary.
(b) Bonuses. In addition to the Base Salary payable to the Executive
-------
hereunder, the Executive shall be entitled to receive a bonus hereunder for each
calendar year to the extent earned in accordance with performance targets,
measurements and such other criteria as shall be established for such year by
the Chief Executive Officer or Board of Directors of the Company on or before
March 31 of such year (June 30, 1997 for the 1997 calendar year). In no event
shall the annual amount of bonus paid to the Executive pursuant to this Section
4(b) be an amount greater than the Base Salary paid to Executive for such year
or, in the case of calendar 1997, an amount greater than $200,000.
(c) Expenses. During the Term of the Executive's employment
--------
hereunder, the Executive shall be entitled to receive payment or reimbursement
for all reasonable expenses incurred by the Executive in performing services
hereunder, including all expenses of travel and living expenses while away from
home on business or at the request of and in the service of the Company or its
subsidiaries and including dues and seminar fees (including, without limitation,
the cost of seminars, educational courses and license fees not to exceed $5,000
per annum necessary for the Executive to maintain his active status as a Florida
licensed attorney at law); provided that such expenses are incurred and
accounted for in accordance with the policies and procedures then presently
established by the Company.
(d) Other Benefits. The Executive shall be entitled to participate in
--------------
or receive benefits under any employee benefit plan or arrangement made
available by the Company or its subsidiaries in the future to its executives and
key management employees, subject to and on a basis consistent with the terms,
conditions and overall administration of such plans and arrangements. Any
payments or benefits payable to the Executive hereunder in respect of any
calendar year during which the Executive is employed by the Company for less
than the entire such year shall, unless otherwise provided in the applicable
plan or arrangement, be prorated in accordance with the number of days in such
calendar year during which he is so employed.
(e) Group or Family Medical Coverage. The Company shall cause to be
--------------------------------
provided at its expense group or family medical insurance coverage to the
Executive and his dependents under a plan for employees of the Company and such
plan shall include reasonable coverage for medical, hospital, surgical and major
medical expenses and shall be subject to such deductibles as applicable to other
Company employees.
5. LEGAL REQUIREMENTS. Both the Executive and the Company agree that all
------------------
legal requirements shall be met with respect to United States Federal and
foreign (if applicable) withholding tax requirements, compensation income and
the like.
-2-
<PAGE>
(6) TERMINATION. Unless otherwise agreed to in writing by the Company and
-----------
the Executive, the Executive's employment hereunder may be terminated under the
following circumstances:
(a) Death. The Executive's death.
-----
(b) Disability. If, as a result of the Executive's incapacity due to
----------
physical or mental illness (such incapacity being determined by the Company in
its sole reasonable discretion), the Executive shall have been absent from his
full-time duties as described hereunder for the entire period of six (6)
consecutive months, the Company may terminate the Executive's employment
hereunder.
(c) Cause.
-----
(i) The Company may terminate the Executive's employment
hereunder for Cause. For purposes of this Agreement, "Cause" shall mean that (i)
the Executive is convicted of a felony which, in the sole determination of the
Company, would have a material adverse effect on the Executive's ability to
perform his duties hereunder or on the business or reputation of the Company;
(ii) the Executive has exhibited gross misconduct resulting in material harm to
the Company, its business or reputation; (iii) the Executive has willfully
misappropriated Company assets or has otherwise willfully defrauded the Company,
including without limitation by fraud, theft, embezzlement, or breach of a
fiduciary duty involving personal profit; (iv) the Executive has intentionally
failed to perform his duties hereunder; or (v) a breach of any provision of this
Agreement. For the purposes of this Section 6(c)(i), no act or failure to act on
the Executive's part shall be considered "willful" unless done, or omitted to be
done, by him not in good faith and without reasonable belief that his action or
omission was in the best interests of the Company.
(ii) Notwithstanding the foregoing, any termination of the
Executive shall not be considered a termination for Cause pursuant to this
Section 6(c), and shall be considered a termination Without Cause pursuant to
Section 6(d) hereof, if such termination is effected without: (1) reasonable
notice to the Executive setting forth the reasons for the Company's intention to
terminate for Cause; (2) an opportunity for the Executive, together with his
counsel, to be heard before the Board of Directors of the Company; and (3)
delivery to the Executive of a Notice of Termination as provided for in Section
8 hereof from the Board of Directors of the Company finding that in the good
faith opinion of the Board of Directors of the Company the Executive was guilty
of conduct set forth above in the preceding sentence, and specifying the
particulars thereof in detail.
(d) Without Cause. Any termination of the Executive by the Company
-------------
(including any action which is deemed a termination of the Executive pursuant to
Section 6(f) hereof), other than a termination pursuant to Sections 6(a)-(c)
hereof, shall be deemed a termination Without Cause.
-3-
<PAGE>
(e) Termination by the Executive. The Executive may terminate this
----------------------------
Agreement (i) due to the Executive's retirement; provided that the Executive
provide the Company with thirty (30) days written notice, pursuant to Section
8(a), prior to the effective date of such retirement, as shall be stated in such
notice, and (ii) for any reason other than the Executive's retirement; provided
that the Executive provide the Company with sixty (60) days written notice prior
to the effective date of such termination, as shall be stated in such notice.
(f) Other Events of Termination. The following circumstances shall
---------------------------
specifically be deemed a termination Without Cause of the Executive's employment
by the Company:
(i) a vote by the Board of Directors to terminate the Executive
Without Cause, as defined in Section 6(d) hereof;
(ii) any termination of the Executive's employment which is not
effected pursuant to a Notice of Termination satisfying the requirements of
Section 8(a) hereof;
(iii) a breach by the Company of this Agreement, and a subsequent
election by the Executive to terminate this Agreement pursuant to Section 6(e)
above;
(iv) the performance of any other act by the Company which is
designed to prevent and does prevent the Executive from properly performing the
authorities, duties and responsibilities of his employment hereunder, including
without limitation a material change in the duties or position of the Executive
within the Company; or
(v) a Change in Control (as defined below) of the Company.
(g) Change in Control. For purposes of this Agreement, "Change in
-----------------
Control" shall, unless the Board otherwise directs by resolution adopted prior
thereto, be deemed to occur if (i) any "person" (as that term is used in
Sections 13 and 14(d)(2) of the Exchange Act), other than Steven E. Bernstein,
is or becomes the beneficial owner (as that term is used in Section 13(d) of the
Exchange Act), directly or indirectly, of twenty-five percent (25%) or more of
the voting stock; or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board cease for
any reason to constitute at least a majority thereof, unless the election or the
nomination for election by the Company's shareholders of each new director was
approved by a vote of at least three-quarters of the directors then still in
office who were directors at the beginning of the period. Any merger,
consolidation or corporate reorganization in which the owners of the Company's
capital stock entitled to vote in the election of directors ("Voting Stock")
prior to said combination own fifty percent (50%) or more of the resulting
entity's Voting Stock shall not, by itself, be considered a Change in Control.
-4-
<PAGE>
7. COMPENSATION UPON TERMINATION.
-----------------------------
(a) If the Executive's employment is terminated for any reason
pursuant to Section 6(d) hereof, the Company shall be obligated to pay to the
Executive an amount equal to the product of (i) the Base Salary multiplied by
(ii) 1.0, such payment to be made in a lump sum on or before the fifth day
following the Date of Termination; provided, however, that if the lump sum
-------- -------
severance payment under this Section 7(a), either alone or together with other
payments which the Executive has the right to receive from the Company, would
constitute a "parachute payment" (as defined in Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code")), such lump sum severance payment
shall be reduced to the largest amount as will result in no portion of the lump
sum severance payment under this Section 7(a) being subject to the excise tax
imposed by Section 4999 of the Code. The determination of any reduction in the
lump sum severance payment under this Section 7(a) pursuant to the foregoing
provision shall be made by independent counsel to the Company in consultation
with the independent certified public accountants of the Company.
(b) If the Executive's employment is terminated pursuant to Sections
6(a), 6(b), 6(c) or 6(e) hereof, on and after the Date of Termination the
Company shall no longer be obligated to pay the Executive any amounts payable
hereunder for such period, whether in the form of Base Salary or otherwise, and
the Executive shall have no right to compensation or other benefits hereunder
for any such period. Notwithstanding the foregoing, the Company shall be
obligated to pay to the Executive all amounts payable hereunder and otherwise,
through and including the Date of Termination, whether such amounts were payable
prior to the date of termination or thereafter, and the Executive shall be
entitled to receive any extension of benefits beyond the Date of Termination,
provided that (i) such benefits were received by the Executive prior to the Date
of Termination and (ii) such extension is customarily offered by the Company to
its employees or is otherwise required by applicable law.
(c) Notwithstanding the foregoing or anything contained herein to the
contrary, in no event shall the total amount of payments made under this
Agreement on account of termination under Section 6(f)(v) hereof exceed three
times the "base amount" minus one dollar. "Base amount" means the average
annualized compensation income from the Company includible in the Executive's
gross income for Federal income tax purposes over the five-year period (or such
lesser period as Executive shall have been employed) preceding the year in which
the Executive's employment is terminated. This paragraph, and the language
therein, shall be interpreted consistently with Section 280G of the Internal
Revenue Code of 1986, as amended, and any regulations thereunder.
8. NOTICE OF TERMINATION AND EFFECTIVE DATE.
----------------------------------------
(a) Any termination of the Executive's employment by the Company or
by the Executive (other than termination pursuant to Section 6(a) hereof) shall
be communicated by written Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall (i) indicate the specific termination provision in this Agreement relied
upon; (ii) set forth in reasonable detail the facts and circumstances claimed to
-5-
<PAGE>
provide a basis for termination of the Executive's employment under the
provision so indicated; and (iii) contain any other information required by this
Agreement.
(b) For purposes of this Agreement, "Date of Termination" shall mean:
(i) if the Executive's employment is terminated by his death, the date of his
death; (ii) if the Executive's employment is terminated, pursuant to Section
6(b) hereof, the expiration of six (6) consecutive months of the Executive's
incapacity due to physical or mental illness, as set forth in Section 6(b)
hereof (provided that the Executive shall not have returned to the performance
of his duties on a full-time basis during such six (6) month period); (iii) if
the Executive's employment is terminated pursuant to Sections 6(c) or 6(d)
hereof, the date that the Notice of Termination is communicated to the Executive
pursuant to Section 8(a) hereof; (iv) if the Executive's employment is
terminated pursuant to Section 6(e) hereof, the termination date stated in the
written notice received by the Company; or (v) if deemed terminated pursuant to
Section 6(f) hereof, the date of such action which is deemed a termination of
the Executive by the Company.
9. RESTRICTIVE COVENANT. Upon any cessation of employment hereunder
--------------------
other than one pursuant to Sections 6(d) or 6(f), the Executive agrees that for
the period commencing on the Consummation Date and ending on the date which is
two (2) years from the date the Executive is no longer employed by the Company,
the Executive will not, directly or indirectly:
(i) engage in any trade or business directly competitive with
that of any of the Company or any of its subsidiaries, anywhere in the United
States or such other country or countries in which the Company actively engages
in its trade or business as of the Date of Termination (the "Territory");
(ii) become associated as a manager, supervisor, employee,
consultant, advisor, control shareholder (either individually or as part of an
affiliated group), or otherwise of any person, corporation or entity engaging in
any trade or business directly competitive with those of the Company or any of
its subsidiaries anywhere in the Territory;
(iii) call upon any client or clients of the Company or any of
its subsidiaries for the purpose of selling or soliciting for any person,
corporation or entity, other than any of the Company or its subsidiaries, sales
of any products, processes, or services directly competitive with those of the
Company within the Territory;
(iv) divert, solicit or take away any such client or clients of
the Company or any of its subsidiaries for the purpose of selling any products
or services directly competitive with those of the Company or any of its
subsidiaries; and service any contracts or accounts relating to any products or
services directly competitive with those of the Company or any of its
subsidiaries for any person, corporation or entity other than the Company or any
of its subsidiaries; or
(v) induce, influence, combine or conspire with, or attempt to
induce, influence, combine or conspire with, any of the officers or employees of
the Company to
-6-
<PAGE>
terminate his or her employment with or to directly compete against the Company,
any of its present or future subsidiaries, or any of the Company's present or
future affiliates about which the Executive obtained any knowledge of the
business or operation of such affiliate during the Term of this Agreement.
The provisions of this Section 9 shall not apply to Employee in the event of a
termination of employment hereunder pursuant to Sections 6(d) or 6(f). Should
any of the time periods or the geographic area set forth in this Section 9 be
held to be unreasonable by any court of competent subject matter jurisdiction,
the parties hereto agree to petition such court to reduce the time period or
geographic area to the maximum permitted by governing law.
10. CONFIDENTIALITY.
---------------
(a) In the course of this employment, the Company or any of its
subsidiaries may disclose or make known to the Executive, and the Executive may
be given access to or may become acquainted with, certain information, trade
secrets or both, including but not limited to confidential information and trade
secrets regarding tapes, computer programs, designs, skills, procedures,
formulations, methods, documentation, drawings, facilities, customers, policies,
marketing, pricing, customer lists and leads, and other information and know-
how, all relating to or useful in the Company's business or the business of its
subsidiaries and/or affiliates (collectively, the "Information"), and which the
Company considers proprietary, desires to maintain confidential and is not in
the public domain. During the Term of this Agreement and at all times
thereafter, the Executive shall not in any manner, either directly or
indirectly, divulge, disclose or communicate to any person or firm, except to or
for the Company's benefit as directed by the Company, any of the Information
which he may have acquired in the course of or as an incident to his employment
by the Company, the parties agreeing that such information affects the
successful and effective conduct of the Company's business and its goodwill, and
that any breach of the terms of this Section 10 is a material breach of this
Agreement.
(b) All equipment, documents, memoranda, reports, records, files,
materials, samples, books, correspondence, lists, other written and graphic
records, and the like (collectively, the "Materials") affecting or relating to
the business of the Company or of its subsidiaries and/or affiliates, which the
Executive shall prepare, use, construct, observe, possess or control shall be
and remain the Company's sole property or in the Company's exclusive custody,
and must not be removed from the premises of the Company except as directed by
the Company's Board of Directors in writing. Promptly upon termination of the
Agreement or the Executive's employment hereunder for any reason, or otherwise
upon request of the Chief Executive Officer of the Company, the Information, the
Materials and all copies thereof in the custody or control of the Executive
shall be delivered to the Company.
11. NOTICE. All notices, requests, consents and other communications
------
required or permitted under this Agreement shall be in writing (including
electronic transmission) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service,
-7-
<PAGE>
electronically transmitted, or mailed (airmail if international) by registered
or certified mail (postage prepaid), return receipt requested, addressed to:
If to the Executive: Jeffrey A. Stoops
15575 Woodmar Court
Wellington, Florida 33414
If to the Company SBA Communications Corporation
6001 Broken Sound Parkway, Suite 400
Boca Raton, Florida 33487
Attention: Steven E. Bernstein, President
or to such other address as any party may designate by notice complying with the
provisions of this Section. Each such notice shall be deemed delivered (a) on
the date delivered if by personal delivery; (b) on the date of transmission with
confirmed answer back if by electronic transmission; and (c) on the date upon
which the return receipt is signed or delivery is refused or the notice is
designated by the postal authorities as not deliverable, as the case may be, if
mailed.
12. AMENDMENTS. The provisions of this Agreement may not be amended,
----------
supplemented, waived or changed orally, but only by a writing signed by the
party as to whom enforcement of any such amendment, supplement, waiver or
modification is sought and making specific reference to this Agreement.
13. ASSIGNMENTS. No party shall assign his or its rights and/or
-----------
obligations under this Agreement without the prior written consent of each other
party to this Agreement.
14. COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument. Confirmation of
execution by electronic transmission of a facsimile signature page shall be
binding upon any party so confirming.
15. ENFORCEMENT COSTS. If any civil action, arbitration or other legal
-----------------
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with any
provision of this Agreement, the successful or prevailing party or parties shall
be entitled to recover reasonable attorneys' fees, sales and use taxes, court
costs and all expenses even if not taxable as court costs (including, without
limitation, all such fees, taxes, costs and expenses incident to arbitration,
appellate, bankruptcy and post-judgment proceedings), incurred in that civil
action, arbitration or legal proceeding, in addition to any other relief to
which such party or parties may be entitled. Attorneys' fees shall include,
without limitation, paralegal fees, investigative fees, administrative costs,
sales and use taxes and all other charges billed by the attorney to the
prevailing party.
-8-
<PAGE>
16. EQUITABLE REMEDIES. The Executive acknowledges that the services to
------------------
be rendered by the Executive hereunder are extraordinary and unique and are
vital to the success of the Company, and that damages at law would be an
inadequate remedy for any breach or threatened breach of this Agreement by the
Executive. Therefore, in the event of a breach or threatened breach by the
Executive of any provision of this Agreement, the Company shall be entitled, in
addition to all other rights or remedies, to an injunction restraining such
breach, without the Company being required to show any actual damage or to post
an injunction bond.
17. GOVERNING LAW. This Agreement and all transactions contemplated by
-------------
this Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of Florida.
18. JURISDICTION AND VENUE. The parties acknowledge that a substantial
----------------------
portion of the negotiations, anticipated performance and execution of this
Agreement occurred or shall occur in Palm Beach County, Florida. Any civil
action or legal proceeding arising out of or relating to this Agreement shall be
brought in the courts of record of the State of Florida in Palm Beach County or
the United States District Court, Southern District of Florida, West Palm Beach
Division. Each party consents to the jurisdiction of such court in any such
civil action or legal proceeding and waives any objection to the laying of venue
of any such civil action or legal proceeding in such court. Service of any
court paper may be effected on such party by mail, as provided in this
Agreement, or in such other manner as may be provided under applicable laws,
rules of procedure or local rules.
19. THIRD PARTIES. Unless expressly stated herein to the contrary,
-------------
nothing in this Agreement, whether express or implied, is intended to confer any
rights or remedies under or by reason of this Agreement on any persons other
than the parties hereto and their respective administrators, executors, other
legal representatives, heirs, successors and permitted assigns. Nothing in this
Agreement is intended to relieve or discharge the obligation or liability of any
third persons to any party to this Agreement, nor shall any provision give any
third persons any right of subrogation or action over or against any party to
this Agreement.
20. SEVERABILITY. If any provision of this Agreement or any other
------------
agreement entered into pursuant hereto is contrary to, prohibited by or deemed
invalid under applicable law or regulation, such provision shall be inapplicable
and deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given full force
and effect so far as possible. If any provision of this Agreement may be
construed in two or more ways, one of which would render the provision invalid
or otherwise voidable or unenforceable and another of which would render the
provision valid and enforceable, such provision shall have the meaning which
renders it valid and enforceable.
21. SUCCESSION. This Agreement is intended to supersede and terminate any
----------
and all prior employment agreements, in their entirety, and all amendments
thereto, between the Executive and the Company, SBA, Inc. and SBA Leasing, Inc.
-9-
<PAGE>
would render the provision valid and enforceable, such provision shall have the
meaning which renders it valid and enforceable.
22. ENTIRE AGREEMENT. This Agreement represents the entire understanding
----------------
and agreement between the parties with respect to the subject matter hereof, and
supersedes all other negotiations, understandings and representations (if any)
made by and between such parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
SBA COMMUNICATIONS
CORPORATION
By: /s/ Steven E. Bernstein
--------------------------------
Steven E. Bernstein, President
/s/ Jeffrey A. Stoops
-----------------------------------
Jeffrey A. Stoops
-10-
<PAGE>
EXHIBIT 10.105
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT between SBA COMMUNICATIONS CORPORATION, a Florida
corporation with its principal place of business at One Town Center Road, Third
Floor, Boca Raton, Florida (the "Company") and MICHAEL N. SIMKIN (the
"Executive"), is made and entered into as of this 15th day of June, 1998.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and its subsidiaries engage in the business of
developing, leasing and maintaining wireless telecommunications tower sites; and
WHEREAS, the Executive and the Company wish to provide for the employment
of the Executive by the Company on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, it is hereby agreed by and between the parties as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive and the
----------
Executive hereby agrees to be employed by the Company on the terms and
conditions set forth herein.
2. TERM. The initial term of employment of the Executive by the Company
----
hereunder shall commence as of June 15, 1998 and shall end April 14, 2001 (the
"Term"), unless sooner terminated as hereinafter provided. At the end of such
initial Term, this Agreement shall be extended automatically for successive one
(1) year Terms of employment, unless either the Company or the Executive
notifies the other party in writing at least ninety (90) days prior to the end
of the incumbent Term of any intention not to renew this Agreement, in which
case this Agreement will terminate at the end of such incumbent Term. All
references herein to the Term shall refer to both such initial Term and any such
successive Terms.
3. POSITION AND DUTIES. The Executive shall serve initially as the Chief
-------------------
Operating Officer and Executive Vice President of the Company. The Executive
shall perform the duties of Chief Operating Officer and Executive Vice President
and shall have such specific responsibilities, positions, titles, duties and
authorities as shall from time to time be assigned by the Chief Executive
Officer or the Board of Directors of the Company. The Executive shall devote
substantially all his working time and efforts to the business and affairs of
the Company and its subsidiaries.
<PAGE>
4. COMPENSATION AND RELATED MATTERS
--------------------------------
(a) Salary. During the period of the Executive's employment
------
hereunder, the Executive shall be paid an annual salary at a rate determined by
the Board of Directors of the Company of not less than Two Hundred Fifty
Thousand Dollars ($250,000) per annum (the "Base Salary"). The Base Salary shall
be paid in monthly or semi-monthly installments as shall be the practice of the
Company, and may be paid by the Company or any of its subsidiaries. Compensation
of the Executive by payments of Base Salary shall not be deemed exclusive and
shall not prevent the Executive from participating in any other compensation or
benefit plan of the Company or its subsidiaries. The term "Base Salary" shall be
deemed to include any and all regular installment amounts received by the
Executive under this Agreement. The Board of Directors of the Company, in its
sole discretion, may from time to time authorize increases in the Base Salary.
(b) Bonuses. Executive shall be entitled to receive a bonus hereunder
-------
for each calendar year to the extent earned in accordance with performance
targets, measurements and such other criteria as shall be established for such
year by the Board of Directors of the Company. The maximum bonus earned can be
up to 100% of the employee's pro-rated base salary then in effect. For 1998,
employee's pro-rated period will be from April 13, 1998 -December 31, 1998.
(c) Expenses. During the Term of the Executive's employment
--------
hereunder, the Executive shall be entitled to receive payment or reimbursement
for all reasonable expenses incurred by the Executive in performing services
hereunder, including all expenses of travel and living expenses while away from
home on business or at the request of and in the service of the Company or its
subsidiaries; provided that such expenses are incurred and accounted for in
accordance with the policies and procedures then presently established by the
Company.
(d) Moving Expenses. Company will reimburse Executive for (i) all
---------------
reasonable expenses associated with the move of furniture, personal belongings,
and vehicles; (ii) tax gross ups for all non-deductible expenses.
(e) Travel and Living. Company will reimburse Executive for all
-----------------
travel and living expenses needed to commute from Denver, Colorado to Boca
Raton, Florida on a weekly basis. Living expenses shall include a $3600 per
month amount to cover housing and meals.
(f) Other Benefits. The Executive shall be entitled to participate in
--------------
or receive benefits under any employee benefit plan or arrangement made
available by the Company or its subsidiaries in the future to its executives and
key management employees, subject to and on a basis consistent with the terms,
conditions and overall
<PAGE>
administration of such plans and arrangements. Any payments or benefits payable
to the Executive hereunder in respect of any calendar year during which the
Executive is employed by the Company for less than the entire such year shall,
unless otherwise provided in the applicable plan or arrangement, be prorated in
accordance with the number of days in such calendar year during which he is so
employed.
(g) Group or Family Medical Coverage. The Company shall cause to be
--------------------------------
provided at its expense group or family medical insurance coverage to the
Executive and his dependents under a plan for employees of the Company and such
plan shall include reasonable coverage for medical, hospital, surgical and major
medical expenses and shall be subject to such deductibles as applicable to other
Company employees.
(h) Options. Employee will be granted 200,000 employee stock options
-------
at $2.63 per share under an incentive stock option agreement.
5. LEGAL REQUIREMENTS. Both the Executive and the Company agree that all
------------------
legal requirements shall be met with respect to United States Federal and
foreign (if applicable) withholding tax requirements, compensation income and
the like.
6. TERMINATION. Unless otherwise agreed to in writing by the Company and
-----------
the Executive, the Executive's employment hereunder may be terminated under the
following circumstances:
(a) Death. The Executive's death.
-----
(b) Disability. If, as a result of the Executive's incapacity due to
----------
physical or mental illness (such incapacity being determined by the Company in
its sole reasonable discretion), the Executive shall have been absent from his
full-time duties as described hereunder for the entire period of six (6)
consecutive months, the Company may terminate the Executive's employment
hereunder.
(c) Cause.
-----
(i) The Company may terminate the Executive's employment
hereunder for Cause. For purposes of this Agreement, "Cause" shall mean personal
dishonesty, willful misconduct, breach of a fiduciary duty involving personal
profit, intentional failure to perform stated, specified or assigned duties or
breach of any provision of this Agreement. No act or failure to act on the
Executive's part shall be considered "willful" unless done, or omitted to be
done, by him not in good faith and without reasonable belief that his action or
omission was in the best interests of the Company.
(ii) Notwithstanding the foregoing, any termination of the
Executive shall not be considered a termination for Cause pursuant to this
Section 6(c), and shall be considered a termination Without Cause pursuant to
Section 6(d) hereof, if
<PAGE>
such termination is effected without: (1) reasonable notice to the Executive
setting forth the reasons for the Company's intention to terminate for Cause;
(2) an opportunity for the Executive to be heard before the Board of Directors
of the Company; and (3) delivery to the Executive of a Notice of Termination as
provided for in Section 8 hereof from the Board of Directors of the Company
finding that in the good faith opinion of the Board of Directors of the Company
the Executive was guilty of conduct set forth above in the preceding sentence,
and specifying the particulars thereof in detail.
(d) Without Cause. Any termination of the Executive by the Company
-------------
(including any action which is deemed a termination of the Executive pursuant to
Section 6(f) hereof), other than a termination pursuant to Sections 6(a)-(c)
hereof, shall be deemed a termination Without Cause.
(e) Termination by the Executive. The Executive may terminate this
----------------------------
Agreement (i) due to the Executive's retirement; provided that the Executive
provide the Company with thirty (30) days written notice, pursuant to Section
8(a), prior to the effective date of such retirement, as shall be stated in such
notice, and (ii) for any reason other than the Executive's retirement; provided
that the Executive provide the Company with sixty (60) days written notice prior
to the effective date of such termination, as shall be stated in such notice.
(f) Other Events of Termination. The following circumstances shall
---------------------------
specifically be deemed a termination Without Cause of the Executive's employment
by the Company:
(i) a vote by the Board of Directors to terminate the Executive
Without Cause, as defined in Section 6(d) hereof;
(ii) any termination of the Executive's employment which is not
effected pursuant to a Notice of Termination satisfying the requirements of
Section 8(a) hereof; or
(iii) a breach by the Company of this Agreement, and a subsequent
election by the Executive to terminate this Agreement pursuant to Section 6(e)
above;
(iv) the performance of any other act by the Company which is
designated to prevent the Executive from properly performing the authorities,
duties and responsibilities of his employment hereunder; or
(v) a Change in Control (as defined below) of the Company.
(g) Change in Control. For purposes of this Agreement, "Change in
-----------------
Control" shall, unless the Board otherwise directs by resolution adopted prior
thereto, be deemed to occur if (i) any "person" (as that term is used in
Sections 13 and 14(d)(2) of
<PAGE>
the Exchange Act), other than Steven E. Bernstein, is or becomes the beneficial
owner (as that term is used in Section 13(d) of the Exchange Act), directly or
indirectly, of twenty-five percent (25%) or more of the voting stock; or (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the Board cease for any reason to constitute at least a
majority thereof, unless the election or the nomination for election by the
Company's shareholders of each new director was approved by a vote of at least
three-quarters of the directors then still in office who were directors at the
beginning of the period. Any merger, consolidation or corporate reorganization
in which the owners of the Company's capital stock entitled to vote in the
election of directors ("Voting Stock") prior to said combination own fifty
percent (50%) or more of the resulting entity's Voting Stock shall not, by
itself, be considered a Change in Control.
7. COMPENSATION UPON TERMINATION.
-----------------------------
(a) If the Executive's employment is terminated for any reason
pursuant to Section 6(d) hereof, the Company shall be obligated to pay to the
Executive an amount equal to one times the Executive's aggregate annual
compensation in a lump sum payment on or before the fifth day following the
date of termination.
(b) If the Executive's employment is terminated for any reason other
than pursuant to Section 6(d) hereof, on and after the Date of Termination the
Company shall no longer be obligated to pay the Executive any amounts payable
hereunder for such period, whether in the form of Base Salary or otherwise, and
the Executive shall have no right to compensation or other benefits hereunder
for any such period. Notwithstanding the foregoing, the Company shall be
obligated to pay to the Executive all amounts payable hereunder and otherwise,
through and including the Date of Termination.
8. NOTICE OF TERMINATION AND EFFECTIVE DATE.
----------------------------------------
(a) Any termination of the Executive's employment by the Company or
by the Executive (other than termination pursuant to Section 6(a) hereof) shall
be communicated by written Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall (i) indicate the specific termination provision in this Agreement relied
upon; (ii) set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated; and (iii) contain any other information required by this
Agreement.
(b) For purposes of this Agreement, "Date of Termination" shall mean:
(i) if the Executive's employment is terminated by his death, the date of his
death; (ii) if the Executive's employment is terminated pursuant to Section 6(b)
hereof, the expiration of six (6) consecutive months of the Executive's
incapacity due to physical or mental illness, as set forth in Section 6(b)
hereof (provided that the Executive shall not have
<PAGE>
returned to the performance of his duties on a full-time basis during such six
(6) month period); (iii) if the Executive's employment is terminated pursuant to
Sections 6(c) or 6(d) hereof, the date that the Notice of Termination is
communicated to the Executive pursuant to Section 8(a) hereof; (iv) if the
Executive's employment is terminated pursuant to Section 6(e) hereof, the
termination date stated in the written notice received by the Company; or (v) if
deemed terminated pursuant to Section 6(f) hereof, the date of such action which
is deemed a termination of the Executive by the Company.
9. RESTRICTIVE COVENANT. Upon any cessation of employment hereunder
--------------------
other than one pursuant to Sections 6(d) or 6(f), the Executive agrees that for
the period commencing on the Date of Termination and ending on the date which is
one (1) year thereafter, the Executive will not, directly or indirectly:
(i) engage in any trade or business directly competitive with
that of any of the Company or any of its subsidiaries, anywhere in the United
States or such other country or countries in which the Company actively engages
in its trade or business as of the Date of Termination (the "Territory");
(ii) become associated as a manager, supervisor, employee,
consultant, advisor, control shareholder (either individually or as part of an
affiliated group), or otherwise of any person, corporation or entity engaging in
any trade or business directly competitive with those of the Company or any of
its subsidiaries anywhere in the Territory;
(iii) call upon any client or clients of the Company or any of
its subsidiaries for the purpose of selling or soliciting for any person,
corporation or entity, other than any of the Company or its subsidiaries, sales
of any products, processes, or services directly competitive with those of the
Company within the Territory;
(iv) divert, solicit or take away any such client or clients of
the Company or any of its subsidiaries for the purpose of selling any products
or services directly competitive with those of the Company or any of its
subsidiaries; and service any contracts or accounts relating to any products or
services directly competitive with those of the Company or any of its
subsidiaries for any person, corporation or entity other than the Company or any
of its subsidiaries; or
(v) induce, influence, combine or conspire with, or attempt to
induce, influence, combine or conspire with, any of the officers or employees of
the Company to terminate his or her employment with or to directly compete
against the Company, any of its present or future subsidiaries, or any of the
Company's present or future affiliates about which the Executive obtained any
knowledge of the business or operation of such affiliate during the Term of this
Agreement.
The provisions of this Section 9 shall not apply to Employee in the event of a
termination of employment hereunder pursuant to Sections 6(d) or 6(f). Should
any of the time
<PAGE>
periods or the geographic area set forth in this Section 9 be held to be
unreasonable by any court of competent subject matter jurisdiction, the parties
hereto agree to petition such court to reduce the time period or geographic area
to the maximum permitted by governing law.
10. CONFIDENTIALITY.
---------------
(a) In the course of this employment, the Company or any of its
subsidiaries may disclose or make known to the Executive, and the Executive may
be given access to or may become acquainted with, certain information, trade
secrets or both, including but not limited to confidential information and trade
secrets regarding tapes, computer programs, designs, skills, procedures,
formulations, methods, documentation, drawings, facilities, customers, policies,
marketing, pricing, customer lists and leads, and other information and know-
how, all relating to or useful in the Company's business or the business of its
subsidiaries and/or affiliates (collectively, the "Information"), and which the
Company considers proprietary, desires to maintain confidential and is not in
the public domain. During the Term of this Agreement and at all times
thereafter, the Executive shall not in any manner, either directly or
indirectly, divulge, disclose or communicate to any person or firm, except to or
for the Company's benefit as directed by the Company, any of the Information
which he may have acquired in the course of or as an incident to his employment
by the Company, the parties agreeing that such information affects the
successful and effective conduct of the Company's business and its goodwill, and
that any breach of the terms of this Section 10 is a material breach of this
Agreement.
(b) All equipment, documents, memoranda, reports, records, files,
materials, samples, books, correspondence, lists, other written and graphic
records, and the like (collectively, the "Materials") affecting or relating to
the business of the Company or of its subsidiaries and/or affiliates, which the
Executive shall prepare, use, construct, observe, possess or control shall be
and remain the Company's sole property or in the Company's exclusive custody,
and must not be removed from the premises of the Company except as directed by
the Company's Board of Directors in writing. Promptly upon termination of the
Agreement or the Executive's employment hereunder for any reason, or otherwise
upon request of the Chief Executive Officer of the Company, the Information, the
Materials and all copies thereof in the custody or control of the Executive
shall be delivered to the Company.
11. DISCLOSURE. Executive and Company agree not to disclose any negative,
----------
adverse or derogatory comments about Company or Executive if this agreement
terminates.
<PAGE>
12. NOTICE. All notices, requests, consents and other communications
------
required or permitted under this Agreement shall be in writing (including
electronic transmission) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, electronically
transmitted, or mailed (airmail if international) by registered or certified
mail (postage prepaid), return receipt requested, addressed to:
If to the Executive: Michael N. Simkin
If to the Company: SBA Communications Corporation
One Town Center Road, Third Floor
Boca Raton, Florida 33486
Attention: Steven E. Bernstein, President
or to such other address as any party may designate by notice complying with the
provisions of this Section. Each such notice shall be deemed delivered (a) on
the date delivered if by personal delivery; (b) on the date of transmission with
confirmed answer back if by electronic transmission; and (c) on the date upon
which the return receipt is signed or delivery is refused or the notice is
designated by the postal authorities as not deliverable, as the case may be, if
mailed.
13. AMENDMENTS. The provisions of this Agreement may not be amended,
----------
supplemented, waived or changed orally, but only by a writing signed by the
party as to whom enforcement of any such amendment, supplement, waiver or
modification is sought and making specific reference to this Agreement.
14. ASSIGNMENTS. No party shall assign his or its rights and/or
-----------
obligations under this Agreement without the prior written consent of each other
party to this Agreement.
15. COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument. Confirmation of
execution by electronic transmission of a facsimile signature page shall be
binding upon any party so confirming.
16. ENFORCEMENT COSTS. If any civil action, arbitration or other legal
-----------------
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with any
provision of this Agreement, the successful or prevailing party or parties shall
be entitled to recover reasonable attorneys' fees, sales and use taxes, court
costs and all expenses even if not taxable as court costs (including, without
limitation, all such fees, taxes, costs and expenses incident to arbitration,
appellate, bankruptcy and post-judgment proceedings), incurred in that civil
action, arbitration or legal proceeding, in addition to any other relief
<PAGE>
to which such party or parties may be entitled. Attorneys' fees shall include,
without limitation, paralegal fees, investigative fees, administrative costs,
sales and use taxes and all other charges billed by the attorney to the
prevailing party.
17. EQUITABLE REMEDIES. The Executive acknowledges that the services to
------------------
be rendered by the Executive hereunder are extraordinary and unique and are
vital to the success of the Company, and that damages at law would be an
inadequate remedy for any breach or threatened breach of this Agreement by the
Executive. Therefore, in the event of a breach or threatened breach by the
Executive of any provision of this Agreement, the Company shall be entitled, in
addition to all other rights or remedies, to an injunction restraining such
breach, without the Company being required to show any actual damage or to post
an injunction bond.
18. GOVERNING LAW. This Agreement and all transactions contemplated by
-------------
this Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of Florida.
19. JURISDICTION AND VENUE. The parties acknowledge that a substantial
----------------------
portion of the negotiations, anticipated performance and execution of this
Agreement occurred or shall occur in Palm Beach County, Florida. Any civil
action or legal proceeding arising out of or relating to this Agreement shall be
brought in the courts of record of the State of Florida in Palm Beach County or
the United States District Court, Southern District of Florida, West Palm Beach
Division. Each party consents to the jurisdiction of such court in any such
civil action or legal proceeding and waives any objection to the laying of venue
of any such civil action or legal proceeding in such court. Service of any
court paper may be effected on such party by mail, as provided in this
Agreement, or in such other manner as may be provided under applicable laws,
rules of procedure or local rules.
20. THIRD PARTIES. Unless expressly stated herein to the contrary,
-------------
nothing in this Agreement, whether express or implied, is intended to confer any
rights or remedies under or by reason of this Agreement on any persons other
than the parties hereto and their respective administrators, executors, other
legal representatives, heirs, successors and permitted assigns. Nothing in this
Agreement is intended to relieve or discharge the obligation or liability of any
third persons to any party to this Agreement, nor shall any provision give any
third persons any right of subrogation or action over or against any party to
this Agreement.
21. SEVERABILITY. If any provision of this Agreement or any other
------------
agreement entered into pursuant hereto is contrary to, prohibited by or deemed
invalid under applicable law or regulation, such provision shall be inapplicable
and deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given full force
and effect so far as possible. If any provision of this Agreement may be
construed in two or more ways, one of which would render the provision invalid
or otherwise voidable or unenforceable and another of which
<PAGE>
would render the provision valid and enforceable, such provision shall have the
meaning which renders it valid and enforceable.
22. ENTIRE AGREEMENT. This Agreement represents the entire understanding
----------------
and agreement between the parties with respect to the subject matter hereof, and
supersedes all other negotiations, understandings and representations (if any)
made by and between such parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
SBA COMMUNICATIONS
CORPORATION
By: /s/ Steven E. Bernstein
--------------------------------
Steven E. Bernstein, President
/s/ Michael N. Simkin
--------------------------------
Michael N. Simkin
<PAGE>
EXHIBIT 10.125
INCENTIVE STOCK OPTION AGREEMENT
--------------------------------
THIS AGREEMENT CERTIFIES THAT, for value received, MICHAEL N. SIMKIN the
-----------------
"Optionee"), is entitled to purchase from SBA COMMUNICATIONS CORPORATION, a
Florida Corporation (the "Company"), 200,000 shares of the Company's Class A
--------
common stock (the "Common Stock"), subject to adjustment pursuant to Section 9
hereof, at the price of $2.63 per share (the Exercise Price").
1. GRANT UNDER 1996 STOCK OPTION PLAN. This option is granted pursuant to and
----------------------------------
is governed by the Company's 1996 Stock Option Plan (the "Plan") and,
unless the context otherwise requires, terms used herein shall have the
same meaning as in the Plan. Determinations made in connection with this
option pursuant to the Plan shall be governed by the Plan as it exists on
this date. In the event of any inconsistency between this Agreement and the
Plan, or if any issue is not addressed by this Agreement, the provisions of
the Plan shall govern.
2. GRANT AS INCENTIVE STOCK OPTION; OTHER OPTIONS. The option right granted
----------------------------------------------
under this Agreement shall be an "incentive stock option" as such term is
defined in Section 422(b) of the Internal Revenue Code of 1986, as amended
(the "Code"), and is intended to qualify as an incentive stock option under
Section 422 of the Code. This option is in addition to any other options
heretofore or hereafter granted to the Optionee by the Company.
3. VESTING. Subject to the terms, provisions and limitations contained in the
-------
Plan, the option granted under this Agreement shall vest and become
exercisable in three installments of 66666.67 shares each, with the first
--------
installment to occur upon December 31, 1998, and with two subsequent
vestings to occur on December 31, 1999 and December 31, 2000. Subject to any
limitations contained in the Plan, this option may be exercised up to and
including the date which is ten (10) years from June 15, 1998.
4. PARTIAL EXERCISE. Exercise of this option up to the extent above stated may
----------------
be made in part at any time and from time to time within the above limits,
except that this option may not be exercised for a fraction of a share. Any
fractional share with respect to which an installment of this option cannot
be exercised because of the limitation contained in the preceding sentence
shall remain subject to this option and shall be available for later
purchase by the Optionee in accordance with the terms hereof.
5. PAYMENT OF PRICE. The Exercise Price is payable in cash and/or shares of
----------------
Stock (as such term is defined in the Plan) valued at its Fair Market Value
at the time the option is exercised, or, in the discretion of the
Compensation Committee of the Company's Board of Directors, either (i) in
other property having a Fair Market Value on the date of exercise equal to
the option price, or (ii) by delivering to the Company a copy of irrevocable
instructions to a stockbroker to deliver promptly to the Company an amount
of sale or loan proceeds sufficient to pay the Exercise Price.
6. AGREEMENT TO PURCHASE FOR INVESTMENT. By acceptance of this option, the
------------------------------------
Optionee agrees that a purchase of shares under this option will not be made
with a view of their distribution, as that term is used in the Securities
Act of 1933, as amended (the "Act"), unless in the opinion of counsel to the
Company such distribution is in compliance with or exempt from the
registration and prospectus requirements of the Act, or a registration
statement is in effect pursuant to the Act with respect to the shares, and
the Optionee agrees to sign a certificate to such effect at the time of
exercising this option and agrees that the certificate for the shares so
purchased may be inscribed with a legend to ensure compliance with the Act.
7. METHOD OF EXERCISING OPTION. Subject to the terms and conditions of this
---------------------------
Agreement, this option may be exercised by written notice to the Company, at
the principal executive office of the Company, or to such transfer agent as
the Company shall designate. Such notice shall state the election to
exercise an option and the number of shares in respect of which it is
1
<PAGE>
INCENTIVE STOCK OPTION AGREEMENT
--------------------------------
being exercised and shall be signed by the person or persons so exercising
this option. Such notice shall be accompanied by payment of the full
Exercise Price of such shares, and the Company shall deliver a certificate
or certificates representing such shares as soon as practicable after such
payment shall be received. The certificate or certificates for the shares
as to which this option shall have been so exercised shall be registered in
the name of the person or persons so exercising this option (or, if this
option shall be exercised by the Optionee and if the Optionee shall so
request in the notice exercising this option, shall be registered in the
name of the Optionee and another person jointly, with right of
survivorship) and shall be delivered as provided above to or upon the
written order of the person or persons exercising this option. In the event
this option shall be exercised by any person or persons other than the
Optionee (if in compliance with the Plan), such notice shall be accompanied
by appropriate proof of the right of such person or persons to exercise
this option. All shares that shall be purchased upon the exercise of this
option as provided herein shall be fully paid and non-assessable.
8. NO OBLIGATION TO EXERCISE OPTION. The grant and acceptance of this option
--------------------------------
imposes no obligation on the Optionee to exercise the options.
9. CAPITAL CHANGES AND BUSINESS SUCCESSIONS. The Plan contains provisions
----------------------------------------
covering the treatment of options in a number of contingencies such as
stock splits and mergers. Provisions in the Plan for adjustment with
respect to stock subject to options and the related provisions with respect
to successors to the business of the Company are hereby made applicable
hereunder and are incorporated herein by reference.
10. RESERVATION OF COMMON STOCK. The Company will at all times reserve and
---------------------------
keep available for issuance upon the exercise of this Agreement such number
of its authorized but unissued shares of Common Stock as will be sufficient
to permit the exercise in full hereof, and upon such issuance such shares
of Common Stock will be validly issued, fully paid and nonassessable.
11. NO SHAREHOLDER RIGHTS OR OBLIGATION. This agreement will not entitle the
-----------------------------------
Optionee (or subsequent holder of this Agreement) hereof to any voting
rights or other rights as a shareholder of the Company. No provision of
this Agreement will give rise to any obligation of the Optionee for the
Exercise Price of Common Stock acquirable by exercise hereof or as a
shareholder of the Company.
12. ENTIRE AGREEMENT. This Agreement and the Plan represent the entire
----------------
understanding and agreement between the parties with respect to the subject
matter hereof, and supersedes all other negotiations, understandings and
representations (if any) made by and between such parties.
13. AMENDMENTS. Except as expressly contemplated by the Plan, the provisions
-----------
of this Agreement may not be amended, supplemented, waived or changed
orally, but only by a writing signed by the party as to whom enforcement of
any such amendment, supplement, waiver or modification is sought and making
specific reference to this Agreement.
14. ASSIGNMENTS. Except as otherwise provided herein, no party shall assign
------------
his or its rights and/or obligations hereunder without the prior written
consent of each other party to this Agreement.
15. FURTHER ASSURANCES. The parties hereby agree from time to time to execute
------------------
and deliver such further and other transfers, assignments and documents and
do all matters and things which may be convenient or necessary to more
effectively and completely carry out the intentions of this Agreement.
2
<PAGE>
INCENTIVE STOCK OPTION AGREEMENT
--------------------------------
16. BINDING EFFECT. All of the terms and provisions of this Agreement shall be
--------------
binding upon, to the benefit of, and be enforceable by the parties and
their respective legal representatives, successors and permitted assigns,
whether so expressed or not.
17. NOTICES. All notices, requests, consents and other communications required
-------
or permitted under this Agreement shall be in writing (including electronic
transmission) and shall be (as elected by the person giving such notice)
hand delivered by messenger or courier service, electronically transmitted,
or mailed (airmail if international) by registered or certified mail
(postage prepaid), return receipt requested, addressed to:
If to Optionee:
- ---------------
Michael N. Simkin
To be provided
If to the Company:
- ------------------
SBA Communications Corporation
One Town Center Road, 3rd Floor
Boca Raton, Florida 33486
Attn: Steven E. Bernstein
or to such other address as any party may designate by notice complying with the
terms of this Section. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date of transmission with
confirmed answer back if by electronic transmission; and (c ) on the date upon
which the return receipt is signed or delivery is refused or the notice is
designated by the postal authorities as not deliverable, as the case may be, if
mailed.
18. SURVIVAL. All covenants, agreements, representations and warranties made
--------
herein or otherwise made in writing by any party pursuant hereto shall
survive the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby.
19. JURISDICTION AND VENUE. The parties acknowledge that a substantial portion
----------------------
of the negotiations and anticipated performance of this Agreement occurred
or shall occur in Palm Beach County, Florida. Any civil action or legal
proceeding arising out of or relating to this Agreement shall be brought in
the courts of record of the State of Florida in Palm Beach County or the
United States District Court, Southern District of Florida, West Palm Beach
Division. Each party consents to the jurisdiction of such court in any such
civil action or legal proceedings and waives any objection to the laying of
venue of any such civil action or legal proceeding in such court. Service
of any court paper may be effected on such party my mail, as provided in
this Agreement, or in such other manner as may be provided under applicable
laws, rules of procedure or local rules.
20. ENFORCEMENT COSTS. If any civil action, arbitration or other legal
------------------
proceeding is brought for the enforcement of this Agreement, or because of
an alleged dispute, breach, default or misrepresentation in connection with
any provision of this Agreement, the successful or prevailing party or
parties shall be entitled to recover reasonable attorney's fees, sales and
use taxes, court costs and all expenses even if not taxable as court costs
(including, without limitation, all such fees, taxes, costs and expenses
incident to arbitration, appellate, bankruptcy and post-judgment
proceedings), incurred in that civil action, arbitration or legal
proceeding, in addition to any other relief to which such party or parties
may be entitled. Attorney's fees shall include, without limitation,
paralegal fees, investigative fees, administrative costs, sales and use
taxes and all other charges billed by the attorney to the prevailing party.
3
<PAGE>
INCENTIVE STOCK OPTION AGREEMENT
--------------------------------
21. GOVERNING LAW. This agreement and all transactions contemplated by this
-------------
Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of Florida.
22. PROVISION OF DOCUMENTATION TO OPTIONEE. By signing this Agreement the
--------------------------------------
Optionee acknowledges receipt of a copy of this Agreement and a copy of the
Company's 1996 Stock Option Plan.
IN WITNESS WHEREOF, the Company and the Optionee have caused this instrument to
be executed, and the Optionee whose signature appears below acknowledges
acceptance of an original copy of this Agreement.
Date of Grant as of June 15, 1998
Date of Agreement: June 15, 1998
SBA COMMUNICATIONS CORPORATION
By: /s/ Steven E. Bernstein
-----------------------------------
Steven E. Bernstein, President
/s/ Michael N. Simkin
- --------------------------------------
Michael N. Simkin
4
<PAGE>
EXHIBIT 10.13
NONQUALIFIED STOCK OPTION AGREEMENT
-----------------------------------
THIS AGREEMENT CERTIFIES THAT, for value received, JEFFREY A. STOOPS (the
"Optionee"), is entitled to purchase from SBA COMMUNICATIONS CORPORATION, a
Florida corporation (the "Company"), One Hundred Thousand (100,000) shares of
the Company's Class A common stock (the "Common Stock"), subject to adjustment
pursuant to Section 9 hereof, at the price of six dollars ($6.00) per share (the
"Exercise Price").
1. Grant Under 1996 Stock Option Plan. This option is granted pursuant to
----------------------------------
and is governed by the Company's 1996 Stock Option Plan (the "Plan") and, unless
the context otherwise requires, terms used herein shall have the same meaning as
in the Plan. Determinations made in connection with this option pursuant to the
Plan shall be governed by the Plan as it exists on this date. In the event of
any inconsistency between this Agreement and the Plan, or if any issue is not
addressed by this Agreement, the provisions of the Plan shall govern.
2. Grant as Nonqualifled Stock Option; Other Options. The option right
-------------------------------------------------
granted under this Agreement shall not be an "incentive stock option" as such
term is defined in Section 422(b) of the Internal Revenue Code of 1986, as
amended (the "Code"). This option is in addition to any other options heretofore
or hereafter granted to the Optionee by the Company.
3. Vesting. Subject to the terms, provisions and limitations contained in
-------
the Plan, the option granted under this Agreement shall vest and become
exercisable in two installments of 33,333 shares each, and a third installment
of 33,334 shares, with the first installment to vest on December 31, 1997, the
second installment to vest on December 31, 1998 and the third installment to
vest on December 31, 1999. Notwithstanding anything set forth in the Plan to the
contrary, this option, once vested, may be exercised up to and including the
date which is ten (10) years from the date this option is granted.
4. Accelerated Vesting. Notwithstanding anything set forth in the Plan to
-------------------
the contrary, all options granted under this Agreement shall vest and become
immediately exercisable in the event Optionee's employment with the Company is
terminated "Without Cause," as such term is defined in that certain Employment
Agreement between Optionee and the Company of even date herewith.
5. Partial Exercise. Exercise of this option up to the extent above
----------------
stated may be made in part at any time and from time to time within the above
limits, except that this option may not be exercised for a fraction of a share.
Any fractional share with respect to which an installment of this option cannot
be exercised because of the limitation contained in the preceding sentence shall
remain subject to this option and shall be available for later purchase by the
Optionee in accordance with the terms hereof.
6. Payment of Price. The Exercise Price is payable in cash and/or shares
----------------
of Stock (as such term is defined in the Plan) valued at its Fair Market Value
at the time the option is exercised, or, in the discretion of the Compensation
Committee of the Company's Board of Directors, either (i) in other property
having a Fair Market Value (including some of the options granted hereunder) on
the date of exercise equal to the option price, or (ii) by delivering to the
Company a copy of
<PAGE>
irrevocable instructions to a stockbroker to deliver promptly to the Company an
amount of sale or loan proceeds sufficient to pay the Exercise Price.
7. Agreement to Purchase for Investment. By acceptance of this option,
------------------------------------
the Optionee agrees that a purchase of shares under this option will not be made
with a view to their distribution, as that term is used in the Securities Act of
1933, as amended (the "Act"), unless in the opinion of counsel to the Company
such distribution is in compliance with or exempt from the registration and
prospectus requirements of the Act, or a registration statement is in effect
pursuant to the Act with respect to the shares, and the Optionee agrees to sign
a certificate to such effect at the time of exercising this option and agrees
that the certificate for the shares so purchased may be inscribed with a legend
to ensure compliance with the Act.
8. Method of Exercising Option. Subject to the terms and conditions of
---------------------------
this Agreement, this option may be exercised by written notice to the Company,
at the principal executive office of the Company, or to such transfer agent as
the Company shall designate. Such notice shall state the election to exercise an
option and the number of shares in respect of which it is being exercised and
shall be signed by the person or persons so exercising this option. Such notice
shall be accompanied by payment of the full Exercise Price of such shares, and
the Company shall deliver a certificate or certificates representing such shares
as soon as practicable after such payment shall be received. The certificate or
certificates for the shares as to which this option shall have been so exercised
shall be registered in the name of the person or persons so exercising this
option (or, if this option shall be exercised by the Optionee and if the
Optionee shall so request in the notice exercising this option, shall be
registered in the name of the Optionee and another person jointly, with right of
survivorship) and shall be delivered as provided above to or upon the written
order of the person or persons exercising this option. In the event this option
shall be exercised by any person or persons other than the Optionee (if in
compliance with the Plan), such notice shall be accompanied by appropriate proof
of the right of such person or persons to exercise this option. All shares that
shall be purchased upon the exercise of this option as provided herein shall be
fully paid and non-assessable.
9. No Obligation to Exercise Option. The grant and acceptance of this
--------------------------------
option imposes no obligation on the Optionee to exercise the options.
10. Capital Changes and Business Successions. The Plan contains provisions
----------------------------------------
covering the treatment of options in a number of contingencies such as stock
splits and mergers. Provisions in the Plan for adjustment with respect to stock
subject to options and the related provisions with respect to successors to the
business of the Company are hereby made applicable hereunder and are
incorporated herein by reference.
11. Reservation of Common Stock. The Company will at all times reserve and
---------------------------
keep available for issuance upon the exercise of this Agreement such number of
its authorized but unissued shares of Common Stock as will be sufficient to
permit the exercise in full hereof, and upon such issuance such shares of Common
Stock will be validly issued, fully paid, and nonassessable.
2
<PAGE>
12. No Shareholder Rights or Obligation. This Agreement will not entitle
-----------------------------------
the Optionee (or subsequent holder of this Agreement) hereof to any voting
rights or other rights as a shareholder of the Company. No provision of this
Agreement will give rise to any obligation of the Optionee for the Exercise
Price of Common Stock acquirable by exercise hereof or as a shareholder of the
Company.
13. Entire Agreement. This Agreement and the Plan represent the entire
----------------
understanding and agreement between the parties with respect to the subject
matter hereof, and supersedes all other negotiations, understandings and
representations (if any) made by and between such parties.
14. Amendments. Except as expressly contemplated by the Plan, the
----------
provisions of this Agreement may not be amended, supplemented, waived or changed
orally, but only by a writing signed by the party as to whom enforcement of any
such amendment, supplement, waiver or modification is sought and making specific
reference to this Agreement.
15. Assignments. Except as otherwise provided herein, no party shall
-----------
assign his or its rights and/or obligations hereunder without the prior written
consent of each other party to this Agreement. Notwithstanding the foregoing,
Optionee may transfer some of the options granted pursuant to this Agreement to
another employee of the Company or its subsidiaries, which assignment shall
otherwise be subject to all of the terms of this Agreement and the Plan,
provided such assignee executes an agreement similar to this Agreement with the
Company.
16. Further Assurances. The parties hereby agree from time to time to
------------------
execute and deliver such further and other transfers, assignments and documents
and do all matters and things which may be convenient or necessary to more
effectively and completely carry out the intentions of this Agreement.
17. Binding Effect. All of the terms and provisions of this Agreement
--------------
shall be binding upon, to the benefit of, and be enforceable by the parties and
their respective legal representatives, successors and permitted assigns,
whether so expressed or not.
18. Notices. All notices, requests, consents and other communications
-------
required or permitted under this Agreement shall be in writing (including
electronic transmission) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, electronically
transmitted, or mailed (airmail if international) by registered or certified
mail (postage prepaid), return receipt requested, addressed to:
If to Optionee:
Jeffrey A. Stoops
15575 Woodmar Court
Wellington, Florida 33414
3
<PAGE>
If to the Company:
SBA Communications Corporation
6001 Broken Sound Parkway, 4th Floor
Boca Raton, Florida 33487
Attn.: Steven E. Bernstein
or to such other address as any party may designate by notice complying with the
terms of this Section. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date of transmission with
confirmed answer back if by electronic transmission; and (c) on the date upon
which the return receipt is signed or delivery is refused or the notice is
designated by the postal authorities as not deliverable, as the case may be, if
mailed.
19. Survival. All covenants, agreements, representations and warranties
--------
made herein or otherwise made in writing by any party pursuant hereto shall
survive the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
20. Jurisdiction and Venue. The parties acknowledge that a substantial
----------------------
portion of the negotiations and anticipated performance of this Agreement
occurred or shall occur in Palm Beach County, Florida. Any civil action or legal
proceeding arising out of or relating to this Agreement shall be brought in the
courts of record of the State of Florida in Palm Beach County or the United
States District Court, Southern District of Florida, West Palm Beach Division.
Each party consents to the jurisdiction of such court in any such civil action
or legal proceeding and waives any objection to the laying of venue of any such
civil action or legal proceeding in such court. Service of any court paper may
be effected on such party by mail, as provided in this Agreement, or in such
other manner as may be provided under applicable laws, rules of procedure or
local rules.
21. Enforcement Costs. If any civil action, arbitration or other legal
-----------------
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with any
provision of this Agreement, the successful or prevailing party or parties shall
be entitled to recover reasonable attorneys' fees, sales and use taxes, court
costs and all expenses even if not taxable as court costs (including, without
limitation, all such fees, taxes, costs and expenses incident to arbitration,
appellate, bankruptcy and post-judgment proceedings), incurred in that civil
action, arbitration or legal proceeding, in addition to any other relief to
which such party or parties may be entitled. Attorneys' fees shall include,
without limitation, paralegal fees, investigative fees, administrative costs,
sales and use taxes and all other charges billed by the attorney to the
prevailing party.
22. Governing Law. This Agreement and all transactions contemplated by
-------------
this Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of Florida.
4
<PAGE>
23. Provision of Documentation to Optionee. By signing this Agreement the
--------------------------------------
Optionee acknowledges receipt of a copy of this Agreement and a copy of the
Company's 1996 Stock Option Plan.
IN WITNESS WHEREOF, the Company and the Optionee have caused this
instrument to be executed, and the Optionee whose signature appears below
acknowledges acceptance of an original copy of this Agreement.
Date of Grant: as of March 14, 1997
Date of Agreement: March 14, 1997
SBA COMMUNICATIONS CORPORATION
/s/ Jeffrey A. Stoops By: /s/ Steven E. Bernstein
- ------------------------------- --------------------------------
Optionee Steven E. Bernstein, President
Jeffrey A. Stoops
- -------------------------------
Print Name of Optionee
15575 Woodmar Court
- -------------------------------
Street Address
Wellington, Florida 33134
- -----------------------------------
City State Zip Code
5
<PAGE>
EXHIBIT 10.14
SBA COMMUNICATIONS CORPORATION
SUBORDINATION AGREEMENT
This Agreement, dated as of August 8, 1997, is among SBA Communications
Corporation, a Florida corporation (the "Company"), the undersigned holders of
-------
in excess of 73% of the Company's 4% Series A Convertible Preferred Stock, $0.01
par value per share, and BankBoston, N.A., as agent (the "Agent") for itself and
-----
the other Lenders under the Credit Agreement (as defined below). The parties
agree as follows:
1. Reference to Credit Agreement; Certain Rules of Construction; Definitions.
-------------------------------------------------------------------------
Reference is made to the Credit Agreement dated as of the date hereof, as from
time to time in effect (the "Credit Agreement"), among the Company, its
----------------
Subsidiaries from time to time party thereto, the Lenders and the Agent. Except
as the context otherwise explicitly requires, (a) the capitalized term "Section"
refers to sections of this Agreement, (b) references to a particular Section
shall include all subsections thereof and (c) the word "including" shall be
construed as "including without limitation". Capitalized terms defined in the
Credit Agreement and not otherwise defined herein are used herein with the
meanings so defined. Certain other capitalized terms are used in this Agreement
as specifically defined in this Section 1 as follows:
1.1. "Junior Creditor" means each holder of any Preferred Stock and each
---------------
other Person becoming a party to this Agreement (or a substantially similar
subordination agreement) pursuant to Section 8.1.
1.2. "Preferred Stock" means, collectively, the Series A Preferred Stock,
---------------
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock.
1.3. "Reorganization" means any voluntary or involuntary dissolution,
--------------
winding-up, liquidation, reorganization by judicial proceedings, bankruptcy,
insolvency, receivership or other statutory or common law proceedings, including
any proceeding under the federal Bankruptcy Code or any similar law of any other
jurisdiction, involving the Company, any of its properties or the readjustment
of the liabilities of the Company or any assignment for the benefit of creditors
or any marshaling of the assets or liabilities of the Company.
1.4. "Senior Indebtedness" means all Credit Obligations and all renewals,
-------------------
extensions and refinancings of the Credit Obligations.
1.5. "Signatory Holders" means the undersigned holders of at least 73% of
-----------------
the outstanding Preferred Stock and each other Person to whom Subordinated
Indebtedness is transferred by such a Signatory Holder in a transaction
complying with Section 8.1.
1.6. "Subordinated Indebtedness" means:
-------------------------
<PAGE>
(a) Rights to receive dividends on and redemptions of any Preferred
Stock and all other Indebtedness of the Company and its Subsidiaries to the
Junior Creditors with respect to the Preferred Stock; and
(b) All other obligations of the Company and its Subsidiaries to the
Junior Creditors with respect to the items in clause (a), whether now
existing or hereafter arising, including any claim against the Company and
its Subsidiaries in respect of rescission, indemnification, expenses,
damages or otherwise.
2. Subordination Covenants. Each of the Company and each Junior Creditor
-----------------------
covenants that, so long as any part of the Senior Indebtedness is outstanding
and until the Lenders' obligations to extend credit under each Credit Document
shall have been terminated, each of them will comply with the following
provisions:
2.1. Subordination. To the extent and in the manner provided in this
-------------
Agreement, the payment of any Subordinated Indebtedness is and shall be
expressly subordinated and junior in right of payment to the prior payment in
full of all Senior Indebtedness, and the Subordinated Indebtedness is
subordinated as a claim against the Company, any of its Subsidiaries, any
guarantor of the Senior Indebtedness or any of their respective assets to the
prior payment in full of the Senior Indebtedness, in each case whether such
claim is (a) in the ordinary course of business or (b) in the event of any
Reorganization.
2.2. Restricted Payments. The Company and its Subsidiaries will not make,
-------------------
and the Junior Creditors will not accept or receive, any payment of any
Subordinated Indebtedness, whether in cash, securities or other property or by
way of conversion, exchange or set-off or otherwise, and no such payment shall
become due; provided, however, that the Company may make, and the Junior
-------- -------
Creditors may accept and receive, payments as follows:
2.2.1. So long as immediately before and after giving effect thereto
no Default exists, and so long as immediately after giving effect thereto
the Company and its Subsidiaries are in pro forma compliance with the
Computation Covenants, the Company may redeem outstanding shares of
Preferred Stock after the fifth anniversary of the date of the initial
closing of the private placement of Series A Preferred Stock pursuant to
the Offering Memorandum; provided, however, that during any single fiscal
-------- -------
year (a) any such redemption by the Company shall occur after the date upon
which the Company makes any prepayment to the Lenders pursuant to section
4.3.2 (Excess Cash Flow) of the Credit Agreement; and (b) all such
redemptions made during such fiscal year shall be in an aggregate amount no
greater than the amount of any prepayment pursuant to such section 4.3.2
made to the Lenders in such fiscal years; and provided, further, that the
-------- -------
number of shares redeemed pursuant to this Section 2.2.1 during any fiscal
year shall not exceed 25% of the shares outstanding on March 31, 2002.
-2-
<PAGE>
2.2.2. So long as immediately before and after giving effect thereto
no Default exists, the Company may redeem outstanding shares of Preferred
Stock after December 31, 1999 from the proceeds of a public offering of the
Company's Common Stock raising gross proceeds of at least $20,000,000.
2.3. Reorganization. In the event of any Reorganization, all Senior
--------------
Indebtedness shall first be paid in full before any payment is made on account
of any Subordinated Indebtedness. In any proceedings seeking to effect a
Reorganization any payment or distribution of any kind or character, whether in
cash or property or securities, which may be payable or deliverable in respect
of any such Subordinated Indebtedness shall be paid or delivered directly to the
Agent for application to payment of the Senior Indebtedness, unless and until
all Senior Indebtedness shall have been paid in full.
2.4. Specific Powers in Reorganization. In any proceedings with respect to
---------------------------------
any Reorganization, the Junior Creditors irrevocably authorize the Agent:
(a) In the event the Subordinated Indebtedness claims have not been
properly submitted and presented in such proceedings by the 10th day prior
to the expiration date for the submission and presentment of claims, to
prove and enforce any claims on the Subordinated Indebtedness owed by the
Company and its Subsidiaries to the Junior Creditors either in the name of
the Agent or in the names of the Junior Creditors as the attorney-in-fact
of the Junior Creditors for such limited purpose;
(b) To accept and execute receipts for any payment or distribution
made with respect to any such Subordinated Indebtedness and to apply such
payment or distribution to the payment of the Senior Indebtedness; and
(c) To take any lawful action necessary to effectuate the foregoing,
either in the name of the Agent or in the name of the Junior Creditors as
the attorney-in-fact of the Junior Creditors for such limited purpose.
2.5. Turnover of Payments. If any payment or distribution of the assets of
--------------------
the Company or any of its present or future Subsidiaries of any kind or
character (other than payments permitted by Section 2.2) shall be received, by
way of set-off or otherwise, by the Signatory Holders in contravention of
Section 2.2 or 2.3 and, in the case of any contravention of Section 2.2 on
account of a Default existing before or after giving effect to such payment or
distribution, the Company or the Agent shall have given the Signatory Holders
written notice of such Default prior to the receipt by the Signatory Holders of
such payment, then such payment or distribution shall be promptly paid over to
the Agent (who shall have the right to convert any such assets into cash) for
application to the payment of all Senior Indebtedness remaining unpaid, after
giving effect to any concurrent payment or distribution to the holders of Senior
Indebtedness. Any funds or property remaining after all such Senior
Indebtedness has been paid in full at a time when the Lenders' obligations to
extend credit under the Credit
-3-
<PAGE>
Documents have been terminated shall be promptly remitted by the Agent to the
Signatory Holders. Upon written request by the Signatory Holders, the Agent
shall provide the Signatory Holders with computations showing any payments or
assets of the Company received by the Agent pursuant to this Section 2.5, any
conversion of any such assets into cash and the application of such payments on
account of the Senior Indebtedness.
2.6. Restrictions on Acceleration. Notwithstanding any contrary provision
----------------------------
of any Subordinated Indebtedness or of any agreement or instrument relating
thereto, (a) no Subordinated Indebtedness (other than payments permitted by
Section 2.2) shall become or be declared to be due and payable prior to the date
on which the Senior Indebtedness becomes or is declared to be due and payable
and (b) if any Senior Indebtedness shall have become or been declared to be due
and payable prior to its stated maturity, the Subordinated Indebtedness shall
become immediately due and payable.
2.7. Restrictions on Remedies. The Junior Creditors shall not, without the
------------------------
Agent's prior written consent, institute proceedings to enforce any Subordinated
Indebtedness, notwithstanding any provision to the contrary contained in any
Subordinated Indebtedness or in any agreement or instrument relating thereto.
Without limiting the generality of the foregoing sentence, the Junior Creditors
shall not, without the Agent's prior written consent, commence or join with any
other creditor of the Company and its Subsidiaries in commencing any proceeding
against the Company and its Subsidiaries seeking to effect a Reorganization.
Notwithstanding the foregoing, in the event of any Reorganization, the Junior
Creditors shall be entitled to prove and enforce their claims on the
Subordinated Indebtedness in their own names subject, however, to the
subordination and application provisions contained herein.
2.8. No Collateral. The Company and its Subsidiaries shall not grant, and
-------------
the Junior Creditors shall not demand, accept or receive, any collateral, direct
or indirect, for any Subordinated Indebtedness.
2.9. No Other Subordination. Each Junior Creditor represents that the
----------------------
Subordinated Indebtedness has not been subordinated by agreement of such Junior
Creditor to any obligations other than the Senior Indebtedness and covenants
that it will not subordinate the Subordinated Indebtedness to any other
obligations except with the prior written consent of the Agent.
2.10. Payment in Full. For the purposes of this Agreement, no Senior
---------------
Indebtedness shall be deemed to have been paid in full unless the holder thereof
shall have received cash equal to the amount thereof then outstanding; provided,
--------
however, that if the Lenders are required by reason of a judgment or order of
- -------
any court or administrative authority having competent jurisdiction to repay any
amounts or property received by the Lenders on account of the Credit Obligations
and the Lenders repay or return such amounts or property, then the subordination
provisions of this Agreement shall be reinstated retroactively with respect to
the amounts so repaid or property so returned as if such amounts or property had
never been
-4-
<PAGE>
received by the Lenders, notwithstanding any termination thereof or the
cancellation of any instrument or agreement evidencing any of the Credit
Obligations.
3. Effect of Provisions; Subrogation.
---------------------------------
3.1. Effect of Provisions; Relative Rights. The provisions hereof as to
-------------------------------------
subordination are solely for the purpose of defining the relative rights of the
holders of Senior Indebtedness on one hand and the Junior Creditors on the other
hand, and such provisions shall not impair as between the Company and the Junior
Creditors the obligation of the Company to pay to the Junior Creditors any
Subordinated Indebtedness owed by the Company to the Junior Creditors and all
other amounts in respect thereof, nor shall any such provisions prevent the
Junior Creditors from exercising all remedies otherwise permitted by applicable
law or under the terms of such Subordinated Indebtedness upon a default
thereunder, except to the extent prohibited by this Agreement.
3.2. Subrogation. When all Senior Indebtedness has been paid in full and
-----------
the Lenders' obligations to extend credit under all Credit Documents have been
terminated, the Junior Creditors shall be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions of assets of
the Company or any of its Subsidiaries that would be deemed payable on the
Senior Indebtedness until the Subordinated Indebtedness shall be paid in full.
For the purposes of such subrogation, no payments or distributions to the
holders of Senior Indebtedness of any cash, property or securities to which the
Junior Creditors would be entitled except for the provisions of this Agreement,
and no payment over pursuant to the provisions of this Agreement to the holders
of Senior Indebtedness by the Junior Creditors, shall, as between the Company or
any of its Subsidiaries and their creditors other than the holders of Senior
Indebtedness, on one hand, and the Junior Creditors, on the other hand, be
deemed to be a payment by the Company or any of its Subsidiaries to or on
account of Senior Indebtedness.
4. Further Assurances. Each of the Company and each Junior Creditor covenants
------------------
to execute and deliver to the Agent such further instruments and to take such
further action as the Agent may at any time or times reasonably request in order
to carry out the provisions and intent of this Agreement.
5. Representations and Warranties.
------------------------------
5.1. Signatory Holders. Each Signatory Holder represents and warrants as
-----------------
to itself only (and not as to any other Junior Creditor) as follows:
5.1.1. Existence and Power. Such Signatory Holder is a validly
-------------------
existing entity with all power and authority necessary to enter into and
perform this Agreement.
-5-
<PAGE>
5.1.2. Authorization and Enforceability. Such Signatory Holder has
--------------------------------
taken all action required to execute, deliver and perform this Agreement.
This Agreement constitutes the legal, valid and binding obligation of such
Signatory Holder, enforceable against such Signatory Holder in accordance
with its terms.
5.1.3. No Legal Obstacle to Agreements. Neither the execution and
-------------------------------
delivery of this Agreement, nor the consummation of any transaction
referred to in or contemplated by this Agreement, nor the fulfillment of
the terms hereof, has constituted or resulted, or will constitute or
result, in:
(a) Any breach or termination of the provisions of any agreement,
instrument, deed or lease to which such Signatory Holder is a party or by
which it is bound, or of the organizational and governing documents of such
Signatory Holder; or
(b) To the best of such Signatory Holder's knowledge, the violation
of any law, statute, judgment, decree or governmental order, rule or
regulation applicable to such Signatory Holder.
No approval, authorization or other action by, or declaration to or filing
with, any governmental or administrative authority or any other Person is
required to be obtained or made by such Signatory Holder in connection with
the execution, delivery and performance of this Agreement or any other
Credit Document to which it is party or the transactions contemplated
hereby or thereby.
5.1.4. Litigation. No litigation, at law or in equity, or any
----------
proceeding before any court, board or other governmental or administrative
agency or any arbitrator is pending to which such Signatory Holder is a
party or, to the knowledge of such Signatory Holder, is any such litigation
or proceeding threatened, which seeks to enjoin the consummation, or which
questions the validity, of any of the transactions contemplated by this
Agreement.
5.2. Company. The Company represents and warrants as follows:
-------
5.2.1. Outstanding Preferred Stock. As of the date hereof Series A
---------------------------
Preferred Stock is the only Preferred Stock outstanding. Shares of Series
B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock
are issuable only in connection with, and to holders of, Series A
Preferred Stock or other shares of Preferred Stock issued directly or
indirectly in connection with, and to holders of, Series A Preferred Stock.
5.2.2. Authority of Signatory Holders. The Signatory Holders
------------------------------
constitute the holders of at least 73% of the outstanding Preferred Stock
and have the authority to bind all other Junior Creditors to this Agreement
by virtue of Article E of the Amended
-6-
<PAGE>
and Restated Certificate of Designation, Preferences, Rights and
Limitations Amending Terms of the Preferred Stock dated April 1977.
6. Information Regarding the Company. Each Junior Creditor agrees that it has
---------------------------------
made such investigation as it deems desirable of the risks undertaken by it in
entering into this Agreement and is fully satisfied that it understands all such
risks. Each Junior Creditor waives any obligation which may now or hereafter
exist on the part of the Agent or any holder of any Senior Indebtedness to
inform such Junior Creditor of the risks being undertaken by entering into this
Agreement or of any changes in such risks and such Junior Creditor undertakes to
keep itself informed of such risks and any changes therein. Each Junior
Creditor expressly waives (except to the extent prohibited by applicable law
which cannot be waived) any duty which may now or hereafter exist on the part of
the Agent or any holder of any Senior Indebtedness to disclose to such Junior
Creditor any matter related to the business, operations, character, collateral,
credit, condition (financial or otherwise), income or prospects of the Company
or its Affiliates, properties or management, whether now or hereafter known by
any Lender. Each Junior Creditor agrees that it assumes sole responsibility for
obtaining from the Company and its Affiliates all information concerning the
Credit Agreement and all other Credit Documents and all other information as to
the Company and its Subsidiaries and their respective Affiliates, properties or
management or anything relating to any of the above as it deems necessary or
desirable.
7. Continuing Agreement; Lender Powers; etc.
-----------------------------------------
7.1. Continuing Agreement, etc. This Agreement shall be a continuing
-------------------------
agreement and shall remain in full force and effect until the payment in full of
the Senior Indebtedness and the termination of the Lenders' obligations to
extend credit under all Credit Documents.
7.2. Consent to Credit Agreement. Each Junior Creditor acknowledges
---------------------------
receipt from the Company of a correct and complete copy of the Credit Agreement
as in effect as of the date hereof, and consents to all of the provisions of the
Credit Agreement as in effect as of such date.
7.3. Power to Modify Credit Agreement, etc. To the extent permitted by
-------------------------------------
applicable law that cannot be waived, each Junior Creditor grants the Agent and
the Lenders full power, in their sole discretion, without notice to or consent
by such Junior Creditor and without in any way affecting the subordination of
the Subordinated Indebtedness provided in this Agreement, but subject to the
proviso set forth at the end of this Section 7.3:
7.3.1. To waive compliance with any Default under, and to consent to
any amendment or change of any terms of, the Credit Agreement, any other
Credit Document, the Credit Security, the Credit Obligations or any
Guarantee thereof (each as from time to time in effect);
-7-
<PAGE>
7.3.2. To grant one or more extensions or renewals of the Credit
Obligations (for any duration), and any other indulgence with respect
thereto and to effect any total or partial release (by operation of law or
otherwise), discharge, compromise or settlement with respect to the
obligations of the Company in respect of the Credit Obligations, whether or
not rights against the Company under this Agreement are reserved in
connection therewith;
7.3.3. To take security in any form for the Credit Obligations and to
consent to the addition to or the substitution, exchange, release, failure
to perfect or any other disposition of, and to deal in any other manner
with, any property which may from time to time secure the Credit
Obligations whether or not the property, if any, received upon the exercise
of such power shall be of a character or value the same as or different
from the character or value of any property disposed of, and to obtain,
modify or release any present or future Guarantees of the Credit
Obligations and to proceed against any of the Credit Security or such
Guarantees in any order;
7.3.4. To extend credit under the Credit Agreement or any other Credit
Document, or otherwise, in such amount as the Lenders may determine,
whether for a greater or lesser amount than is presently in effect, even
though the financial condition of the Company and its Subsidiaries may have
deteriorated since the date hereof; and
7.3.5. To collect or liquidate or realize upon any of the Credit
Obligations or the Credit Security in any lawful manner or to refrain from
collecting or liquidating or realizing upon any of the Credit Obligations
or the Credit Security;
provided, however, that the Company and the Agent agree not to amend the
-------- -------
definition of "Consolidated Excess Cash Flow" or of the terms included in
such definition without the consent of the holders of at least 66-2/3% of
the outstanding Preferred Stock if the effect of such amendment would be to
reduce the amount of Consolidated Excess Cash Flow.
7.4. No Impairment by Company, Lenders, etc. No right of the Lenders or
--------------------------------------
any present or future holder of any Senior Indebtedness shall at any time be
prejudiced or impaired by any act or failure to act on the part of the Company,
including any noncompliance by the Company with the terms of this Agreement, or
by any lawful act or failure to act, in good faith, by any Lender or any such
holder (other than amendments to the Credit Documents entered into by the Agent
or the Lenders).
7.5. Specific Performance. The Agent is authorized to demand specific
--------------------
performance of this Agreement at any time when the Company or any Junior
Creditor shall have failed to comply with any provision hereof applicable to it,
and each of them irrevocably waives any
-8-
<PAGE>
defense based on the adequacy of a remedy at law which might be asserted as a
bar to the remedy of specific performance hereof in any action brought therefor
by the Lenders.
8. Transfers; Successors and Assigns.
---------------------------------
8.1. Transfers. No Signatory Holder will sell, assign, transfer or
---------
otherwise dispose of any Subordinated Indebtedness except to another Person
which shall have entered into this Agreement expressly as a Signatory Holder.
The other Junior Creditors will not sell, assign, transfer or otherwise dispose
of any Subordinated Indebtedness except to another Person which shall have
entered into this Agreement or another agreement with the Agent, in a form
satisfactory to the Agent, providing for subordination of such Subordinated
Indebtedness to the prior payment of the Credit Obligations on the terms
provided in this Agreement.
8.2. Successors and Assigns. The provisions of this Agreement shall inure
----------------------
to the benefit of the Lenders and their successors and assigns and shall be
binding upon each of the Company and the Junior Creditors and their respective
successors and assigns. The Company and the Junior Creditors may not assign
their rights or obligations under this Agreement except to the extent provided
in Section 8.1.
9. Notices. Any notice or other communication in connection with this
-------
Agreement shall be deemed to be given if given in writing (including telex,
telecopy or similar teletransmission) addressed as provided below (or to the
addressee at such other address as the addressee shall have specified by notice
actually received by the addressor), and if either (a) actually delivered in
fully legible form to such address (evidenced in the case of a telex by receipt
of the correct answerback) or (b) in the case of a letter, five business days
shall have elapsed after the same shall have been deposited in the United States
mails, with first-class postage prepaid and registered or certified.
If to the Company, to it at its address specified in or pursuant to Section
16 of the Credit Agreement, to the attention of its chief financial officer.
If to any Signatory Holder, to it at its address set forth below its
signature hereto.
If to any other Junior Creditor, to it in care of the Company.
If to the Agent, to it at its address specified in or pursuant to Section
16 of the Credit Agreement.
10. Venue; Service of Process. Each of the Company and each Junior Creditor:
-------------------------
(a) Irrevocably submits to the nonexclusive jurisdiction of the state
courts of The Commonwealth of Massachusetts and to the nonexclusive
jurisdiction of the United States District Court for the District of
Massachusetts for the purpose of any suit,
-9-
<PAGE>
action or other proceeding arising out of or based upon this Agreement or
any other Credit Document or the subject matter hereof or th e reof; and
(b) Waives to the extent not prohibited by applicable law, and agrees
not to assert, by way of motion, as a defense or otherwise, in any such
proceeding brought in any of the above-named courts, any claim that it is
not subject personally to the jurisdiction of such court, that its property
is exempt or immune from attachment or execution, that such proceeding is
brought in an inconvenient forum, that the venue of any such proceeding is
improper, or that this Agreement or any other Credit Document, or the
subject matter hereof or thereof, may not be enforced in or by such court.
Each of the Company and each Junior Creditor consents to service of process in
any such proceeding in any manner permitted by Chapter 223A of the General Laws
of The Commonwealth of Massachusetts and agrees that service of process by
registered or certified mail, return receipt requested, at its address specified
in or pursuant to Section 9 is reasonably calculated to give actual notice.
11. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH
--------------------
CANNOT BE WAIVED, EACH OF THE AGENT, THE COMPANY AND EACH JUNIOR CREDITOR
WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT
OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE,
CLAIM, DEMAND OR ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE CREDIT
AGREEMENT OR ANY OTHER CREDIT DOCUMENT OR THE SUBJECT MATTER HEREOF OR THEREOF
OR ANY CREDIT OBLIGATION OR IN ANY WAY CONNECTED WITH THE DEALINGS OF THE AGENT,
THE COMPANY OR THE JUNIOR CREDITORS IN CONNECTION WITH ANY OF THE ABOVE, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT
OR OTHERWISE. Each of the Company and each Signatory Holder acknowledges that
it has been informed by the Agent that the provisions of this Section 11
constitute a material inducement upon which each of the Lenders has relied, is
relying and will rely in entering into the Credit Agreement and any other Credit
Document, and that it has reviewed the provisions of this Section 11 with its
counsel. The Agent, the Company or any Junior Creditor may file an original
counterpart or a copy of this Section 11 with any court as written evidence of
the consent of the Agent, the Company and such Junior Creditor to the waiver of
the right to trial by jury.
12. General. All covenants, agreements, representations and warranties made in
-------
this Agreement or any other Credit Document or in certificates delivered
pursuant hereto or thereto shall be deemed to have been relied on by each
Lender, notwithstanding any investigation made by the Agent on its behalf, and
shall survive the execution and delivery to the Lenders hereof and thereof. The
invalidity or unenforceability of any provision hereof shall not affect the
validity or enforceability of any other provision hereof, and any invalid or
unenforceable
-10-
<PAGE>
provision shall be modified so as to be enforced to the maximum extent of its
validity or enforceability. The headings in this Agreement are for convenience
of reference only and shall not limit, alter or otherwise affect the meaning
hereof. This Agreement and the other Credit Documents constitute the entire
understanding of the parties with respect to the subject matter hereof and
thereof and supersede all prior and current understandings and agreements,
whether written or oral. This Agreement is a Credit Document and may be executed
in any number of counterparts, which together shall constitute one instrument.
This Agreement shall be governed by and construed in accordance with the laws
(other than the conflict of laws rules) of The Commonwealth of Massachusetts.
-11-
<PAGE>
Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
dated first written above.
SBA COMMUNICATIONS CORPORATION
By /S/ Jeffrey A. Stoops
________________________________
Title: Senior Vice President
BANKBOSTON, N.A.,
as Agent under the Credit Agreement
By /s/ Reginald T. Dawson
________________________________
Title: Director
ABS CAPITAL PARTNERS II, L.P.
By: ABS PARTNERS II, LLC, its General Partner
By: /s/ Donald B. Hebb, Jr.
__________________________
Donald B. Hebb, Jr., Managing Member
ABS MB MANAGEMENT
135 East Baltimore Street
Baltimore, MD 21202
Telecopy: (410) 895-4380
ADVENT ATLANTIC AND PACIFIC III, L.P.
By: TA ASSOCIATES AAP III PARTNERS, L.P., its
General Partner
By: TA ASSOCIATES, INC., its
General Partner
By: /s/ Brian J. Conway
____________________
Brian J. Conway,
Managing Director
-12-
<PAGE>
TA ASSOCIATES
125 High Street, Suite 2500
Boston, MA 02110
Telecopy: (617) 574-6728
ADVENT VII L.P
By: TA ASSOCIATES VII L.P., its General
Partner
By: TA ASSOCIATES, INC.,its
General Partner
By: /s/ Brian J. Conway
_______________________
Brian J. Conway
Managing Director
TA ASSOCIATES
125 High Street, Suite 2500
Boston, MA 02110
Telecopy: (617) 574-6728
TA VENTURE INVESTORS LIMITED
PARTNERSHIP
By: /s/ Brian J. Conway
___________________________
Brian J. Conway,
General Partner
TA ASSOCIATES
125 High Street, Suite 2500
Boston, MA 02110
Telecopy: (617) 574-6728
-13-
<PAGE>
EXHIBIT 10.15
PURCHASE AND SALE AGREEMENT
---------------------------
PURCHASE AND SALE AGREEMENT (this "Agreement"), dated as of July 22, 1997
---------
("Effective Date"), among SBA TOWERS FLORIDA, INC., a Florida corporation ("SBA
-------------- ---
Towers"), and SBA CONSTRUCTION ACQUISITION, INC., a Florida corporation ("SBA
- ------ ---
Construction"), both having an address at 6001 Broken Sound Parkway, Fourth
- ------------
Floor, Boca Raton, Florida 33487, Attn.: Jeffrey A. Stoops, Senior Vice
President, Fax Number (561) 997-0343 (SBA Towers and SBA Construction are
collectively referred to herein as "Purchasers"); and COMMUNICATION SITE
----------
SERVICES, INC., a Florida corporation ("CSSI"), SEGARS COMMUNICATION GROUP,
----
INC., a Florida corporation ("SCGI"), E. ROBERT SEGARS and DENISE L. SEGARS,
----
individuals (collectively "Segars"), all having an address at 2530 N.E. 36th
------
Avenue, Ocala, Florida 34470-3119, Attn.: E. Robert Segars, Fax Number (352)
629-5661 (CSSI, SCGI and Segars are collectively referred to herein as the
"Sellers").
-------
Preliminary Statement:
---------------------
Sellers have agreed to sell the Property (as defined below) to Purchasers,
and Purchasers have agreed to purchase the Property from Sellers, on the terms,
covenants and conditions set forth in this Agreement.
Robert and Denise Segars, being the sole shareholders of CSSI and SCGI and
deriving significant benefit from the transaction contemplated hereby, have
agreed that they will not compete with the businesses of SBA Communications
Corporation for a period of seven (7) years from the date of consummation of the
purchase of Property pursuant to the terms of this Agreement.
In consideration of the mutual covenants contained in this Agreement, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Sellers and Purchasers hereby agree as follows:
1. DEFINITIONS. Capitalized terms used but not otherwise defined in this
-----------
Agreement will have the meanings set forth in Exhibit "A".
-----------
2. SALE AND PURCHASE.
-----------------
2.1 Purchase of Property. In consideration of the mutual covenants
---------------------
contained in this Agreement, and other good and valuable consideration, Sellers
agree to sell and convey the Property to Purchasers and Purchasers agree to
purchase the Property from Sellers, on the terms, covenants and conditions set
forth in this Agreement. The Property shall not include any of the Excluded
Property.
2.2 Assumption of Liabilities. At the Closing and to the extent
-------------------------
permitted by law and the provisions of the agreements, contracts and other items
purchased, as part of the consideration for this transaction, Sellers shall
assign to Purchasers all of their rights, title and interests, and Purchasers
shall assume as of the Closing Date and agree to pay when due and
<PAGE>
otherwise perform thereunder all of Sellers' obligations and liabilities which
arise or relate to the period commencing on and after the Closing Date, under
the Tenant Leases, Ground Leases, Equipment Leases, Construction Contracts, and
all other liabilities shown on the balance sheet of CSSI disclosed in the
Disclosure Letter to the extent they arise or relate to the period commencing on
and after the Closing Date other than those for borrowed funds (the "Assumed
-------
Liabilities"). Except as specifically set forth herein, Purchasers do not and
- -----------
shall not assume any debts, obligations or liabilities of any nature whatsoever
of the Sellers, including those related to income taxes, arising before or after
the Closing or in connection with any of the Property or the businesses of the
Sellers.
3. PURCHASE PRICE AND METHOD OF PAYMENT.
------------------------------------
3.1 Purchase Price. The Purchase Price of the Property is Eleven
--------------
Million Seven Hundred Fifty Thousand Dollars ($11,750,000), adjusted as
contained in Section 3.2.
3.2 Payment of Purchase Price.
-------------------------
3.2.1 On the Closing Date, Purchasers will pay Seven Million
Dollars ($7,000,000) to Sellers by Current Funds, subject to all adjustments,
credits and prorations provided for in Sections 11 and 12 hereof.
3.2.2 Also on the Closing Date, Purchasers will deliver to
Sellers an installment note in the principal amount of Four Million Seven
Hundred and Fifty Thousand Dollars ($4,750,000) (the "Installment Note"),
----------------
subject to adjustment as contained herein, which shall bear interest at 6% per
annum and shall be due no later than August 15, 1998 (the "Second Payment
--------------
Date"). The Installment Note shall be unsecured and fully subordinated to SBA
- ----
Communications Corporation's obligations under its senior credit facility on
such terms as are satisfactory to SBA Communications Corporation's primary
lender, but shall be backed by the Letter of Credit.
3.2.3 The amount due under the Installment Note shall be reduced
by: (a) the actual and direct costs paid to construct the Construction Towers or
any towers substituted for any of the Construction Towers which are approved by
Purchasers (the "Substitution Towers" which Substitution Towers may include one
-------------------
(1) or more of the eight (8) parcels of real property along the I-10 corridor
between Jacksonville and Tallahassee described on Exhibit "E" as designated by
-----------
Sellers; otherwise the costs of constructing towers on such parcels shall be the
sole responsibility of Purchasers) (i.e., the amounts which would have been
recorded as "cost of sales" had the Construction Towers or Substitution Towers
been built for a third party); (b) an amount equal to twelve times the amount by
which annualized gross rents for the Florida Sites are less than $490,000.00;
(c) an amount equal to twelve times the amount by which annualized gross rents
for the Georgia Sites are less than $191,000.00; (d) an amount equal to Two
Hundred Thousand Dollars ($200,000.00) multiplied by the difference between
twenty (20) towers and the actual number of Towers, Construction Towers and
Substitution Towers completed and
2
<PAGE>
operating; and (e) the amount by which (if any) the accounts receivable assigned
to Purchasers on the Closing Date remain unpaid after regular good faith efforts
at collection by Purchasers, in which event any amounts paid in respect of such
accounts receivable on or after the date upon which the Installment Note is paid
in full shall be paid to CSSI. Only rents collected pursuant to leases assumed
by or approved in writing by Purchasers shall be included in the calculations
for this Section 3.2.3. Purchasers shall not unreasonably refuse to assume or so
approve such leases. Any proposed tower site for which an anchor tenant
described in Section 3.2.5 hereof has executed a lease shall be eligible for
Purchasers' approval as a Substitution Tower. Purchasers shall not unreasonably
withhold such approval. In any instance in which Purchasers do not approve such
a proposed tower site as a Substitution Tower, Purchasers shall approve as a
Substitution Tower the next such proposed tower site with an anchor tenant
meeting the requirements of Section 3.2.5. Any rebates or refunds of
construction costs received by Purchasers from Tenants on the Construction
Towers or Substitution Towers shall be netted against the construction costs to
be charged against the amounts due under the Installment Note.
3.2.4 The amount due under the Installment Note shall be
calculated (as of the end of the immediately preceding month) and paid pursuant
to Section 3.2 beginning January 15, 1998 and continuing monthly until August
15, 1998 at which time a final calculation under Section 3.2 shall be made. With
respect to any payment on the Installment Note to be paid after January 15,
1998, the amount payable shall be the amount calculated pursuant to Section
3.2.3 less all amounts previously paid pursuant to this Section 3.2.4.
3.2.5 In order for any Tower, Construction Tower or Substitution
Tower to be used in the calculation of any payment under the Installment Note,
such Tower, Construction Tower or Substitution Tower must have as its anchor
tenant a cellular or PCS A or B-Block carrier or Nextel.
3.2.6 In order for any tower to be considered a Substitution
Tower, Sellers must give notice to Purchasers pursuant to Section 3.4 of the
Site Development Agreement that Sellers desire that such Antenna Tower Site be
considered for purposes of Section 3.2 of this Agreement and not for any payment
pursuant to Section 3.3(ii) of the Site Development Agreement. Any tower
accepted by Purchasers as a Substitution Tower shall not be entitled to any
payment pursuant to the Site Development Agreement.
3.2.7 The six percent (6%) per annum interest due under the
Installment Note shall only be paid on the amount due under the Installment Note
after all adjustments pursuant to Section 3.2 have been made. All interest
accrued on the Installment Note shall be payable at the time principal payments
are made as set forth in Section 3.2.4.
3.3 Allocation of Purchase Price. The Purchase Price shall be
----------------------------
allocated on the closing statement among each of the items of Property being
purchased hereunder, as mutually agreed by Sellers and Purchasers.
3
<PAGE>
4. REPRESENTATIONS AND WARRANTIES OF SELLERS. As a material inducement
-----------------------------------------
to Purchasers to enter into this Agreement, Sellers represent and warrant to
Purchasers that, except as otherwise disclosed in writing in the Disclosure
Letter:
4.1 Due Organization. CSSI and SCGI are duly organized and validly
----------------
existing corporations under the laws of the State of Florida and have the
corporate power and lawful authority to own their respective properties and to
transact their respective businesses in which they are currently engaged. CSSI
and SCGI are not qualified to transact business as a foreign corporation in any
state and are not required to be so qualified under applicable law.
4.2 Power and Authority.
-------------------
4.2.1 All documents, including this Agreement, executed or to be
executed by Sellers in connection with the transactions described herein (i)
have been or will be duly authorized, executed and delivered by Sellers, (ii)
are or will be legal, valid and binding obligations of Sellers, and (iii) do not
or will not violate any provisions of any agreement to which any Seller is a
party or to which it is bound. Sellers have the full right, power and authority,
without the necessity of obtaining the consent or approval of any other Person,
to enter into this Agreement and to perform their obligations under this
Agreement.
4.2.2 Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated hereby or thereby, nor
compliance by Sellers with any of the provisions hereof, will (i) violate, or
conflict with, or result in a breach of any provisions of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the actual or possible termination of,
or accelerate the performance required by, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the Property which
violation, conflict, breach, default, termination, acceleration or creation of
lien, security interest, charge or encumbrance would reasonably be expected to
have an adverse effect on Sellers, Purchasers, the business of either or the
Property; under any of the terms, conditions or provisions of the Articles of
Incorporation or By-laws of the Sellers; or any note, bond, mortgage, indenture,
deed of trust, contract, permit, license, agreement, lease or other instrument
or obligations to which any Seller is a party, or by which Sellers or any of
their businesses or Property may be bound or affected; or (ii) violate any
order, judgment, writ, injunction, decree, or any law, statute, rule, ordinance
or regulation applicable to Sellers or any of their businesses or Property which
violation would reasonably be expected to have an adverse effect on Sellers,
Purchasers, the business of either or the Property.
4.3 Articles of Incorporation and By-laws. The copies of the
-------------------------------------
Articles of Incorporation and any amendments thereto, and By-Laws of Sellers
delivered to Purchasers as part of the Disclosure Letter will be true and
complete as of the date of delivery of the Disclosure Letter and the Closing
Date, and will be the same as in effect on the date hereof.
4
<PAGE>
4.4 Real Property. For all Real Property owned by Sellers, Sellers
-------------
have good and marketable fee simple title to the Real Property and the
Improvements thereon, except as disclosed in title searches done by Purchasers
prior to the Closing. Sellers will convey the Real Property and the Improvements
thereon to Purchasers at Closing pursuant to the Deeds free and clear of all
liens and encumbrances, excepting only the Permitted Exceptions. Sellers and
Purchasers acknowledge that certain parcels of the Real Property owned by Segars
are ground leased to CSSI (the "CSSI Leases"). Sellers agree to provide
-----------
Purchasers at the Closing with written evidence of the termination of all CSSI
Leases in a form acceptable to Purchasers.
4.5 Ground Leases. For the Real Property not owned by Sellers,
-------------
attached to the Disclosure Letter will be true, correct and complete copies of
the Ground Leases. Sellers are the original lessees (or have validly succeeded
to the rights of the original lessees) under each of the Ground Leases, hold the
leasehold interest created under each of the Ground Leases, and are the sole
owners of the Improvements located on the real property being leased thereunder.
Sellers will assign the Ground Leases and convey the Improvements in connection
therewith to Purchasers at Closing free and clear of all liens and encumbrances,
excepting only the Permitted Exceptions. Furthermore, Sellers represent and
warrant that: (i) each Ground Lease is in full force and effect and has not been
modified or amended; (ii) Sellers are in actual possession of the leased
premises under each of the Ground Leases; (iii) Sellers have paid the rent set
forth in each of the Ground Leases on a current basis and there are no past due
amounts; (iv) except as expressly set forth in the Ground Leases, Sellers are
not obligated to pay any additional rent or charges to any of the Ground Lessors
for any period subsequent to the Closing Date; and (v) Sellers have not received
notice from or given notice to any Ground Lessor claiming that such Ground
Lessor or Sellers are in default under any of the Ground Leases, and, to the
best of Sellers' knowledge, there is no event which, with the giving of notice
or the passage of time or both, would constitute such a default.
4.6 Easements. Attached to the Disclosure Letter will be true,
---------
correct and complete copies of the Easements. Sellers are the original grantees
(or have validly succeeded to the rights of the original grantees) under each of
the Easements, have good and marketable title to the Easements, and are the sole
owners of the Improvements located on the easement areas thereunder. Sellers
will convey their interests in the Easements and the Improvements in connection
therewith to Purchasers at Closing free and clear of all liens and encumbrances,
excepting only the Permitted Exceptions. Furthermore, Sellers represent and
warrant that: (i) each Easement is in full force and effect and has not been
modified or amended; (ii) Sellers are in actual possession of the easement area
under each of the Easements; (iii) except as expressly set forth in the
Easements, Sellers are not obligated to pay any rent or charges under any of the
Easements for any period subsequent to the Closing Date; and (iv) Sellers have
not given notice to or received notice from any Person claiming that the Person
or Sellers are in default under any Easement, and, to the best of Sellers'
knowledge, there is no event which, with the giving of notice or the passage of
time or both, would constitute such a default.
5
<PAGE>
4.7 Tenant Leases. Attached to the Disclosure Letter will be true,
-------------
correct and complete copies of the Tenant Leases. Sellers are the original
lessors (or have validly succeeded to the rights of the original lessors) under
each of the Tenant Leases. Sellers will assign their interests in the Tenant
Leases to Purchasers at Closing free and clear of all liens and encumbrances,
excepting only the Permitted Exceptions. Except for the rights of the Tenants,
as tenants only, pursuant to the Tenant Leases, no Person other than Purchasers
will on the Closing Date be in, or have any right or claim to, possession of any
of the Property. Other than the Tenant Leases, there are no leases, subleases,
licences or other occupancy agreements (written or oral) which grant any
possessory interest in or to any of the Tower Sites or the Improvements thereon,
or which grant other rights with respect to the use of any of the Property.
Furthermore, Sellers represent and warrant that: (i) each Tenant Lease is in
full force and effect and has not been modified or amended; (ii) each Tenant has
accepted possession of its premises under its Tenant Lease; (iii) Sellers are
collecting the rent set forth in each Tenant Lease on a current basis and there
are no past due amounts thereunder in excess of one month; (iv) except as
expressly set forth in the Tenant Leases, no Tenant is entitled to any rental
concessions or abatements in rent for any period subsequent to the Closing Date;
(v) Sellers have not given notice to any Tenant claiming that the Tenant is in
default under its Tenant Lease, and, to the best of Sellers' knowledge, there is
no event which, with the giving of notice or the passage of time or both, would
constitute such a default; (vi) Sellers have not received notice from any Tenant
claiming that Sellers are in default under the Lease, or claiming that there are
defects in the Improvements, which default or defect remains uncured; (vii)
Sellers have not received notice from any Tenant asserting any Claims, offsets
or defenses of any nature whatsoever to the performance of its obligations under
its Tenant Lease and, to the best of Sellers' knowledge, there is no event
which, with the giving of notice or the passage of time or both, would
constitute the basis of such Claim, offset or defense; and (viii) except as
expressly set forth in the Tenant Leases, there are no security deposits or
prepaid rentals under any of the Tenant Leases.
4.8 Equipment Leases. Attached to the Disclosure Letter will be
----------------
true, correct and complete copies of the Equipment Leases. Sellers are the
original lessees (or have validly succeeded to the rights of the original
lessees) under each of the Equipment Leases and hold the leasehold interest
created under each of the Equipment Leases. Sellers will assign the Equipment
Leases to Purchasers at Closing free and clear of all liens and encumbrances,
excepting only the Permitted Exceptions. Furthermore, Sellers represent and
warrant that: (i) each of the Equipment Leases is in full force and effect and
has not been modified or amended; (ii) Sellers are in actual possession of the
equipment leased under each of the Equipment Leases; (iii) Sellers have paid the
rent set forth in each of the Equipment Leases on a current basis and there are
no past due amounts; (iv) except as expressly set forth in the Equipment Leases,
Sellers are not obligated to pay any additional rent or charges to any of the
Equipment Lessors for any period subsequent to the Closing Date; and (v) Sellers
have not received notice from or given notice to any Equipment Lessor claiming
that such Equipment Lessor or Sellers are in default under any of the Equipment
Leases and, to the best of Sellers' knowledge, there is no event which, with the
giving of notice or the passage of time or both, would constitute such a
default.
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4.9 Construction Contracts. Attached to the Disclosure Letter will
----------------------
be true, correct and complete copies of the Construction Contracts. Sellers will
assign the Construction Contracts to Purchasers at Closing free and clear of all
liens and encumbrances, excepting only the Permitted Exceptions. Furthermore,
Sellers represent and warrant that: (i) each of the Construction Contracts is in
full force and effect and has not been modified or amended; (ii) Sellers have
been paid the sums due them under each of the Construction Contracts on a
current basis, there are no past due amounts under the Construction Contracts
and the Sellers have not been paid in advance for any work not yet performed by
them under the Construction Contracts; (iii) Sellers have not given notice to
any Contract Party claiming that the Contract Party is in default under its
Construction Contract, and, to the best of Sellers' knowledge, there is no event
which, with the giving of notice or the passage of time or both, would
constitute such a default; (iv) Sellers have not received notice from any
Contract Party claiming that Sellers are in default under the Construction
Contracts, or claiming that there are defects in the work performed by the
Sellers thereunder, which default or defect remains uncured; and (v) Sellers
have not received notice from any Contract Party asserting any Claims, offsets
or defenses of any nature whatsoever to the performance of its obligations under
its Construction Contract and, to the best of Sellers' knowledge, there is no
event which, with the giving of notice or the passage of time or both, would
constitute the basis of such Claim, offset or defense.
4.10 No Subsidiaries. On the date hereof CSSI and SCGI do not own,
---------------
and on the Closing Date Sellers will not own, either of record, beneficially or
equitably, any capital stock or other securities or any other direct or indirect
interest in any firm, corporation or other entity (including any joint venture
or partnership) (a "Subsidiary"). At no time during the periods covered by the
----------
tax returns of Sellers included in the Disclosure Letter or by the Financial
Statements (as hereinafter defined) did CSSI or SCGI have any Subsidiaries which
could have been consolidated with CSSI or SCGI for purposes of filing such tax
returns or preparing such Financial Statements.
4.11 Defects. To Sellers' knowledge, there are no material physical,
-------
structural or mechanical defects in any of the Towers, the Headquarters or other
Improvements, and the same are suitable and adequate for their intended use.
4.12 Utilities and Access. All electric, telephone, drainage
--------------------
facilities and other utilities required for use and operation of the Tower Sites
and the Headquarters are installed up to the boundaries of the Tower Sites or
Headquarters, as appropriate, within valid, written, recorded easements. Such
utilities are in good working order, meet all current codes and ordinances and
are of adequate size and capacity to service the Tower Sites or Headquarters, as
appropriate. Each Tower Site and the Headquarters has adequate, direct,
indefeasible legal and practical pedestrian and vehicular access to paved public
roads.
4.13 Mechanics' Liens. On the Closing Date, there will be no
----------------
outstanding contracts made or authorized by Sellers for the Improvements or any
other work or services to the Property (other than the Construction Towers),
including professionals such as architects,
7
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engineers and planners, which have not been fully paid for to the extent payment
is due and owing as of the Closing Date.
4.14 Taxes and Assessments. All ad valorem real property taxes for
---------------------
the Real Property and all personal property taxes for the Tangible Personal
Property have been fully paid for the year 1996, and all prior years. There are
no existing or pending special assessments, fees or similar obligations
affecting any of the Tower Sites or the Appurtenant Property, which may be
assessed by any Governmental Authority. Sellers will be liable for any such
special assessments, fees or similar obligations affecting any of the Tower
Sites that arise prior to the Closing Date. All federal, state, local and
foreign tax returns, reports, statements and other similar filings required to
have been filed by Sellers (the "Tax Returns") with respect to any federal,
-----------
state, local or foreign taxes, assessments, interest, penalties, deficiencies,
fees and other governmental charges or impositions (including without limitation
all income tax, unemployment compensation, social security, payroll, sales and
use, excise, privilege, property, ad valorem, franchise, license, school and any
other tax or similar governmental charge or imposition under laws of the United
States of any state or municipal or political subdivision thereof or any foreign
country or political subdivision thereof) (the "Taxes"), have been filed with
-----
the appropriate governmental agencies in all jurisdictions in which such Tax
Returns are required to be filed, and all such Tax Returns properly reflect the
liabilities of Sellers for Taxes for the periods, property or events covered
thereby. All Taxes, including without limitation those which are called for by
the Tax Returns, or heretofore or hereafter claimed with respect to periods on
or before the Closing Date to be due by any taxing authority from Sellers, have
been properly accrued or paid or are being contested in good faith by all
reasonably appropriate actions and/or proceedings so long as Sellers have
established such reserves for the payment of such Taxes as may be commercially
prudent. Sellers have made all deposits required by law to be made with respect
to employees' withholding and other employment taxes, including without
limitation the portion of such deposits relating to Taxes imposed upon Sellers.
Since the Statement Date, Sellers have not incurred any liability with respect
to any Taxes except in the ordinary and regular course of business. CSSI and
SCGI have elected to be treated as a Subchapter S corporation under the Internal
Revenue Code of 1986, as amended (the "Code"). Neither CSSI nor SCGI have been
----
members of an affiliated group of corporations filing a consolidated income tax
return, nor have Sellers ever made an election under Section 341(f) of the Code.
No waiver by Sellers of the statute of limitations with respect to any Taxes is
in effect. To the best of Sellers' knowledge, none of the Tax Returns of
Sellers have been or are being audited by the Internal Revenue Service or any
other regulatory authority. There are no present or, to the best knowledge of
Sellers, potential disputes as to Taxes payable by Sellers that could themselves
have or result in any adverse effect on Sellers.
4.15 Condemnation. There are no present or pending legal or
------------
administrative proceedings relative to condemnation, or other taking by any
Governmental Authority, of any portion of the Property, and, to the best of
Sellers' knowledge, no such proceedings are contemplated.
8
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4.16 Legal Compliance; No Proceedings. To the best of Sellers' know
--------------------------------
ledge, the use, maintenance and operation of the Property by Sellers, the
Tenants and all other Persons is in full compliance with all applicable Legal
Requirements (including, without limitation, requirements concerning acting as a
contractor in those states where Sellers engage in such activities) and with all
easements, restrictive covenants, reservations and similar matters of record.
Sellers have received no notice of any violation currently affecting the
Property. There are no other suits, actions or proceedings pending or, to the
best of Sellers' knowledge, threatened against or affecting the Property before
any Governmental Authority, and, to the best of Sellers' knowledge, Sellers are
not in default under any judgment, order, writ, injunction, rule or regulation
issued by any Governmental Authority. To the best of Sellers' knowledge, Sellers
are not conducting or carrying on their businesses or affairs in violation of
any foreign, federal, state or local law, statute, ordinance, rule, regulation
or court or administrative order or process. To the best of Sellers' knowledge,
none of the Sellers nor any of their respective officers, directors, employees
or agents, on behalf of or for the benefit of any Seller, directly or
indirectly, has (i) offered, paid or received any remuneration to or from, or
made any arrangement with, any of the past or present customers or potential
customers of Sellers in order to obtain business from such customers, other than
standard pricing or discount arrangements consistent with proper business
practice and applicable law, (ii) given or received, or agreed to give or
receive, or is, to Sellers' knowledge, aware that there has been made, or that
there is an agreement to make or receive, any gift or gratuitous payment of any
kind, nature or description (whether in money, property or services) to any past
or present customer, supplier, source of financing, landlord, subtenant,
licensee or anyone else at any time, (iii) made, or has agreed to make, or is,
to Sellers' knowledge, aware that there is any agreement to make, any political
contribution or any contributions, payments or gifts of their respective funds
or property to or for the private use of any governmental official, employee or
agent, whether either the payment or the purpose of such contribution, payment
or gift relates to the businesses of Sellers and is illegal under the laws of
the United States, any state thereof or any other jurisdiction (foreign or
domestic), or made, or has agreed to make, or is aware that there have been made
or that there is any agreement to make, any payments to any persons with the
intention or understanding that any part of such payment was to be used directly
or indirectly for the benefit of any past or present customer, employee,
supplier or landlord of any Seller, or for any purpose other than that reflected
in the documents supporting the payments.
4.17 Permits. To the best of Sellers' knowledge, the Permits listed
-------
and described in the Disclosure Letter will comprise all licenses, consents,
authorizations, approvals and permits issued by any Governmental Authority used
or necessary in connection with the operation of Sellers respective businesses.
All such Permits have been duly and validly issued, are in full force and
effect, and all rights and entitlements thereunder are vested exclusively in
Sellers. To the best of Sellers' knowledge, Sellers have not committed any act
or failed to act in a manner or under circumstances which could result in the
revocation or suspension of any such Permits or in any other disciplinary action
relating thereto. To the best of Seller's knowledge, no one has claimed and
Sellers have not received any notice that they have committed any such act or
failed to so act. The consummation of the transactions provided for in this
Agreement will not
9
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impair or adversely affect any of the rights, powers or privileges granted
pursuant to any such Permits. All such Permits are renewable by their terms or
in the ordinary course of business without the need to comply with any special
qualification procedures or to pay any amounts other than routine filing fees.
4.18 Hazardous Materials. (a) To the best of Sellers' knowledge,
-------------------
Sellers have obtained all permits, licenses and other authorizations which are
required in connection with the conduct of their respective businesses under all
applicable laws, rules or regulations relating to pollution, including laws,
rules or regulations relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes into the environment (including without
limitation ambient air, surface water, groundwater or land), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes (collectively,
"Environmental Laws"). To the best of Sellers' knowledge, Sellers are in
------------------
compliance in the conduct of their respective businesses with all terms and
conditions of such required permits, licenses and authorizations, and are also
in compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
the Environmental Laws or contained in any code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder.
As used in this Agreement the reference to "hazardous or toxic waste"
or "hazardous or toxic substances" shall mean any flammables, explosives,
radioactive materials, hazardous wastes, friable asbestos or any material
containing asbestos, toxic substances or related materials, including, without
limitation, substances now or hereafter defined as hazardous substances,
hazardous materials or toxic substances in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. (S)9601,
et. seq.); The Hazardous Materials Transport Act, (49 U.S.C. (S)1801 et. seq.),
- -- --- -- ---
The Resource Conservation and Recovery Act (42 U.S.C. (S)6901, et. seq.); any
-- ---
so-called "Superfund" or "Superlien" law, or any other applicable federal,
state or local law, common law, code, rule, regulation, or ordinance, presently
in effect or hereafter enacted.
(b) Sellers are not aware of, nor have they received notice of, any
past, present or future events, conditions, circumstances, activities,
practices, incidents, actions or plans which may interfere with or prevent
compliance or continued compliance with the Environmental Laws or any code,
plan, order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder, or which may give rise to any
common law or legal liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation, based on or related
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release or threatened
release into the environment, of any pollutant, contaminant, chemical, or
industrial, toxic or hazardous substance or waste.
10
<PAGE>
4.19 No Flood Hazard Area. To the best of Sellers' knowledge, no
--------------------
Real Property is located within an area that has been designated by the Federal
Insurance Administration, the Army Corps of Engineers, the Federal Emergency
Management Administration or any other Governmental Authority as being subject
to any special or increased flooding hazards.
4.20 No Other Contracts. Except for (i) the contracts listed in the
------------------
Disclosure Letter, true and complete copies of which will be provided to
Purchasers and (ii) contracts unrelated to the businesses of Sellers to which
CSSI and SCGI are not a party, Sellers are not parties to, nor are any assets
owned by them bound by or subject to, any Contract which (i) has a monetary
value of $15,000 or more, either individually or in the aggregate with the same
party, or (ii) is material to or materially affects the business or Property of
Sellers. All such contracts are valid, binding and enforceable on and against
Sellers, and against the other parties thereto, in accordance with their terms
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application relating to creditors' rights or
by the application of equitable principles when equitable remedies are sought.
Sellers are not in breach of, or default under, any contract in any respect,
and, to the best of Sellers' knowledge, no event or action has occurred, is
pending, or is threatened, which after the giving of notice, or the lapse of
time, or otherwise, would constitute or result in a breach or default by Sellers
or any other Person under any Contract. Sellers have not received notice that
any party to any of the contracts intends to cancel, suspend or terminate any of
the contracts or to exercise or not exercise any options under any of the
contracts.
4.21 Financial Statements. The Disclosure Letter will contain the
--------------------
true and complete copies of the financial statements of CSSI and SCGI as, at and
for the year ended December 31, 1996, including the notes thereto and the report
thereon of CSSI's certified public accounting firm which is, on the date hereof,
Robson, Scribner & Stewart, P.A. (the "Accountants"), and the unaudited
-----------
statements of income for the businesses for the year to date period ended June
30, 1997 (the "Statement Date"). All such financial statements, together with
--------------
the notes thereto, have been prepared in accordance with generally accepted
accounting principles (except that notes are not included in the financial
statements for the period ended June 30, 1997) applied on a consistent basis
throughout the periods covered by such statements and present fairly in all
material respects the financial position, the results of operations and the
changes in financial position, as the case may be, as of the respective dates
and for the respective periods indicated, and for the respective entities or
divisions indicated (collectively the "Financial Statements").
--------------------
4.22 Undisclosed Liabilities. CSSI and SCGI had, as of the Statement
-----------------------
Date, or will have as of the date of the Closing Date, no liabilities or
obligations of any nature (whether accrued, absolute, fixed or unfixed, known or
unknown, asserted or unasserted, contingent, by guaranty, surety or assumption
or otherwise), which were not, or will not be, fully disclosed, reflected or
reserved against in the Financial Statements or the notes thereto except for
liabilities of a recurring nature incurred in the ordinary course of business
and which are not material to
11
<PAGE>
CSSI and SCGI's financial position or future prospects. Except for current
liabilities or obligations which have been incurred since the Statement Date in
the ordinary course of business, CSSI and SCGI have not incurred any liability
or obligation of any nature (whether accrued, absolute, fixed or unfixed, known
or unknown, asserted or unasserted, contingent, by guaranty, surety or
assumption or otherwise). There are no outstanding powers of attorney granted
by CSSI or SCGI.
4.23 Related Parties. Except as disclosed in the Disclosure Letter,
---------------
no officer, director, stockholder or employee of Sellers or any person who would
be an heir or descendant of an officer, director or stockholder if he were not
now living, (a) has any direct or indirect interest in (i) any entity which does
business with Sellers or (ii) any property, asset or right which is used by
Sellers in the conduct of their respective businesses; or (b) has any
contractual relationship with any Seller, including without limitation as debtor
or creditor, other than a relationship arising from the status of officer,
director, employee or stockholder.
4.24 Accounts Receivable The accounts, notes, contracts and other
-------------------
receivables which are reflected in the Financial Statements were acquired by
CSSI and SCGI in the ordinary and regular course of their businesses arising
from bona fide sales and deliveries of goods, services or other business
transactions and the aggregate gross amount of the accounts, notes, contracts
and other receivables which are reflected in the Financial Statements (without
reduction for any bad debt or other reserve) have been collected in full or CSSI
and SCGI have no knowledge of any facts that would reasonably lead Sellers to
believe that such amounts will not be collected in the ordinary course of
business at no less than CSSI and SCGI's historical collection rate over the two
(2) year period ending on the Effective Date. The accounts, notes, contracts
and other receivables which have been or will be acquired by CSSI and SCGI after
the Statement Date were or will be acquired in the ordinary and regular course
of business and the aggregate amount thereof (without reduction for any bad debt
or other reserve) has been collected in full or Sellers have no knowledge of any
facts that would reasonably lead Sellers to believe that such amounts will not
be collected in the ordinary course of business at no less than CSSI and SCGI's
historical collection rate over the two (2) year period ending on the Effective
Date. Sellers have not received any revenue for goods or services not yet
provided by them under contract.
4.25 Absence of Certain Changes or Events. Except as disclosed in
------------------------------------
the Disclosure Letter or any other Exhibit hereto or as expressly provided for
or contemplated in this Agreement, Sellers have conducted their respective
businesses since the Statement Date through the date hereof only in the ordinary
course, and since the Statement Date, there has not been any:
(i) change in the condition (financial or otherwise), assets,
liabilities, earnings or businesses of Sellers or with respect to the business
relations with any of the employees, suppliers or customers of Sellers, other
than changes in the ordinary course of business which in the aggregate have not
been materially adverse;
12
<PAGE>
(ii) Loss, damage or destruction to any of the Property due to fire
or other casualty, whether or not insured, materially adversely affecting the
business or the Property, (and Sellers agree to promptly inform Purchasers of
any fire or casualty, loss or damage with respect to the Property amounting to
more than $20,000);
(iii) Change in the Articles of Incorporation of CSSI or SCGI or
their By-Laws; or the issuance, sale or other disposition of any stock, stock
options, bonds, notes or other securities of CSSI or SCGI;
(iv) Mortgage, pledge or subjection to lien, charge or any other
encumbrance of any of the Property, tangible or intangible except the lien, if
any, of current real and personal property taxes incurred but not yet due and
payable and leasehold interests in personal property arising from the leasing of
such property by Sellers in the ordinary course of business;
(v) Sale, assignment or transfer of any of the Property or
cancellation of any debts or claims relating to the businesses, except in each
case in the ordinary course of business;
(vi) Waiver of any rights of substantial value to Sellers relating
to their businesses, whether or not in the ordinary course of business;
(vii) Entrance by Sellers into any collective bargaining agreement,
or incurrence of any significant labor trouble or work stoppage;
(viii) Capital expenditures in excess of twenty five thousand dollars
($25,000.00) individually or fifty thousand dollars ($50,000.00) in the
aggregate by Sellers with respect to their respective businesses;
(ix) incurrence of any obligation or liability (absolute or
contingent), except for current liabilities incurred, and obligations under
contracts entered into, in the ordinary course of business, consistent with past
practice;
(x) increase in compensation payable or to become payable by
Sellers to any officer, employee, agent or consultant, whether by means of
bonus, percentage compensation, service award or other like benefit, or welfare,
pension, retirement or similar payment or arrangement, except in the ordinary
course of business;
(xi) discharge or satisfaction of any lien, charge or encumbrance,
or payment of any obligation or liability, absolute or contingent, by Sellers,
other than current liabilities shown on the Financial Statements and current
liabilities incurred since that date in the ordinary course of business;
13
<PAGE>
(xii) release, compromise, waiver or cancellation of any debts to
or claims by Sellers, except in each case in the ordinary course of business, or
waiver of any rights of substantial value;
(xiii) change in accounting methods or practices (including,
without limitation, any change in depreciation or amortization policies or rates
or income recognition methods) by Sellers or revaluation by Sellers of any of
their Property;
(xiv) loan by Sellers to any Person or entity, or guaranty by
Sellers of any loan;
(xv) amendment or termination of any oral or written contract,
agreement or license to which any Seller is a party or by which it is bound,
except in the ordinary course of business;
(xvi) other event or condition of any character that has or might
reasonably have a material adverse effect on the businesses of Sellers
(excluding events or conditions, if any, of public knowledge or of a general
economic, market or similar nature) or indicate that an existing customer of any
Seller may not continue as a customer after the Closing;
(xvii) failure by Sellers to satisfy any of its debts, obligations
or liabilities as the same became due and owing; or
(xviii) Agreement by Sellers to do any of the foregoing.
Until the Closing Date, Sellers shall not do any of the things described in
the preceding clauses (i) and (iii) through (xviii).
4.26 Inventory. Except as otherwise indicated in the Disclosure
---------
Letter, the Inventory, as of the date of this Agreement, materially consists of
items of a quality and quantity usable and, except for office supplies, salable
in the ordinary course of business. All items included in the Inventory are the
property of Sellers.
4.27 Equipment. The Disclosure Letter will contain a complete
---------
and accurate schedule describing, and specifying the location of, substantially
all major equipment in the possession of, or use by, Sellers in connection with
their respective businesses. Such equipment is in good and operable condition,
ordinary wear and tear excepted.
14
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4.28 Labor Matters.
-------------
4.28.1 Employee Names and Salaries. The Disclosure Letter will
---------------------------
contain a true and complete list of the names of all employees of Sellers whose
current annual base rate of compensation is $20,000 or more, and shall state the
current base rates of compensation payable to each employee listed.
4.28.2 Legal Compliance. Except as set forth in the Disclosure
----------------
Letter, Sellers have complied (after expiration of any applicable cure period)
in all material respects with all material laws relating to the employment of
labor, including provisions thereof relating to wages, hours, equal opportunity,
collective bargaining and the payment of social security and other taxes.
4.28.3 Employment Contracts and Agreements. Except as provided
-----------------------------------
in the Disclosure Letter, Sellers are not a party to any employment contracts or
collective bargaining agreements with respect to their businesses. All pension,
retirement, bonus, profit sharing, health care, death benefit, disability,
deferred compensation or other agreements or arrangements including, but not
limited to, trust agreements and insurance contracts related thereto, providing
for employee remuneration or benefits to which Sellers are a party or by which
Sellers are bound with respect to their businesses are evidenced in the payroll
or personnel records of the Sellers relating to their businesses; all such
contracts and arrangements are in full force and effect, and Sellers are not in
default under them. There have been no claims of defaults and, to the knowledge
of Sellers, there are no facts or conditions which if continued, or on notice,
will result in a default under such contracts or arrangements.
There is no pending or, to Sellers' knowledge, threatened labor dispute,
strike, work stoppage, grievance or arbitration affecting their businesses, the
Property or the employees of their businesses. There are no pending or, to the
knowledge of Sellers, threatened claims for representation by any labor
organization with respect to any of the unrepresented employees of their
businesses. Sellers have no contractual obligation with any union representing
the employees of their businesses requiring Purchasers to assume any of the
existing contractual obligations under any current collective bargaining
agreement. Except as set forth in the Disclosure Letter there are no pending
or, to the knowledge of Sellers, threatened unfair labor practice charges, and,
to Sellers' knowledge, Sellers have not taken any action which could give rise
to any unfair labor practice charge.
4.28.4 Benefit Plans and ERISA. (a) The Disclosure Letter will
------------------------
list all employee benefit plans and labor and employment agreements or other
similar arrangements to which any Seller is a party or by which any is bound,
legally or otherwise (collectively, "Benefit Plans"), including, without
-------------
limitation, (i) any profit-sharing, deferred compensation, bonus, stock option,
stock purchase, pension, retainer, consulting, retirement, severance, welfare or
incentive plan, agreement or arrangement, (ii) any plan, agreement or
arrangement providing for "fringe benefits" or perquisites to employees,
officers, directors or agents, including but not limited to
15
<PAGE>
benefits relating to automobiles, clubs, vacation, child care, parenting,
sabbatical, sick leave, medical, dental, hospitalization, life insurance and
other types of insurance, (iii) any employment agreement, oral or written, or
(iv) any other "employee benefit plan" (within the meaning of Section 3(3) of
the Employment Retirement Income Security Act of 1974, as amended ("ERISA")).
-----
No Benefit Plan is (i) a stock bonus, pension or profit-sharing plan within the
meaning of Section 401(a) of the Code; (ii) subject to Title IV of ERISA; or
(iii) a "multi-employer plan" (within the meaning of Section 3(37) of ERISA).
(b) Sellers are in full compliance with the applicable provisions of
ERISA (as amended through the date of this Agreement), the regulations and
published authorities thereunder, and all other laws applicable with respect to
all such Benefit Plans in all respects. Sellers have performed all of their
obligations under all such Benefit Plans in all respects, all of which are in
full force and effect. There are no actions, suits or claims pending or, to the
knowledge of any Seller, threatened against such Benefit Plans or their assets,
or arising out of such Benefit Plans, and no facts exist which could give rise
to any such actions, suits or claims. Each of the Benefit Plans can be
terminated by either CSSI or SCGI within a period of thirty (30) days without
payment of any additional compensation or additional vesting or acceleration of
any such benefits. Sellers have complied in all respects with, and is not in
violation in any respect of, applicable federal, state and local equal
employment opportunity and other employment of labor statutes, laws and
regulations with respect to its employees, including without limitation, those
involving health and safety matters.
(c) All group health plans of Sellers have been operated in
compliance with the group health plan continuation coverage requirements of
Sections 162(k) (as in effect immediately prior to the Technical and
Miscellaneous Revenue Act of 1988) and 4980B of the Code in all respects to the
extent such requirements are applicable.
(d) There has been no act or omission by Sellers or any ERISA
affiliate that has given rise to or may give rise to fines, penalties, taxes, or
related charges under Section 502(c) or (i) or Section 4071 of ERISA or Chapter
43 of the Code.
4.29 Intangible Property and Trade Secrets.
-------------------------------------
(a) Sellers do not own licenses or have any other interest in, and
have never used, any patents, trademarks, service marks, logos, trade names,
software, proprietary designs, assumed names or copyrights, or applications for
any of the foregoing other than those listed and described in the Disclosure
Letter (collectively, the "Intellectual Property"), which constitute all those
---------------------
necessary for the conduct of the respective businesses of the Sellers as
presently conducted. To the best of Seller' knowledge, there is not now and has
not been during the past six (6) years any infringement, misuse or
misappropriation by Sellers of any valid patent, trademark, trade name,
software, service mark, copyright or Trade Secret (as such term is defined
below) which relates to or is used in the businesses of Sellers and which is
owned by any third party, and there is not now any existing or, to the knowledge
of Sellers, threatened claim against Sellers of
16
<PAGE>
infringement, misuse or misappropriation of any Intellectual Property. The
Intellectual Property is valid and in full force and effect and is not subject
to any taxes, maintenance fees or other actions.
(b) To the knowledge of Sellers, all trade secrets, including secret
processes, inventions, designs, techniques, industrial models, discoveries,
improvements, modifications, customer lists, know-how, computer programs,
software and routines, and other technical data (collectively, "Trade Secrets")
-------------
currently used or owned by or in which Sellers have any rights or which are
otherwise used in the businesses of Sellers, are not part of the public
knowledge or literature, nor have they been used, divulged, or appropriated for
the benefit of any past or present employees or other persons, or to the
detriment of Sellers. To the knowledge of Sellers, Sellers have taken all
reasonable security measures to protect the secrecy, confidentiality, and value
of the Trade Secrets, and the employees of Sellers and any other Persons who,
either alone or in concert with others, developed, invented, discovered,
derived, programmed, or designed these Trade Secrets, or who have knowledge of
or access to information relating to them, have been put on notice and, if
appropriate, have entered into an agreement that these Trade Secrets are
proprietary to Sellers and are not to be divulged or misused. All such
agreements will be identified in the Disclosure Letter. Sellers do not use any
computer software in their businesses which are proprietary to Sellers or not
generally available to businesses engaged in similar services.
4.30 Insurance. The Disclosure Letter will contain a list and brief
---------
description of substantially all insurance policies for which Purchasers are
assuming liability for unpaid premiums or deductibles. Each of the insurance
policies is in good standing. The cost of insurance on the Property on the day
after the Closing Date shall be the sole responsibility of Purchasers. No
premiums or deductibles are owed or shall be owing under any of the Sellers'
insurance policies covering the periods prior to the Closing Date.
4.31 Restrictions. No Seller is a party to any indenture, agreement,
------------
contract, commitment, lease, plan, license, permit, authorization or other
instrument, document or understanding, oral or written, or subject to any
charter or other corporate restriction or any judgment, order, writ, injunction,
decree or award which adversely affects or restricts or, so far as Sellers can
now reasonably foresee, may in the future adversely affect or restrict, the
business, operations, assets, properties or condition (financial or otherwise)
of Sellers after consummation of the transactions contemplated hereby.
4.32 Conditions Affecting Sellers. There is no fact, development or
----------------------------
threatened development with respect to the markets, products, services, clients,
customers, facilities, computer software, data bases, personnel, vendors,
suppliers, third-party payors, operations or assets of the businesses of Sellers
which are known to Sellers which would materially adversely affect the business,
operations or prospects of Sellers considered as a whole, other than such
conditions as may affect as a whole the economy generally. Sellers do not have
any reason to
17
<PAGE>
believe that any loss of any employee, agent, customer or supplier or other
advantageous arrangement will result because of the consummation of the
transactions contemplated hereby.
4.33 Accurate Documents. All contracts, documents, reports, deeds,
------------------
leases, title insurance policies, title opinions, surveys and other items
relating to the Property and delivered to Purchasers pursuant to this Agreement
or the Disclosure Letter are true, correct and complete copies of the originals
thereof.
4.34 Accuracy of Representations and Warranties. All of Sellers'
------------------------------------------
representations and warranties contained in this Agreement and Sellers'
liability therefor will survive the Closing.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASERS. As a material
--------------------------------------------
inducement to Sellers to enter into this Agreement, Purchasers represent and
warrant to Sellers as follows:
5.1 Power and Authority.
-------------------
5.1.1 Purchasers are corporations, duly organized and validly
existing under the laws of their states of incorporation, and are duly qualified
to transact business under the laws of each state in which Purchasers actually
conduct business. All documents, including this Agreement, executed or to be
executed by Purchasers in connection with the transactions described herein (i)
have been or will be duly authorized, executed and delivered by Purchasers, (ii)
are or will be legal, valid and binding obligations of Purchasers, and (iii) do
not or will not materially violate any provisions of any agreement to which any
Seller is a party or to which it is bound in such a manner as to impair
Purchasers' ability to perform its obligations under this Agreement or any other
agreement with any of the Sellers entered into in connection herewith.
Purchasers have the full right, power and authority, without the necessity of
obtaining the consent or approval of any other Person, to enter into this
Agreement and to perform their obligations under this Agreement.
5.1.2 Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated hereby or thereby, nor
compliance by Purchasers with any of the provisions hereof, will (i) violate, or
conflict with, or result in a breach of any provisions of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the actual or possible termination of,
or accelerate the performance required by any of the terms, conditions or
provisions of the Articles of Incorporation or By-laws of the Purchasers; or any
note, bond, mortgage, indenture, deed of trust, contract, permit, license,
agreement, lease or other instrument or obligations to which Purchasers are a
party which violation, conflict, breach, default, termination or acceleration
would reasonably be expected to impair Purchasers' ability to perform their
obligations under this Agreement or any other agreement with any of the Sellers
entered into in connection herewith; or (ii) violate any order, judgment, writ,
injunction, decree, or any law, statute, rule,
18
<PAGE>
ordinance or regulation applicable to Purchasers which violation would
reasonably be expected to impair Purchasers' ability to perform their
obligations under this Agreement or any other agreement with any of the Sellers
entered into in connection herewith.
5.2 Accuracy of Representations and Warranties. All of Purchasers'
------------------------------------------
representations and warranties contained in this Agreement and Purchasers'
liability therefor will survive the Closing. Sellers will have no duty to
investigate or inquire about the accuracy or veracity of any representation or
warranty of Purchasers.
6. SELLERS' AND PURCHASERS' OBLIGATIONS BEFORE CLOSING, AT CLOSING AND
-------------------------------------------------------------------
POST CLOSING.
- ------------
6.1 Disclosure Letter. Sellers covenant to deliver the Disclosure
-----------------
Letter to Purchasers within ten (10) days following the Effective Date.
6.2 Access. Purchasers and their representatives, agents,
------
contractors, architects and engineers will have access to the Property and the
financial records of the Property at any time during normal business hours
during the Inspection Period, at Purchasers' sole cost and expense, to show the
Property to third parties and to perform any tests, borings, inspections,
surveys, studies, environmental site assessments and measurements which
Purchasers reasonably deem necessary or appropriate. Purchasers will restore any
disturbed Property to its prior condition. Purchasers will indemnify and hold
Sellers harmless from any Claims suffered or incurred by Sellers as a result of
Purchasers' entry upon the Property prior to the Closing, for a period of one
(1) year after the Closing or until the earlier termination of this Agreement,
as the case may be, after which time such indemnity will be deemed to be of no
further force or effect, except as to any Claim which Sellers have notified
Purchasers of prior to the expiration of the one (1) year period.
6.3 Contacts. Purchasers may, but are not obligated to, contact any
--------
Governmental Authority about any Permits or Legal Requirements concerning the
Property, and may, but are not obligated to, contact any Ground Lessor,
Equipment Lessor, Tenant, Contract Party, or other Person about the Ground
Leases, the Equipment Leases, the Easements, the Tenant Leases, the Construction
Contracts or any other aspects of the Property.
6.4 Changes During Inspection Period. Except as otherwise provided
--------------------------------
in this Agreement, during the Inspection Period, Sellers will not (a) permit any
new occupancy of, or enter into any new lease, license or other occupancy
agreement for, space on any of the Towers or in any of the Improvements located
on any of the Tower Sites, (b) renew, modify or terminate the Tenant Leases, the
Ground Leases, Construction Contracts or Equipment Leases, (c) take any action
or fail to take any action that would constitute a default under the Tenant
Leases, the Ground Leases, the Easements, the Construction Contracts or the
Equipment Leases, or (d) enter into or renew any management, maintenance,
service or other agreement affecting the Property,
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<PAGE>
without Purchasers' prior written approval in each instance, which approval will
not be unreasonably withheld or delayed.
6.5 Conduct of Businesses; Affirmative Covenants. Sellers will,
--------------------------------------------
prior to the Closing, conduct their respective businesses only in the ordinary
course and will not do, or cause to be done, anything which is represented and
warranted not to have been done by them in this Agreement since the Statement
Date pursuant to Section 4 and which would have a material adverse effect on
their respective businesses. Sellers will, until the Closing Date, use their
best efforts in the manner previously employed by Sellers in the operation of
their respective businesses to:
(i) preserve their businesses intact and carry on their businesses
in the ordinary course;
(ii) maintain the Property in customary repair, working order and
condition, reasonable wear and tear excepted;
(iii) continue their operations at their present level and only in
the usual, regular and ordinary course and manner;
(iv) continue to insure all Property owned or leased by Sellers
substantially in accordance with the manner set forth in the Disclosure Letter;
(v) keep available to Purchasers the services of the present
officers and employees of Sellers;
(vi) preserve and keep in full force any and all confidential
information, trade secrets, licenses and permits, and comply in all material
respects with the requirements of all material applicable laws, rules,
regulations and orders of all regulatory agencies and authorities having
jurisdiction over the businesses or the Property;
(vii) pay and discharge, or cause to be paid and discharged, all
lawful taxes, assessments and governmental charges or levies imposed upon it or
upon its income or property, except for those items being contested;
(viii) promptly notify Purchasers in writing of any material
investigation, action, suit or proceeding commenced against them before any
court or any governmental department, commission, board, bureau, agency or
instrumentality; and
(ix) preserve for Purchasers the good will of the suppliers,
customers and others having business relations with the Sellers except as
otherwise permitted by this Agreement or consented to by Purchasers in writing.
20
<PAGE>
6.6 Conduct of Businesses; Negative Covenants. Sellers, prior to the
-----------------------------------------
Closing, will not, except in the ordinary course of business, or as otherwise
permitted by this Agreement or consented to by Purchasers in writing:
(i) Knowingly fail in any material respect to comply with any laws,
ordinances, regulations or other governmental restrictions applicable to the
businesses;
(ii) Grant any powers of attorney in connection with the businesses; or
(iii) Make any shareholder distributions to Robert and/or Denise Segars or
any other Person from January 1, 1997 forward other than (i) the payment of
normal salaries in effect as of the date hereof; (ii) to satisfy income tax
liabilities of Robert or Denise Segars (calculated at the 40% rate) attributable
to the operations of the Sellers from January 1, 1996 through the date of
Closing; and (iii) an amount not to exceed $57,500.
(iv) Do anything which would cause the representations and warranties set
forth in Section 4 hereof to be untrue, incomplete or inaccurate in any respect
on the Closing Date;
(v) Enter into any contract or agreement for (i) the purchase of goods,
equipment or services by Sellers, without Purchasers' prior written consent,
which shall not be unreasonably withheld, except in the ordinary course of
business and not exceeding $25,000 for any individual contract or agreement, nor
exceeding $75,000 in the aggregate, and except for contracts or agreements
relating to legal, accounting and other services to be provided to Sellers in
connection with this Agreement and the transactions contemplated hereby; and
(ii) Sellers to sell assets or supply goods or services to others, without
Purchasers' prior written consent, which shall not be unreasonably withheld,
other than in the ordinary course of business and not exceeding $10,000 for any
individual contract or agreement, nor exceeding $20,000 in the aggregate;
6.7 Books and Records of Sellers. Sellers will maintain their books and
----------------------------
records in the usual, regular and ordinary manner, and promptly advise
Purchasers in writing of any material adverse change in their businesses
(financial or otherwise) or Property.
6.8 Change in Name. On the Closing Date, Sellers shall deliver to
--------------
Purchasers all such executed documents as may be required to change the names
"Communication Site Services, Inc." and "Segars Communication Group, Inc." to
other names bearing no similarity to "Communication Site Services, Inc." or
"Segars Communication Group, Inc.," including but not limited to a name change
amendment with the Secretary of State of Florida and an appropriate name change
notice for each state where Sellers are qualified to do business. Sellers
hereby appoint Purchasers as their attorneys-in-fact to file all such documents
on or after the Closing Date.
21
<PAGE>
6.9 Tax Liabilities. Subsequent to Closing, Sellers shall accurately
---------------
prepare and file in the time periods prescribed therefor all tax returns with
respect to income attributable to CSSI and SCGI's businesses and operations in
the period from January 1, 1997 through the Closing Date, and pay when due all
taxes due and owing with respect thereto.
6.10 Retained Liabilities. Subsequent to the Closing Date, Sellers shall
--------------------
be responsible for, and timely discharge, all liabilities of CSSI and SCGI other
than the Assumed Liabilities.
6.11 Disputes Involving Assumed Liabilities. From and after the Closing
--------------------------------------
Date, Purchasers shall have complete control over the payment, settlement or
other disposition of, or any dispute involving, any of the Assumed Liabilities
and the Purchasers shall have the right to conduct and control all negotiations
and proceedings with respect thereto; provided, however, that the Purchasers
shall keep Sellers reasonably informed with respect to all such negotiations and
proceedings. Sellers shall notify Purchasers immediately of any claim made with
respect to any such Assumed Liability and shall not, except with the prior
written consent of Purchasers, make any payment of, or settle or offer to
settle, or consent to any compromise with respect to, any such Assumed
Liability. Sellers shall cooperate with Purchasers in any reasonable manner
requested by Purchasers in connection with any negotiations or proceedings
involving any such Assumed Liability, provided that such cooperation shall be at
no cost to Sellers.
6.12 Payments Received. From and after the Closing, Purchasers shall have
-----------------
the right and authority to endorse without recourse the name of Sellers on any
check or any other evidences of indebtedness received by Purchasers on account
of the businesses or the Property transferred to Purchasers hereunder. Sellers
agree that after the Closing they will hold and promptly transfer and deliver to
the Purchasers, from time to time as and when received, any cash, checks with
appropriate endorsements (using their best efforts not to convert such checks
into cash), or other property that they may receive on or after the Closing
which properly belongs to Purchasers (after taking into effect Section 3.2.3)
and will account to Purchasers for all such receipts.
6.13 Access to Records. At all times after the Closing Date, upon the
-----------------
request of Purchasers, Sellers shall make available to Purchasers any records,
documents and data retained by Sellers with respect to the Property and Assumed
Liabilities not transferred to Purchasers hereunder. Sellers shall preserve
until the sixth (6th) anniversary of the Closing Date all records possessed or
to be possessed by Sellers relating to any of the Property, Assumed Liabilities
or their businesses prior to the Closing Date.
6.14 Employees. Sellers will terminate the employment of the employees of
---------
CSSI and SCGI, effective at 12:01 a.m. on the day following the Closing Date,
and will pay all liabilities, relating to their employment of and termination of
such employees. In accordance with and as permitted by applicable law, Sellers
shall pay directly to each of the employees of CSSI and SCGI that portion of all
benefits (including the Benefit Plans described in the
22
<PAGE>
Disclosure Letter) which has been accrued on behalf of that employee (or is
attributable to expenses properly incurred by that employee) as of the Closing
Date, and Purchasers shall assume no liability therefor. No portion of the
assets of any Benefit Plan, fund, program or arrangement, written or unwritten,
heretofore sponsored or maintained by Sellers (and no amount attributable to any
such Benefit Plan, fund, program or arrangement) shall be transferred to
Purchasers, and Purchasers shall not be required to continue any such Benefit
Plan, fund, program or arrangement after the Closing Date. The amounts payable
on account of all Benefit Plans (other than as specified in the following
subsections) shall be determined with reference to the date of the event by
reason of which such amounts become payable, without regard to conditions
subsequent, and Purchasers shall not be liable for any claim for insurance,
reimbursement or other benefits payable by reason of any event which occurs
prior to the Closing Date. All amounts payable directly to employees, or to any
Benefit Plan, fund, program or arrangement maintained by Sellers therefor shall
be paid by Sellers within thirty (30) days after the Closing Date to the extent
that such payment is not inconsistent with the terms of such Benefit Plan, fund,
program or arrangement. All employees of CSSI and SCGI who are re-employed by
Purchasers on or after the Closing Date shall be new employees of Purchasers and
any prior employment by Sellers of such employees shall not affect entitlement
to, or the amount of, salary or other cash compensation, current or deferred,
which Purchasers may make available to its employees, other than as required by
Section 8.1.
6.15 Use of Name. From and after the Closing Date, no Seller will use the
-----------
names "Communication Site Services, Inc." or "Segars Communication Group, Inc.",
any other Trade names and Trademarks or any names similar thereto or variants
thereof.
6.16 Business Inquiries. From and after the Closing Date, Sellers will
------------------
promptly refer all inquiries with respect to ownership of the Property or the
businesses to Purchasers.
6.17 Purchasers' Obligation of Confidentiality. Prior to Closing,
-----------------------------------------
Purchasers and all employees thereof, shall hold in strict confidence all trade
secrets and other proprietary information, including without limitation secret
processes, inventions, designs, techniques, industrial models, discoveries,
improvements, modifications, customer lists, know-how, computer programs,
software and routines and other technical data used or owned by or in which
Sellers have any rights or which are otherwise used in the business of Sellers
and all other information concerning Sellers, their businesses or the Property,
provided to Purchasers by Sellers or which becomes know to Purchasers about
Sellers, other than information which is publicly known, which was given to
Purchasers by a third party with no present or prior duty of confidentiality to
Sellers, which was already known to Purchasers at the time of disclosure or
which must be disclosed pursuant to applicable law or court order, and
Purchasers shall not divulge such trade secrets and other proprietary
information to any third party (other than to the extent necessary to carry out
the transaction described herein) except with the written consent of Sellers.
23
<PAGE>
7. CONDITIONS PRECEDENT TO PURCHASERS' PERFORMANCE. Purchasers'
------------------------------------------------
obligations hereunder are expressly contingent on fulfillment of the following
terms and conditions:
7.1 Disclosure Letter. Sellers shall deliver the Disclosure Letter
-----------------
to Purchasers not later than the date which is ten (10) days after the Effective
Date.
7.2 Accuracy of Representations and Warranties. All representations
------------------------------------------
and warranties of Sellers set forth in this Agreement shall be true and correct
as of the Closing Date as if made on that date.
7.3 Sellers' Performance. Each of the obligations of Sellers to be
--------------------
performed by them, at or before Closing, pursuant to the terms of this
Agreement, shall have been duly performed at or before the Closing.
7.4 Consents. All agreements and consents of any Person or
--------
Governmental Authority to the consummation of the transactions contemplated by
this Agreement, deemed necessary by Purchasers in their sole reasonable
judgment, or otherwise pertaining to the matters covered by it, necessary to be
obtained by Sellers, to the extent the failure to obtain such consent would have
a material adverse effect on the businesses, shall have been obtained by Sellers
at their sole cost and expense and delivered to Purchasers. To the extent a
material contract to be assigned to Purchasers hereunder is not legally or
practically assignable, Sellers and Purchasers shall, prior to Closing, attempt
to cause the contracting party other than Sellers to consent to such assignment,
but if such party does not so consent, or if such contract is otherwise not
assignable, Sellers and Purchasers shall seek and use their best efforts, both
prior to and after Closing, to reach a mutual reasonably satisfactory manner in
which to give Purchasers use of the premises or other benefits of such contract,
as the case may be, and Purchasers shall still be responsible for payment of all
amounts under such contracts.
7.5 Employment of Larry Allen and David Burns. Larry Allen and David
-----------------------------------------
Burns shall have entered into employment agreements with SBA Construction, in
form and substance satisfactory to Purchasers.
7.6 Legal Opinion. Legal counsel to the Purchasers is satisfied that
-------------
the structure of the transactions contemplated by this Agreement is in
compliance with all applicable laws, rules and regulations.
7.7 Litigation. The absence of any pending or threatened litigation
----------
against Sellers which, in the reasonable opinion of Purchasers, has or could
have any material adverse effect on the consummation of the transactions
contemplated by this Agreement or the enjoyment of the benefits hereof.
24
<PAGE>
7.8 General Contractor's License. SBA Construction shall be licensed
----------------------------
as a general contractor under applicable Florida law and the qualifying agent
referred to below shall be an employee of SBA Construction on terms acceptable
to SBA Construction. To facilitate such licensure, CSSI shall cause its
qualifying agent to file a certification change of status with the Construction
Industry Licensing Board of the Florida Department of Business and Professional
Regulation to serve as the qualifying agent for SBA Construction and will, from
time to time, execute, acknowledge and deliver such further documents and
instruments, and perform such additional acts, as SBA Construction may
reasonably request in order to effectuate such licensure.
8. CONDITIONS PRECEDENT TO SELLERS' PERFORMANCE. Sellers' obligations
---------------------------------------------
hereunder are expressly contingent upon fulfillment upon the following terms and
conditions:
8.1 Employment of CSSI Employees. At Closing, Purchasers shall offer
----------------------------
to employ all employees of CSSI on terms no less favorable to them than those
provided by CSSI as of June 16, 1997. Purchasers will use its good faith efforts
to retain such employees for as long as it remains in Purchasers' economic
interests to do so. Any such employees released by Purchasers prior to December
31, 1997 (other than Denise Segars) will receive severance pay equal to three
months' salary.
8.2 Accuracy of Representations and Warranties. All representations
------------------------------------------
and warranties of Purchasers set forth in this Agreement shall be true and
correct as of the Closing Date as if made on that date.
8.3 Purchasers' Performance. Each of the obligations of Purchasers
-----------------------
to be performed by them, at or before Closing, pursuant to the terms of this
Agreement, shall have been duly performed at the Closing.
8.4 Site Development Services. Purchasers shall have delivered to E.
-------------------------
Robert Segars an executed copy of the Site Development Agreement substantially
in the form attached hereto as Exhibit "B".
-----------
8.5 Disclosure Letter. Purchasers shall have delivered to Sellers
-----------------
written acceptance of the Disclosure Letter prior to 5:00 p.m. E.S.T. on the
last day of the Inspection Period.
8.6 Employment of E. Robert Segars. Purchasers shall have delivered
------------------------------
to E. Robert Segars at the Closing an executed copy of the Employment Agreement
in substantially the form attached hereto as Exhibit "G".
-----------
9. TERMINATION: PAYMENT OR DEFAULT.
-------------------------------
25
<PAGE>
9.1 Purchasers will have the right, in their sole and absolute
discretion, to terminate this Agreement at any time during the Inspection Period
for any reason whatsoever. Purchasers will notify Sellers in writing of their
intention to terminate this Agreement pursuant to this Section prior to 5:00
p.m. E.S.T. on the last day of the Inspection Period (or, if the last day of the
Inspection Period is not a Business Day, prior to 5:00 p.m. E.S.T. on the first
Business Day following the end of the Inspection Period). If Purchasers fail to
so notify Sellers within such time period, then Purchasers will be deemed to
have elected to proceed to Closing, and all rights of Purchasers to terminate
this Agreement pursuant to this Section will be null and void and of no further
force or effect. Notwithstanding the foregoing or any other provision of this
Agreement, (i) if Purchasers terminate this Agreement before Sellers deliver the
Disclosure Letter to Purchasers, Purchasers shall waive, and shall be deemed to
have waived, all claims and causes of action of any nature directly or
indirectly against Sellers for any breach of any representations or warranties
contained in Section 4 hereof, and (ii) if Purchasers terminate this Agreement
at any time during the period from the date Sellers deliver the Disclosure
Letter to the Closing, Purchasers shall waive, and shall be deemed to have
waived, any and all claims and causes of action directly or indirectly against
Sellers arising out of or in connection with any misrepresentation in, or breach
of, any representation or warranty set forth herein to the extent the facts
underlying such misrepresentations or breaches were set forth in the Disclosure
Letter.
9.2 In the event that Purchasers fail to pay any amount when due
hereunder or under the Installment Note beyond any applicable grace or cure
period, all unpaid amounts shall become due immediately whether or not otherwise
due.
10. CLOSING. If Purchasers do not terminate this Agreement in accordance
-------
with Section 9, Sellers and Purchasers agree that the Closing will be
consummated as follows:
10.1 Place of Closing. The Closing will be held at the offices of
----------------
Sellers or such other place mutually agreed upon by Sellers and Purchasers.
10.2 Closing Date. The Closing will occur at 2:00 p.m. E.S.T. on the
------------
Closing Date.
10.3 Sellers' Closing Documents. Sellers will deliver the items
--------------------------
listed on Exhibit "C" to Purchasers at Closing, each fully executed and
-----------
acknowledged as required.
10.4 Purchasers' Closing Documents. Purchasers will deliver the
-----------------------------
items listed on Exhibit "D" to Sellers at Closing, each fully executed and
-----------
acknowledged as required.
10.5 Delivery of Possession. At Closing, Sellers will deliver actual
----------------------
and exclusive possession of the Property to Purchasers subject only to the
rights of Tenants, as tenants only, pursuant to the Tenant Leases and the
Permitted Exceptions.
26
<PAGE>
11. EXPENSES.
--------
11.1 Attorneys' Fees. Each of Sellers and Purchasers will pay their
---------------
own attorneys' fees and costs incurred in connection with the negotiation of
this Agreement and consummation of the Closing.
11.2 Transfer Taxes; Recording Costs. Sellers will pay the cost of
-------------------------------
all deed or other transfer taxes (including all documentary stamp taxes), with
respect to the transactions contemplated by this Agreement and all recording
costs of the Deeds and the Assignment of Ground Leases (including recording
costs associated with releases and other documents required to clear title or to
comply with Sellers' obligations hereunder).
11.3 Title Insurance. Purchasers will pay the cost of an owner's
---------------
title insurance policy insuring Purchasers' title to the Tower Sites (if
Purchasers elect to obtain an owner's title insurance policy) and any costs
associated with its inspection of the Property during the Inspection Period.
11.4 Environmental Studies. At Closing, Purchasers shall receive a
credit against the Purchase Price in an amount equal to one-half of the costs of
any environmental studies or audits of the Property conducted by or on behalf of
Purchasers (including any Phase I or Phase II environmental assessments) up to a
maximum credit of Two Thousand Five Hundred and No/100 Dollars ($2,500.00).
11.5 Tax Advice. Upon receipt of an invoice from Arthur Anderson and
----------
evidence of the payment of the same, Purchasers shall reimburse Segars for costs
or expenses relating to tax advice obtained by them in connection with the
transaction contemplated hereby and the preparation of tax returns for the tax
year in which this transaction closes; provided, however, in no event shall
Purchasers be obligated to reimburse such costs and expenses unless the
transaction contemplated hereby shall close.
11.6 Other Expenses. Any items of cost or expense not specifically
--------------
allocated above will be paid by the party to the transaction that customarily
bears such cost or expense within the county in which the Tower Sites and
Property are located.
12. PRORATIONS.
----------
12.1 Taxes: Utilities; Rents. All taxes, real estate assessments,
-----------------------
utility charges, rents payable under the Ground Leases or Equipment Leases and
similar expenses will be prorated as of 12:01 A.M. on the Closing Date on the
basis of a 365-day year. Rents actually collected under the Tenant Leases will
be prorated as of 12:01 a.m. on the Closing Date on the basis of a 30-day month.
All rents paid to or collected by Purchasers subsequent to the Closing Date will
be the sole and exclusive property of Purchasers. If Sellers receive any rents
or other receipts subsequent to the Closing Date which related to any period of
time subsequent to the
27
<PAGE>
Closing Date, Sellers will immediately pay to Purchasers in Current Funds that
portion of the rents attributable to the period of time subsequent to the
Closing Date. All security or utility deposits or reservation fees paid by or on
behalf of Sellers in connection with the Property will be assigned and
transferred to Purchasers.
12.2 Estimate of Taxes. If, on the Closing Date, the current real
-----------------
property tax bill with respect to the Property is not available, the amount of
real property taxes will be apportioned based on the current year's millage and
the current year's assessment. If the current year's millage is not fixed and
the current year's assessment is available, taxes will be apportioned based on
such assessment and the prior year's millage. If the current year's assessment
is not available, then real property taxes will be apportioned on the prior
year's tax. Any apportionment of taxes based upon any figures other than a final
tax bill will, at the request of either Sellers or Purchasers, be subsequently
reapportioned based upon receipt of the final tax bill for the current year.
12.3 Special Assessments. Sellers will pay all certified, confirmed
-------------------
and ratified special assessment liens as of the Closing Date. Purchasers will
assume any pending liens as of the Closing Date. If the improvement which is the
subject of the special assessment has been substantially completed as of the
date of this Agreement, then such pending lien will be considered certified,
confirmed or ratified and Sellers will, at Closing, be charged an amount equal
to the last estimate of assessment for the improvement by the applicable
Governmental Authority.
12.4 Subsequent Prorations. If any of the prorations cannot be
---------------------
calculated accurately on the Closing Date, then the same will be calculated
within thirty (30) days after the Closing Date and either party owing the other
party a sum of money based on such subsequent prorations will promptly pay the
sum to the other party in Current Funds. The terms of this Section will survive
the Closing.
13. RISK OF LOSS. Sellers will bear all risk of loss to the Property,
------------
whether by fire, casualty or otherwise from the Effective Date through and
including the Closing Date.
14. INDEMNITY.
---------
14.1 Sellers' Indemnity. Sellers shall, jointly and severally,
------------------
indemnify, defend and hold harmless Purchasers, their successors and assigns,
against and in respect of any and all direct or indirect damages, claims,
losses, liabilities and reasonable expenses (including, without limitation,
legal, accounting, and other expenses) suffered by Purchasers, or their
successors and assigns, which arise out of or are in respect of: (i) any breach
or violation of this Agreement by Sellers, (ii) any falsity, inaccuracy or
misrepresentation in or breach of any of the representations, warranties or
covenants made in this Agreement by Sellers, (iii) any action, event, condition,
omission or failure to act of or by Sellers, their officers, directors,
employees or agents prior to the Closing Date (other than any action, event,
condition, omission or failure to act of or by
28
<PAGE>
Sellers, their officers, directors, employees or agents disclosed in the
Disclosure Letter) or (iv) any inaccuracy or misrepresentation in the Disclosure
Letter or in any certificate, document or instrument delivered at or prior to
the Closing by or on behalf of Sellers, in accordance with the provisions of
this Agreement.
14.2 Purchasers' Indemnity. Purchasers will, jointly and severally,
---------------------
indemnify, defend and hold harmless Sellers from and against any Claims arising
out of (i) any breach or violation of this Agreement by Purchasers, (ii) any
falsity, inaccuracy or misrepresentation in or breach of any of the
representations, warranties or covenants made in this Agreement by Purchasers,
(iii) any action, event, condition, omission or failure to act of or by
Purchasers, their officers, directors, employees or agents prior to the Closing
Date, excluding, however, any Claims arising out of any act or omission, or
series of similar or related acts or omissions, of Sellers commencing prior to
the Closing Date and continuing after the Closing Date.
14.3 Indemnification Notice.
----------------------
14.3.1 Upon obtaining knowledge thereof, the indemnified party
shall promptly notify the indemnifying party, in writing, of any facts or
circumstances which may give rise to a right of indemnification under Section 14
hereof ("Notice of Claim"). The Notice of Claim shall specify the nature and
---------------
details of such facts and circumstances (including any amount claimed) which may
give rise to such right of indemnification. The indemnifying party shall not be
obligated to indemnify an indemnified party for the increased amount of any
claim or other matter which would otherwise have been payable to the extent such
increase results from a failure to reasonably and promptly provide a Notice of
Claim.
14.3.2 If the claim or demand set forth in the Notice of Claim
relates to a claim or demand asserted by a third party (a "Third Party Claim"),
-----------------
the indemnifying party shall have the right to employ counsel acceptable to the
indemnified party to defend any such claim or demand, and the indemnified party
shall have the right to participate in the defense of any such Third Party
Claim. The indemnifying party shall notify the indemnified party, in writing,
within fifteen (15) days after the Date of the Notice of Claim (as hereinafter
defined), of its decision to defend in good faith any Third Party Claim. So
long as the indemnifying party is defending in good faith any such Third Party
Claim, the indemnified party shall not settle or compromise such Third Party
Claim. The indemnified party shall make available to the indemnifying party or
its representatives all records and other materials reasonably required by them
for their use in contesting any Third Party Claim and shall cooperate with the
indemnifying party in connection therewith. If the indemnifying party does not
so elect to defend any such Third Party Claim, the indemnified party shall have
no obligation to do so.
14.3.3 As soon as is reasonably practicable after the Date of
the Notice of Claim (as hereinafter defined), the indemnified party and the
indemnifying party shall endeavor to agree upon the amount, if any, to which the
indemnified party is entitled under this Section 14. In the event the
indemnifying party, on the one hand, and the indemnified party are unable to
29
<PAGE>
reach agreement upon the right of the indemnified party to indemnification
hereunder, or upon the amount of any such indemnification hereunder, either the
indemnified party or the indemnifying party may submit such dispute for
resolution in accordance with Section 22 hereof.
14.4 Indemnification Payment and Limitations.
----------------------------------------
(a) Within thirty (30) days after either the indemnifying party and
the indemnified party reach agreement on the amount of any indemnification
obligation of the indemnifying party, or any such indemnification obligation is
determined pursuant to Section 22 hereof (in either case, the "Indemnification
---------------
Amount"), the indemnified party shall demand payment of the Indemnification
- ------
Amount from the indemnifying party, who shall pay such amount due in cash within
thirty (30) days of the indemnified party's demand therefor. With respect to
any Indemnification Amount or portion thereof not paid by the indemnifying party
within such thirty (30) day period, the indemnified party may, at its option,
from time to time, in addition to any other remedies or rights it may have with
respect to the collection thereof, offset the amount of any Indemnification
Amount due the indemnified party from the indemnifying party hereunder against
any employment or other agreements with the indemnifying party.
(b) Notwithstanding anything to the contrary set forth in this
Agreement, the indemnifying party shall have no liability or obligation, and the
indemnified parties shall have no rights, with respect to indemnification or
otherwise under this Section 14 on or after the date which is the fifth
anniversary of the Closing Date, except in respect of (i) claims or other
matters for which the Date of the Notice of Claim is prior to such date, and
(ii) claims or other matters arising under Section 4.13 hereof in respect of tax
matters, if the Date of the Notice of Claim in respect thereof is within sixty
(60) days after the expiration of the limitations period in which the
appropriate taxing authority can bring a claim with respect to such matters. The
term "Date of the Notice of Claim" as used herein shall mean the date the notice
---------------------------
is deemed delivered pursuant to Section 18 hereof.
(c) Notwithstanding anything to the contrary set forth in this
Agreement, no Seller shall have any liability or obligation with respect to the
indemnification obligations for breaches or misrepresentations of
representations and warranties set forth in Section 4 hereof except to the
extent that Purchaser's damages from such breaches or misrepresentations of
representations and warranties exceed $250,000 and in no event shall the total
aggregate amount of the Sellers' liability for breaches or misrepresentations of
representations and warranties exceed $1,500,000.
15. SELLERS' AND PURCHASERS' DEFAULT. If any Seller, on the one hand, or
--------------------------------
either Purchaser, on the other hand fails to perform its obligations under this
Agreement, in addition to their rights under Section 14 and any other rights
hereunder, Purchasers or Sellers will have the right of specific performance,
without waiving any rights to sue for damages, or a combination of specific
performance and damages. No remedy conferred upon any party hereto is intended
to be exclusive of any other remedy, and each remedy will be cumulative and in
30
<PAGE>
addition to every other remedy available under this Agreement, at law or in
equity. No single or partial exercise any remedy will preclude any other or
further exercise thereof.
16. BROKER. Neither Purchasers nor Sellers have dealt with any real
------
estate agent, broker or finder in connection with the transaction contemplated
by this Agreement. Each party will indemnify, defend and hold harmless the
other party from any Claims of any real estate agent, broker or finder claiming
to have dealt with the indemnifying party in connection with this Agreement.
This Section will survive the Closing or any termination of this Agreement.
17. INTERPRETATION. The singular includes the plural and the plural
--------------
includes the singular. Except as specified herein, the word "or" is not
exclusive and the word "including" is not limiting. References to a law include
any rule or regulation issued under the law and any amendment to the law, rule
or regulation. References to a Section or Exhibit mean a Section or Exhibit
contained in or attached to this Agreement. The caption headings in this
Agreement are for convenience and reference only and do not define, modify or
describe the scope or intent of any of the terms of this Agreement. This
Agreement will be interpreted and enforced in accordance with its provisions and
without the aid of any custom or rule of law requiring or suggesting
construction against the party drafting or causing the drafting of the
provisions in question.
18. NOTICES. All notices, demands or communications required or permitted
-------
under this Agreement will be in writing and delivered by hand or mailed by
certified mail, return receipt requested, postage and registration or
certification charges prepaid, or by nationally recognized overnight courier
service, or by fax, to the party entitled thereto at the address and to the fax
number first set forth above, or such other party(ies), address(es) or fax
number(s) as either party specifies by written notice to the other from time to
time. Any legal counsel designated above or any substitute counsel as
designated by Sellers or Purchasers by written notice to the other party is
authorized to give notices under this Agreement on behalf of its respective
client.
19. ATTORNEYS FEES AND COSTS. In the event of any litigation or
------------------------
arbitration arising out of this Agreement, the prevailing party will be entitled
to recover all expenses and costs incurred, including reasonable attorneys' fees
and costs. This Section will survive the Closing.
20. ASSIGNMENT. Purchasers will have the right to assign this Agreement
----------
to any Affiliate without Sellers' consent, after which (a) Purchasers will be
relieved of their obligations under this Agreement, (b) the assignee will be
solely responsible for such obligations, and (c) the assignee may enforce all
rights and remedies of Purchasers under this Agreement.
21. GOVERNING LAW. This Agreement will be governed by and construed and
-------------
enforced in accordance with the internal laws of the State of Florida without
regard to principles of conflicts of laws.
31
<PAGE>
22. ARBITRATION. Any controversy or claim between Sellers and Purchasers
-----------
with respect to the subject matter of this Agreement, including any controversy
or claim arising out of an alleged tort, will be determined by binding
arbitration in accordance with the Federal Arbitration Act (or if not
applicable, the applicable state law) and the Rules of Practice and Procedure
for JAMS. Judgment upon any arbitration award may be entered into in any court
having jurisdiction. Any party to this Agreement may bring an action, including
a summary or expedited proceeding, to compel arbitration of any controversy or
claim under this Agreement in any court having jurisdiction over such action.
The arbitration will be conducted in Palm Beach County, Florida and
administered by JAMS, who will appoint the arbitrator. If JAMS is unable or
legally precluded from administering the arbitration, then the American
Arbitration Association will serve. All arbitration hearings will commence
within 90 days of the demand for arbitration. Further, the arbitrator will
only, upon a showing of cause, be permitted to extend the commencement of such
hearing for up to an additional 60 days. The arbitrator shall allocate all
costs and fees relating to or arising from the arbitration, including all
attorneys' fees and costs of Purchasers and Sellers, to either party or among
the parties in any proportion deemed appropriate by the arbitrator.
23. INTEGRATION. All prior understandings and agreements between the
-----------
parties with respect to the subject matter of this Agreement, including that
certain Letter of Intent dated June 16, 1997, are merged in this Agreement.
Neither party is relying upon any statement, covenant or representation made by
any other party which is not embodied in this Agreement.
24. AMENDMENTS. No purported amendment to or waiver of any term of this
----------
Agreement will be binding upon any party, or have any other force or effect in
any respect, unless the same is in writing and signed by the parties hereto.
25. BINDING EFFECT. This Agreement will be binding upon, and will inure
--------------
to the benefit of, the Sellers, Purchasers and their respective successors and
assigns.
26. FURTHER ASSURANCES. Each party will, from time to time, execute,
------------------
acknowledge and deliver such further instruments, and perform such additional
acts, as the other party may reasonably request in order to effectuate the
intent of this Agreement. This Section will survive the Closing.
27. THIRD PARTIES. Nothing in this Agreement, whether express or implied,
-------------
is intended to confer any rights or remedies to any Persons other than Sellers,
Purchasers and their respective successors and assigns.
28. NO OTHER DISCUSSIONS. Sellers will not enter into any discussions
--------------------
with any third party concerning, or furnish any information relating to the
Property to any third party, for the purpose of considering, soliciting or
inducing any offer by such third party.
32
<PAGE>
29. COUNTERPARTS. This Agreement may be executed in two or more
------------
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
30. COVENANT NOT TO COMPETE.
-----------------------
30.1 Sellers' Acknowledgments. Sellers hereby acknowledge that:
------------------------
30.1.1 The agreements and covenants they are providing in this
Section are reasonable and necessary to Purchasers' protection of its legitimate
interests in the transaction contemplated by this Agreement;
30.1.2 They have certain knowledge of the business operations
that may be required to ensure the effective and successful conduct of the
business of Purchasers, they have access to trade secrets and confidential
business methods, plans and practices considered confidential by Purchasers,
this information has commercial value in the business in which Purchasers will
be engaged after the consummation of the transaction contemplated by this
Agreement, Purchasers will be irreparably damaged and its substantial investment
in the transaction contemplated by this Agreement materially impaired if they
were to enter into an activity competing or interfering with the business of
Purchasers in violation of the terms of this Section or if they were to disclose
or make unauthorized use of any confidential information concerning the business
of the Sellers or Purchasers; and
30.1.3 The scope and length of the term of this Section and the
geographical restrictions contained herein are fair and reasonable and not the
result of overreaching, duress or coercion of any kind and the full, uninhibited
and faithful observance of each of the agreements and covenants contained in
this Section will not cause them any undue hardship, financial or otherwise, and
enforcement of each of the covenants contained in this Section will not impair
their ability, if they so desires, to obtain employment commensurate with their
abilities and on terms fully acceptable to them or otherwise obtain income
required for the comfortable support of them or their family and the
satisfaction of the needs of their creditors.
30.2 Covenant Not To Compete. Each of the Sellers covenant and
-----------------------
agree that they will not, at any time during the period of time (the "Term")
----
beginning on the Closing Date and ending on the date that is seven (7) years
after the Closing Date, compete with SBA Communications Corporation in any
activity competitive with that of SBA Communications Corporation or its
subsidiaries as conducted by them as of the Closing, after giving effect to this
transaction. As used in this Section, to "compete" shall mean to, directly or
indirectly, own, manage, operate, join, control, be employed by, or become a
director, officer, employee, agent, broker, consultant, representative or
shareholder of a corporation or an owner of an interest in or an employee,
agent, broker, consultant, representative or partner of a partnership or in any
other capacity whatsoever of any other form of business association, sole
proprietorship or partnership, or otherwise be connected in any manner with the
ownership, management, operation or control
33
<PAGE>
of any Tower or Tower Site or construction or development of the same. Without
limiting the generality of the foregoing, during the Term, Sellers shall not
purchase, lease or otherwise pursue any Opportunity or Antenna Tower Site that
Purchasers reject or otherwise fail to acquire or pursue under the Site
Development Agreement.
30.3 Remedies. Sellers acknowledge that the Purchasers will be
--------
irreparably damaged (and damages at law would be an inadequate remedy) if this
Section is not specifically enforced. Therefore, in the event of a breach or
threatened breach by Sellers of any provision of this Agreement, then Purchasers
shall be entitled, in addition to all other rights or remedies which may be
available at law or in equity, to an injunction restraining such breach, without
being required to show any actual damage or to post an injunction bond, and/or
to a decree for specific performance of the provisions of this Section. The
terms of this Section will survive the Closing.
30.4 Survival. In the event the duration, scope or geographic area
--------
contemplated by this Section 30 are determined to be unenforceable by a court of
competent jurisdiction, the parties agree that such duration, scope or
geographic area shall be deemed to be reduced to the greatest scope, duration or
geographic area which will be enforceable. The terms of this Section will
survive the Closing.
31. SEVERABILITY. If any provision of this Agreement or any other
------------
agreement entered into pursuant hereto is contrary to, prohibited by or deemed
invalid under applicable law or regulation, such provision shall be inapplicable
and deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given full force
and effect so far as possible. If any provision of this Agreement may be
construed in two or more ways, one of which would render the provision invalid
or otherwise voidable or unenforceable and another of which would render the
provision valid and enforceable, such provision shall have the meaning which
renders it valid and enforceable. The terms of this Section will survive the
Closing.
THIS AGREEMENT has been executed by Sellers and Purchasers on the dates set
forth below.
SELLERS:
COMMUNICATION SITE SERVICES, INC.
By: /s/ E. Robert Segars
------------------------------
E. Robert Segars, President
Date: July 22 , 1997
---------------------
SEGARS COMMUNICATION GROUP, INC.
By: /s/ E. Robert Segars
------------------------------
E. Robert Segars, President
Date: July 22 , 1997
---------------------
34
<PAGE>
/s/ E. Robert Segars
------------------------------------
E. ROBERT SEGARS
Date: July 22, 1997
/s/ Denise L. Segars
------------------------------------
DENISE L. SEGARS
Date: July 22, 1997
35
<PAGE>
PURCHASERS:
SBA TOWERS FLORIDA, INC.
By: /s/ Jeffrey A. Stoops
----------------------------------------
Jeffrey A. Stoops, Senior Vice President
Date: July 22, 1997
SBA CONSTRUCTION ACQUISITION, INC.
By: /s/ Jeffrey A. Stoops
----------------------------------------
Jeffrey A. Stoops, Senior Vice President
Date: July 22, 1997
36
<PAGE>
SCHEDULE OF EXHIBITS
--------------------
Exhibit "A" - Defined Terms
Exhibit "B" - Form of Site Development Agreement
Exhibit "C" - List of Sellers' Closing Documents
Exhibit "D" - List of Purchasers' Closing Documents
Exhibit "E" - List of I-10 Corridor Towers
Exhibit "F" - List of Construction Towers
Exhibit "G" - Form of Employment Agreement
<PAGE>
EXHIBIT "A"
-----------
Defined Terms
The following terms will have the following meanings through out this
Agreement:
"Agreement" - this instrument, together with all exhibits, schedules and
---------
addenda attached hereto.
"Affiliate" - with respect to a Person, any other Person that, directly or
---------
indirectly through one or more intermediaries, controls, is controlled by or is
under common control with the first Person.
"Antenna Tower Site" - shall have the meaning attributed thereto in the
------------------
Site Development Agreement.
"Appurtenant Property" - all right, title and interest of Sellers, if any,
--------------------
in and to all (a) streets, roads, easements, contract rights and rights-of-way
appurtenant to the Property, (b) covenants, restrictions, agreements,
development rights, air rights, density rights, drainage rights, riparian and/or
littoral rights benefiting the Property, (c) utility mains, service laterals,
hydrants, valves and appurtenances servicing the Property, (d) utility deposits
and reservation fees paid by or on behalf of Sellers with respect to the
Property, and (e) oil, gas, minerals, soil, flowers, shrubs, crops, trees,
timber, compacted soil, submerged lands and fill appurtenant to the Property.
"Assignment and Assumption of Ground Leases" - an assignment and assumption
------------------------------------------
of the Ground Leases between Sellers and Purchasers, in recordable form and
otherwise in form and substance reasonably acceptable to Sellers and Purchasers.
"Bill of Sale and Assignment and Assumption" - an instrument from Sellers
------------------------------------------
to Purchasers conveying and assigning the Appurtenant Property (to the extent
the same is deemed to the personalty), the Improvements (to the extent the same
are deemed to the personalty), the Intangible Personal Property (other than the
Ground Leases) and the Tangible Personal Property, with warranties of title, and
assuming the Assumed Liabilities, in form and substance reasonably acceptable to
Sellers and Purchasers.
"Business Day" - any day other than a Saturday, Sunday or a day upon which
------------
banking institutions in the State of Florida are authorized or required by law
to close.
"Claim" - any direct or indirect (but excluding consequential damages)
-----
claim, damage, loss, liability, obligation, demand, defense, judgment, suit,
proceeding, disbursement or expense, including reasonable attorneys' fees or
costs (including those related to appeals).
"Closing" - the date upon which the consummation of the purchase and sale
-------
of the Property occurs in accordance with the terms of this Agreement.
<PAGE>
"Closing Date" - the second (2nd) Business Day following the expiration of
------------
the Inspection Period, unless extended by the terms of this Agreement or by
mutual consent of Purchasers and Sellers.
"Code" - the federal Internal Revenue Code of 1986, as amended.
----
"Construction Contracts" - those certain contracts and agreements for
----------------------
construction and other services in process to which the Sellers are a party and
which are identified in the Disclosure Letter.
"Construction Towers" - those potential tower sites described on Exhibit
------------------- -------
"F" attached hereto upon which towers are to be constructed by Purchasers and/or
- ---
Sellers.
"Contract Party" - any party to a Construction Contract other than the
--------------
Sellers.
"Contract Party Consents" - consent and estoppel letters from each of the
-----------------------
Contract Parties to Purchasers with respect to the Bill of Sale and Assignment
and Assumption, in form and substance reasonably acceptable to Purchasers.
"Current Funds" - wired funds, cashier's check or certified check.
-------------
"Deeds" - one or more warranty deeds from Sellers to Purchasers conveying
-----
the Real Property, the Appurtenant Property (to the extent the same is deemed to
be realty), the Easements and the Improvements thereon, in recordable form and
otherwise in form and substance reasonably acceptable to Sellers and Purchasers.
"Disclosure Letter" - that certain completed disclosure letter given by
-----------------
Sellers to Purchasers within ten (10) following the execution of this Agreement
containing, among other things, true, correct and complete copies of certain
records, documentation and other information concerning the ownership, use,
operation and condition of the Property, including that required by Sections
2.2, 4.3, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.17, 4.20, 4.21, 4.23, 4.25, 4.26,
4.27, 4.28, 4.29, 4.30 and 4.33.
"Easements" - the easements described in the Disclosure Letter through
---------
which access to any of the Towers is required.
"Employment Agreement" - that certain agreement to be delivered on the
--------------------
Closing Date in the form attached hereto as Exhibit "G" between E. Robert Segars
-----------
and Purchasers regarding the employment of E. Robert Segars by Purchasers
following the Closing.
"Equipment Leases" - the equipment leases described in the Disclosure
----------------
Letter under which the Sellers lease any personalty used in the business.
<PAGE>
"Equipment Lessor Consents" - consent and estoppel letters from each of the
-------------------------
Equipment Lessors to Purchasers with respect to the Bill of Sale and Assignment
and Assumption, in form and substance reasonably acceptable to Purchasers.
"Equipment Lessors" - each of the lessors under the Equipment Leases.
-----------------
"Excluded Property" - (i) the corporate seals, certificates of
-----------------
incorporation, minute books, stock books, tax returns, books of account or other
records having to do with the corporate organization of the Sellers, (ii) the
rights which accrue or will accrue to the Sellers under this Agreement, (iii)
the rights to any of the Sellers' claims for any federal, state, local or
foreign tax refunds, (iv) a 1976 Ford Bronco (vehicle identification number
U15GLC58565), a 1997 Chevrolet Suburban (vehicle identification number
3GNFK16R2VG124605) and a 1997 Ford F-150 (vehicle identification number
1FTEX18LOVNC57708) owned by CSSI, (v) the office furniture used by E. Robert
Segars and identified in the Disclosure Letter, and (vi) certain real property
contiguous to the Wildwood, Florida and Ocala, Florida tower locations owned by
Sellers and legally described in the Disclosure Letter.
"FAA" - Federal Aviation Authority.
---
"FCC" - Federal Communications Commission.
---
"Florida Sites" - all Towers, Construction Towers and Substitution Towers
-------------
located in the State of Florida.
"Georgia Sites" - all Towers, Construction Towers and Substitution Towers
-------------
located in the State of Georgia.
"Governmental Authority" - the United States of America, the state, county,
----------------------
town or other municipality in which any of the Property is located, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to any of them (including the FAA, the FCC, any
drainage district, street lighting district or special taxing district).
"Ground Leases" - the ground leases described in the Disclosure Letter
-------------
under which certain Towers are located or are anticipated to be constructed.
"Ground Lessors" - each of the lessors under the Ground Leases.
--------------
"Ground Lessor Consents" - consent and estoppel letters from each of the
----------------------
Ground Lessors to Purchasers with respect to the Assignment and Assumption of
Ground Leases, in form and substance reasonably acceptable to Purchasers.
"Headquarters" - the real property and all improvements thereon located at
------------
2530 N.E. 36th Avenue, Ocala, Florida 34470-3119.
<PAGE>
"Improvements" - all Towers, poles, buildings, equipment shelters, storage
------------
facilities, cabinets, anchors, guy wires and other improvements which are
located on or appurtenant to the Property.
"Inspection Period" - the forty-five (45) day period commencing on the
-----------------
Effective Date.
"Intangible Personal Property" - any intangible personal property owned by
----------------------------
the Sellers and used in connection with their business including (a) the
Construction Contracts, Equipment Leases, Ground Leases and Tenant Leases, (b)
any licenses, consents, permits, orders, and approvals issued by any
governmental or regulatory authority, (c) any express or implied warranties or
transferrable benefits which Sellers may have received from manufacturers,
suppliers or licensors with respect to any of the Property, (d) any employee
non-compete and employment agreements to which the Sellers are parties or under
which they are entitled to benefits, (e) any patents, copyrights and trade
secrets, together with all goodwill relating thereto, (f) any trade names, trade
marks, logos, proprietary designs and service marks including, without
limitation, the names "Communications Site Services, Inc.," and "Segars
Communication Group, Inc." together with the goodwill appurtenant thereto, any
registrations thereof, and any civil law rights thereto, any rights to royalties
or fees paid by others in respect thereof and any claims or causes of action for
infringement thereof, (g) any notes receivable and accounts receivable and cash
or cash equivalents on hand and on deposit in banks or other financial
institutions, (h) any contracts for the purchase or sale of raw materials,
supplies or services, (i) any prepaid items including, without limitation,
prepaid rent, insurance, advertising and business licenses, (j) any security,
utility and other deposits and advances made to any person or entity, (k) any
computer software (including documentation and related object and source codes,
(l) any customer, supplier, manufacturer and dealer lists, payment invoices, and
any other existing sales and marketing information and accounting and financial
information including, without limitation, telephone numbers (of Sellers,
customers, suppliers, manufacturers and dealers) and any know-how, technology,
specifications and software, (m) all right, title and interest of Sellers in and
to eight (8) parcels or real property which are in various stages of acquisition
and development along the I-10 corridor between Jacksonville and Tallahassee and
more fully described on Exhibit "E" attached hereto, (n) all of Sellers' rights,
-----------
title and interest in and to the Construction Towers, and (o) any development
rights, documents, technical matter and work product relating to the Property,
including any Permits, environmental studies, construction, engineering,
architectural, landscaping or other plans or drawings related to the Property
and any surveys, maps, site plans, plats and other graphics relating to the
Property.
"Inventory" - all inventory and service and office supplies owned by the
---------
Sellers with respect to their businesses.
"JAMS" - the Arbitration of Commercial Disputes of Judicial Arbitration and
----
Mediation Services, Inc.
"Letter of Credit" - an irrevocable standby letter of credit, in form
----------------
satisfactory to Sellers in their reasonable discretion, (a) to be issued,
accepted and paid, as the case may be, by the Letter of Credit Issuer at its
principal office, (b) for the account of Sellers, (c) in the amount of
<PAGE>
the Installment Note, (d) naming Sellers as beneficiaries, and (e) in such form
and subject to such payment procedures as the Letter of Credit Issuer may
prescribe in the ordinary course of its business.
"Letter of Credit Issuer" - One of the 50 largest banks in the U.S.
-----------------------
designated by Purchaser and reasonably acceptable to Sellers.
"Legal Requirements" - any law, ordinance, order, rule or regulation of any
------------------
Governmental Authority which pertains to the Property or Sellers, including all
building, zoning, land use, subdivision, setback, platting, health, traffic,
environmental, hazardous waste, natural resources or flood control matters.
"Opportunity" - shall have the meaning attributed thereto in the Site
-----------
Development Agreement.
"Permits" - all permits, licenses, authorizations, certificates of
-------
occupancy, certificates of completions, variances and similar approvals of any
Governmental Authority having jurisdiction over the Tower Sites.
"Permitted Exceptions" - exceptions to title which Purchasers fails to
--------------------
object to in writing during the Inspection Period.
"Person" - a natural person, corporation, partnership, limited liability
------
company, trust, joint venture, unincorporated association, Governmental
Authority or other entity.
"Property" - collectively, the Real Property, the Ground Leases, the
--------
Easements, the Appurtenant Property, the Improvements, the Intangible Personal
Property and the Tangible Personal Property.
"Purchase Price" - the amount set forth in Section 3.1.
--------------
"Real Property" - the real property described in the Disclosure Letter on
-------------
which six (6) Towers are located.
"Site Development Agreement" - an agreement between E. Robert Segars and
--------------------------
Purchasers, in form and substance reasonably acceptable to E. Robert Segars and
Purchasers, pursuant to which E. Robert Segars will grant Purchasers the right
to purchase future sites found, acquired or developed by E. Robert Segars.
"Tangible Personal Property" - all personal property, machinery, tools,
--------------------------
furniture, furnishings, fixtures, equipment, appliances, vehicles, Inventory,
supplies and other items of personal property owned by Sellers and used in
connection with the Property, including the items described in the Disclosure
Letter, but not including the Excluded Property.
<PAGE>
"Tenant Estoppels" - estoppel letters from each of the Tenants to
----------------
Purchasers, in form and substance reasonably acceptable to Purchasers.
"Tenant Leases" - the leases, licenses and other occupancy agreements
-------------
described in the Disclosure Letter pursuant to which any Person is granted the
right to use space or install equipment on any of the Towers or in any of the
Improvements located on any of the Tower Sites.
"Tenants" - each of the lessees, licensees or other occupants under the
-------
Tenant Leases.
"Towers" - six (6) communication towers or monopoles located on the Tower
------
Sites, as more particularly described in the Disclosure Letter, constructed as
of the Effective Date and any communication towers or monopoles constructed on
the Property prior to the Closing Date.
"Tower Sites" - collectively, the Real Property, the Ground Leases and the
-----------
Easements.
<PAGE>
EXHIBIT "B"
-----------
Form of Site Development Agreement
Prepared by and return to:
- --------------------------
Thomas P. Hunt, Esquire
Gunster, Yoakley, Valdes-Fauli
& Stewart, P.A.
777 South Flagler Drive, Suite 500 East
West Palm Beach, Florida 33401
SITE DEVELOPMENT AGREEMENT
--------------------------
SITE DEVELOPMENT AGREEMENT ("Agreement") made as of July __, 1997
---------
("Effective Date") between SBA TOWERS FLORIDA, INC., a Florida corporation
--------------
("Purchaser"), having an address at 6001 Broken Sound Parkway, Fourth Floor,
---------
Boca Raton, Florida 33487, Attn.: Jeffrey A. Stoops, Senior Vice President, Fax
Number (561) 997-0343, and E. ROBERT SEGARS, an individual ("Segars"), having an
------
address at 2530 N.E. 36th Avenue, Ocala, Florida 34470-3119, Fax Number (352)
629-5661.
Preliminary Statement:
----------------------
Segars Communication Group, Inc., a Florida corporation ("SCGI"),
----
Communication Site Services, Inc. a Florida corporation ("CSSI"), Segars and
----
Denise L. Segars (SCGI, CSSI, Segars and Denise L. Segars are hereinafter
collectively referred to as the "Sellers") have, contemporaneously herewith,
-------
entered into that certain Purchase and Sale Agreement dated as of July __, 1997,
("Purchase Agreement"), selling and/or assigning to Purchaser all of Sellers'
------------------
interest in certain parcels of real property and improvements thereon, including
the Towers located therein, as more particularly described on Exhibit "A"
-----------
attached hereto ("Purchase Sites") and Sellers' rights to certain Antenna Tower
--------------
Sites as more particularly described on Exhibit "B" ("Contract Sites")
----------- --------------
(collectively, the Purchase Sites and the Contract Sites are the "Property").
--------
Pursuant to the Purchase Agreement, Sellers have rights (as more particularly
described therein) to substitute certain Towers and Antenna Tower Sites acquired
pursuant to this Agreement for certain Contract Sites for purposes of computing
the payout under the Installment Note.
Segars has agreed to grant to Purchaser the rights specified in this
Agreement with respect to any Opportunity identified by Segars during the Term.
Segars desires to execute this Agreement in order to induce Purchaser to
purchase the Property and certain improvements thereon. Purchaser and Segars,
individually and as a principal of CSSI and SCGI, will benefit substantially
from the sale and/or assignment of the Property to Purchaser.
<PAGE>
In consideration of the mutual covenants contained in this Agreement, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Segars and Purchaser hereby agree as follows:
1. DEFINITIONS. Capitalized terms used but not otherwise defined in this
-----------
Agreement will have the meanings set forth in Exhibit "C".
-----------
2. TERM. This Agreement will commence as of the Effective Date and will
----
continue in full force and effect until the seventh (7th) anniversary of the
Effective Date (the "Term").
----
3. OPPORTUNITIES.
-------------
3.1 Identification of Opportunities. If at any time during the Term
-------------------------------
Segars or any Affiliate identifies or is made aware of any Opportunity, Segars
shall deliver a notice to Purchaser as provided in Section 3.2 below.
3.2 Notice. In the event Segars identifies an Opportunity pursuant to
------
Section 3.1, Segars will, within ten (10) days of such identification, send
written notice thereof to Purchaser. Such notice shall provide at a minimum, as
applicable: (i) the current owner or lessor of the Antenna Tower Site, (ii) the
address and legal description of the Antenna Tower Site, (iii) the current
asking price for the Antenna Tower Site (if for sale) or lease payment (if for
lease), (iv) the current zoning for the Antenna Tower Site to the extent known
by Segars, (v) the location of the nearest Tower other than that located on the
applicable Antenna Tower Site to the extent known by Segars, (vi) the terms of
any proposed financing or management, and (vii) any other information reasonably
requested by Purchaser to the extent known by Segars.
3.3 Rights of Purchaser. Purchaser shall have the right, in its
-------------------
reasonable discretion to purchase all of Segars' rights with respect to the
Opportunity identified pursuant to Section 3.2, including all records,
documentation and other information in Segars' possession (or in the possession
of Segars' attorneys or other representatives) regarding the ownership, use,
operation and condition of the Antenna Tower Site corresponding to such
Opportunity ("Opportunity Rights"). Purchaser shall not unreasonably reject any
------------------
Opportunity presented to Purchaser pursuant to Section 3.2 so long as such
Opportunity is consistent with SBA Communications Corporation's formal business
plan existing at the time such Opportunity is presented to Purchaser. In the
event Purchaser elects to purchase the Opportunity Rights pursuant to this
Section, Purchaser shall give written notice to Segars of its intention to
purchase the Opportunity Rights ("Purchase Notice"). Purchaser shall pay
---------------
Segars, and Segars agrees to accept as full and complete consideration for the
Opportunity Rights, an amount equal to the sum of (i) all of Segars' reasonable
and demonstrable out-of-pocket costs and expenses paid to Third Parties with
respect to such Opportunity, and, subject to Section 3.4 below (ii) (a) in the
event Segars is an employee of Purchaser at the time notice of such Opportunity
is delivered to Purchaser pursuant to Section 3.2, the amount of $10,000.00, or
(b) in the event Segars is not an employee of Purchaser at the time notice of
such Opportunity is delivered to Purchaser pursuant to Section 3.2, the amount
of $25,000.00 ("Opportunity Rights Purchase Price"). If Purchaser
---------------------------------
<PAGE>
elects to purchase the Opportunity Rights, Segars shall deliver to Purchaser all
records, documentation and other information evidencing the Opportunity Rights
and shall execute and deliver to Purchaser any documents or instruments
reasonably required by Purchaser to convey the Opportunity Rights to Purchaser,
including a bill of sale. Within ten (10) days following the date upon which the
first tenant leasing space on the Tower constructed pursuant to such Opportunity
makes its first rental payment under such lease, Purchaser shall pay in Current
Funds to Segars the Opportunity Rights Purchase Price less any taxes Purchaser
is required by applicable law to withhold from the Opportunity Rights Purchase
Price arising from Segars status as an employee of Purchaser. Upon Purchaser's
purchase of any Opportunity Rights, Segars shall, if requested by Purchaser and
at no cost to Segars, assist Purchaser in the acquisition and development of
such Opportunity.
3.4 Segars' Election. Only those Opportunities involving proposed
----------------
Antenna Tower Sites which require the construction of a Tower and otherwise meet
the requirements of Section 3.2.5 of the Purchase Agreement may be considered as
Substitution Towers (as defined in the Purchase Agreement). Segars shall elect,
in the notice described in Section 3.2 above, whether the Opportunity identified
in the Purchase Notice shall be used (i) for the calculation of the Opportunity
Rights Purchase Price, or (ii) as a Substitution Tower and for the calculation
of the payment under the Installment Note pursuant to Section 3.2 of the
Purchase Agreement. In no event shall any Opportunity be used for the
calculation of both the Opportunity Rights Purchase Price and any payment under
the Installment Note. In the event Segars fails to deliver Segars' election in
the notice described in Section 3.2 above, Segars will be deemed to have elected
that such Opportunity be used in the calculation of the Opportunity Rights
Purchase Price. Notwithstanding anything herein to the contrary, Section 3.3
hereof shall not apply to any Opportunity accepted by Purchaser as a
Substitution Tower.
3.5 Conflict with Purchase Agreement. The terms of this Section 3
--------------------------------
shall not amend or modify the terms of Section 30.2 of the Purchase Agreement.
In the event of any conflict between the terms of this Section 3 and the terms
of Section 30.2 of the Purchase Agreement, the terms of Section 30.2 of the
Purchase Agreement shall control. Without limiting the generality of the
foregoing, nothing contained herein or in the transactions contemplated hereby
(including the pursuit of any Opportunity by Segars) shall waive any rights of
SBA Communications Corporation or release any parties from their duties,
obligations or liabilities, under Section 30.2 of the Purchase Agreement, it
being the intent of the parties that Segars may not pursue any Opportunity for
his own account or the account of any Person other than Purchaser or an
Affiliate of Purchaser in violation of Section 30.2 of the Purchase Agreement
regardless of whether Purchaser or its Affiliates elect to pursue the same.
4. DEFAULT; REMEDIES.
-----------------
4.1 If Segars fails to comply with any of the provisions of this
Agreement, Purchaser shall have the right to file a lis pendens or similar
encumbrance or to assert any claim of any nature whatsoever against Segars or
any Third Party. Segars shall indemnify, defend and hold Purchaser harmless
from any Claim which Purchaser may sustain or incur as a result of any claim
under this Section.
<PAGE>
4.2 Without limiting the generality of Section 4.1 above, Purchaser
shall have the right to seek equitable relief (including injunctive relief and
specific performance) against Segars in order to enforce the provisions of this
Agreement. Purchaser and Segars acknowledge that Purchaser will be irreparably
damaged (and damages at law would be an inadequate remedy) if this Agreement is
not specifically enforced. Therefore, in the event of a breach or threatened
breach by Segars of any provision of this Agreement, Purchaser shall be
entitled, in addition to all other rights or remedies, to an injunction
restraining such breach, without being required to show any actual damage or to
post an injunction bond, and/or to a decree for specific performance of the
provisions of this Agreement. Nothing in this Section 4 shall limit or otherwise
modify Purchaser's right to seek damages against Segars or a combination of
injunctive relief and damages, when appropriate.
5. MISCELLANEOUS PROVISIONS.
------------------------
5.1 Covenant of Segars. Segars shall not engage in any activity which
------------------
constitutes or is part of a scheme to circumvent the rights, benefits and
privileges given to Purchaser under this Agreement. The engagement in such
activity shall constitute a material default under this Agreement.
5.2 Entire Agreement. This Agreement represents the entire
----------------
understanding of the parties with respect to the subject matter hereof, and
supersedes all other negotiations, understandings and representations.
5.3 Amendments. No purported amendment to or waiver of any term of
----------
this Agreement will be binding upon any party, or have any other force or effect
in any respect, unless the same is in writing and signed by the party to be
charged.
5.4 Further Assurances. Each party will, from time to time, execute,
------------------
acknowledge and deliver such further instruments, and perform such additional
acts, as the other party may reasonably request in order to effectuate the
intent of this Agreement.
5.5 Binding Effect. This Agreement will be binding upon, and will
--------------
inure to the benefit of Segars, Purchaser and their respective successors and
permitted assigns.
5.6 Notices. All notices, demands or communications required or
-------
permitted under this Agreement will be in writing and delivered by hand or
mailed by certified mail, return receipt requested, postage and registration or
certification charges prepaid, or by nationally recognized overnight courier
service, or by fax, to the party entitled thereto at the address and to the fax
number first set forth above, or such other party(ies), address(es) or fax
number(s) as either party specifies by written notice to the other from time to
time. Any legal counsel designated above or any substitute counsel as designated
by Segars or Purchaser by written notice to the other party is authorized to
give notices under this Agreement on behalf of its respective client.
<PAGE>
5.7 Severability. If any provision of this Agreement is contrary to,
------------
prohibited by or deemed invalid under applicable law or regulation, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated and
shall be given full force and effect so far as possible. If any provision of
this Agreement may be construed in two or more ways, one of which would render
the provision invalid or otherwise voidable or unenforceable and another of
which would render the provision valid and enforceable, such provision shall
have the meaning which renders it valid and enforceable.
5.8 Waivers. The failure or delay of a party at any time to require
-------
performance by the other party of any provision of this Agreement, even if
known, shall not affect the right of such party to require performance of that
provision or to exercise any right, power or remedy hereunder. Any waiver by
any party of any breach of any provision of this Agreement should not be
construed as a waiver of any continuing or succeeding breach of such provision,
a waiver of the provision itself, or a waiver of any right, power or remedy
under this Agreement. No notice to or demand on any party in any case shall, of
itself, entitle such party to any other or further notice or demand in similar
or other circumstances.
5.9 Attorneys Fees and Costs. In the event of any litigation or
------------------------
arbitration arising out of this Agreement, the prevailing party will be entitled
to recover all expenses and costs incurred in connection therewith, including
reasonable attorneys' fees and costs.
5.10 Remedies Cumulative. Except as otherwise expressly provided
-------------------
herein, no remedy herein conferred upon any party is intended to be exclusive of
any other remedy, and each and every such remedy shall be cumulative and shall
be in addition to every other remedy given hereunder or now or hereafter
existing at law, in equity or otherwise. No single or partial exercise by any
party of any right, power or remedy hereunder shall preclude any other or
further exercise thereof.
5.11 Arbitration. Except for any equitable action filed by Purchaser
-----------
pursuant to Section 4, any controversy or claim between Assignor and Assignee
with respect to the subject matter of this Agreement, including any controversy
or claim arising out of an alleged tort, will be determined by binding
arbitration in accordance with the Federal Arbitration Act (or if not
applicable, the applicable state law), the Rules of Practice and Procedure for
the Arbitration of Commercial Disputes of Judicial Arbitration and Mediation
Services, Inc. ("JAMS"). Judgment upon any arbitration award may be entered
----
into in any court having jurisdiction. Any party to this Agreement may bring an
action, including a summary or expedited proceeding, to compel arbitration of
any controversy or claim under this Agreement in any court having jurisdiction
over such action. The arbitration will be conducted in Palm Beach County,
Florida and administered by JAMS, who will appoint the arbitrator. If JAMS is
unable or legally precluded from administering the arbitration, then the
American Arbitration Association will serve. All arbitration hearings will
commence within 90 days of the demand for arbitration. Further, the arbitrator
will only, upon a showing of cause, be permitted to extend the commencement of
such hearing for up to an additional 60 days. The arbitrator shall allocate all
costs and fees relating to
<PAGE>
or arising from the arbitration, including all attorneys' fees and costs of
Purchaser and Segars, to either party or among the parties in any proportion
deemed appropriate by the arbitrator.
5.12 Governing Law. This Agreement will be governed by and construed
-------------
and enforced in accordance with the internal laws of the State of Florida
without regard to principles of conflicts of laws.
5.13 Recording. This Agreement or a memoranda thereof may, at the sole
---------
option of Purchaser, be recorded against any property owned, leased or otherwise
controlled by Segars that is improved with or in the reasonable opinion of
Purchaser could be improved with a Tower. Segars hereby releases Purchaser from
any damage, claim, liability or cause of action resulting from or in any way
related to the recording of this Agreement or any memoranda thereof.
5.14 Assignment. Subject to Segars' written consent, which shall not
----------
be unreasonably withheld, Purchaser will have the right to assign this Agreement
to any Person, after which (i) Purchaser will be relieved of its obligations
under this Agreement, (ii) the assignee will be solely responsible for such
obligations, and (iii) the assignee may enforce all rights and remedies of
Purchaser under this Agreement. In no event may Segars assign this Agreement.
5.15 Interpretation. The singular includes the plural and the plural
--------------
includes the singular. The word "or" is not exclusive and the word "including"
is not limiting. References to a law include any rule or regulation issued
under the law and any amendment to the law, rule or regulation. References to a
Section or Exhibit mean a Section or Exhibit contained in or attached to this
Agreement. The caption headings in this Agreement are for convenience and
reference only and do not define, modify or describe the scope or intent of any
of the terms of this Agreement. This Agreement will be interpreted and enforced
in accordance with its provisions and without the aid of any custom or rule of
law requiring or suggesting construction against the party drafting or causing
the drafting of the provisions in question.
THIS AGREEMENT has been executed by Purchaser and Segars as of the
Effective Date.
Witnesses: PURCHASER:
SBA TOWERS FLORIDA, INC., a Florida
corporation
_________________________
Print Name:______________
By: /s/ Jeffrey A. Stoops
_________________________ --------------------------------
Print Name:______________ Jeffrey A. Stoops
Senior Vice President
<PAGE>
SEGARS:
_____________________________
Print Name:__________________
/s/ E. Robert Segars
_____________________________ -----------------------------------
Print Name:__________________ E. ROBERT SEGARS, an individual
<PAGE>
STATE OF FLORIDA
COUNTY OF __________
The foregoing instrument was acknowledged before me this ____ day of
________, 1997, by Jeffrey A. Stoops, Senior Vice President of SBA Towers
Florida, Inc., a Florida corporation, on behalf of the corporation. The above
named individual [_] is personally known to me or [_] has produced
___________________ as identification.
_________________________________
Print Name:______________________
Commission Number:_______________
Commission expires:______________
(NOTARIAL SEAL)
STATE OF FLORIDA
COUNTY OF __________
The foregoing instrument was acknowledged before me this ____ day of
________, 1997, by E. Robert Segars who [_] is personally known to me or [_] has
produced ___________________ as identification.
_________________________________
Print Name:______________________
Commission Number:_______________
Commission expires:______________
(NOTARIAL SEAL)
<PAGE>
EXHIBIT "A"
-----------
Legal Description of the Purchase Sites
<TABLE>
<CAPTION>
SITE COUNTY STATE
- ---- ------ -----
<S> <C> <C>
Ocala (Downtown I) Marion Florida
Ocala (Downtown II Marion Florida
Wildwood Sumter Florida
Regency Park (Orlando) Orange Florida
Silver Springs Marion Florida
Jacksonville Duval Florida
</TABLE>
<PAGE>
EXHIBIT "B"
-----------
LEGAL DESCRIPTION OF THE CONTRACT SITES
<TABLE>
<CAPTION>
SITE COUNTY STATE
- ---- ------ -----
<S> <C> <C>
Buckeye Houston Georgia
Henderson Houston Georgia
Unadilla Dooly Georgia
Vienna Dooly Georgia
Gum Creek Dooly Georgia
Arabia Crisp Georgia
Ashburn Turner Georgia
Chula Tift Georgia
Unionville Tift Georgia
Adel Cook Georgia
Hahira Loundes Georgia
Lake Park Loundes Georgia
Rebar Road (Jacksonville) Baker Florida
Double Run Road (Lake Columbia Florida
(City)
Duval Street (Live Oak) Suwanee Florida
Pine Hill Road (Live Oak) Suwanee Florida
Jennings Hamilton Florida
Jasper (Jennings) Hamilton Florida
Black Bay (Jasper) Hamilton Florida
Winfield Road (Lake City) Columbia Florida
</TABLE>
<PAGE>
EXHIBIT C"
----------
Defined Terms
The following terms will have the following meanings through out this
Agreement:
"Agreement" - this instrument, together with all exhibits, schedules and
---------
addenda attached hereto.
"Affiliate" - with respect to a Person, any other Person that, directly or
---------
indirectly through one or more intermediaries, controls, is controlled by or is
under common control with the first Person.
"Antenna Tower Site" - any parcel of real property or interest in real
------------------
property that is suitable for the development of a Tower.
"Claim" - any claim, damage, loss, liability, obligation, demand, defense,
-----
judgment, suit, proceeding, disbursement or expense, including reasonable
attorneys' fees or costs (including those related to appeals).
"Current Funds" - wired funds, cashier's check or certified check.
-------------
"Governmental Authority" - the United States of America, the state, county,
----------------------
town or other municipality in which any of the Property is located, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to any of them (including the FAA, the FCC, any
drainage district, street lighting district or special taxing district).
"Installment Note" - shall have the meaning attributed thereto in the
----------------
Purchase Agreement.
"Opportunity" - any of the following located in the Territory: (i) any
-----------
parcel of real property or interest in real property including leases and
easements that Segars reasonably believes based upon his experience developing,
leasing, financing and managing Towers, is suitable or desirable for the
development and/or operation of an Antenna Tower Site, or (ii) any parcel of
real property or interest in real property including leases and easements that
currently is improved with one or more Towers and such Tower(s) and/or the
related real property interest is currently (or soon to be) for sale or lease.
"Person" - a natural person, corporation, partnership, limited liability
------
company, trust, joint venture, unincorporated association, Governmental
Authority or other entity.
"Territory" - the United States of America.
---------
"Third Party" - any Person other than Purchaser, Segars or an Affiliate of
-----------
either.
"Tower" - a communication tower or monopole.
-----
<PAGE>
EXHIBIT "C"
-----------
List of Sellers' Closing Documents
1. The Deeds.
2. The Bill of Sale and Assignment and Assumption.
3. The Assignment and Assumption of Ground Leases.
4. The Ground Lessor Consents.
5. The Equipment Lessor Consents.
6. The Contract Party Consents.
7. The Tenant Estoppels.
8. The Site Development Agreement.
9. Originals of all Ground Leases, Equipment Leases, Tenant Leases,
Construction Contracts and Permits.
10. A notice from Sellers to each of the Tenants, in form and substance
reasonably acceptable to Purchasers, informing the Tenants of the sale
of the Property to Purchasers.
11. Evidence that all utility charges for the Tower Sites have been paid
through a date not more than thirty (30) days prior to the Closing
Date.
12. An affidavit to Purchasers' title insurer, in form and substance
reasonably acceptable to Purchasers, which will be sufficient to have
the standard printed exceptions deleted from the title insurance
policy of Purchasers and its lender.
13. An affidavit certifying that Sellers are not "foreign persons" under
Section 1445(f)(3) of the Code.
14. A 1099-S form.
15. A certificate of the secretary of Sellers setting forth the
resolutions adopted by the board of directors of Sellers authorizing
and directing the president or any vice president of Sellers to
execute and deliver the documents required to be executed and
delivered by Sellers under this Agreement, which certificate will show
the name, office and signature of each officer of Sellers authorized
to execute and deliver such documents.
16. A certificate of good standing from the Secretary of State of Sellers'
states of incorporation verifying that Sellers are duly organized,
validly existing and in good standing.
<PAGE>
17. A certificate from Sellers, in form and substance reasonably
acceptable to Purchasers, certifying that all representations and
warranties of Sellers contained in this Agreement and the Disclosure
Letter remain true and correct as of the Closing Date.
18. All keys and other security access devices to the Improvements.
19. A final determination of "no hazard" from the FAA for each of the
Towers.
20. An FCC Form 854R for each of the Towers.
21. Evidence of the termination of the CSSI Leases.
22. The Employment Agreement.
23. Any other documents or instruments required by this Agreement or
reasonably requested by Purchasers to consummate the Closing.
<PAGE>
EXHIBIT "D"
-----------
List of Purchasers' Closing Documents
1. The Purchase Price subject to all adjustments, credits and prorations
provided for in this Agreement.
2. The Letter of Credit.
3. The Assignment and Assumption of Ground Leases.
4. The Bill of Sale and Assignment and Assumption
5. The Site Development Agreement.
6. The Employment Agreement.
7. A certificate of the secretary of Purchasers setting forth the
resolutions adopted by the board of directors of Purchasers
authorizing and directing the president or any vice president of
Purchasers to execute and deliver the documents required to be
executed and delivered by Purchasers under this Agreement, which
certificate will show the name, office and signature of each officer
of Purchasers authorized to execute and deliver such documents.
8. A certificate of good standing from the Secretary of State of
Purchasers' state of incorporation verifying that Purchasers is duly
organized, validly existing and in good standing.
9. A certificate from Purchasers, in form and substance reasonably
acceptable to Sellers, certifying that all representations and
warranties of Purchasers remain true and correct as of the Closing
Date.
10. Any other documents or instruments required by this Agreement or
reasonably requested by Sellers to consummate the Closing.
<PAGE>
EXHIBIT "E"
-----------
List of I-10 Corridor Towers
<TABLE>
<CAPTION>
SITE COUNTY STATE
- ---- ------ -----
<S> <C> <C>
Rebar Road (Jacksonville) Baker Florida
Double Run Road (Lake Columbia Florida
City)
Duval Street (Live Oak) Suwanee Florida
Pine Hill Road (Live Oak) Suwanee Florida
Jennings Hamilton Florida
Jasper (Jennings) Hamilton Florida
Black Bay (Jasper) Hamilton Florida
Winfield Road (Lake City) Columbia Florida
</TABLE>
<PAGE>
EXHIBIT "F"
-----------
List of Construction Towers
<TABLE>
<CAPTION>
SITE COUNTY STATE
- ---- ------ -----
<S> <C> <C>
Buckeye Houston Georgia
Henderson Houston Georgia
Unadilla Dooly Georgia
Vienna Dooly Georgia
Gum Creek Dooly Georgia
Arabia Crisp Georgia
Ashburn Turner Georgia
Chula Tift Georgia
Unionville Tift Georgia
Adel Cook Georgia
Hahira Loundes Georgia
Lake Park Loundes Georgia
</TABLE>
<PAGE>
EXHIBIT "G"
-----------
SBA Construction Acquisition, Inc.
6001 Broken Sound Parkway, 4th Floor
Boca Raton, Florida 33487
______, 1997
E. Robert Segars
2530 N.E. 36th Avenue
Ocala, Florida 34470-3119
Dear Robby:
It is with great pleasure that I offer to you employment on behalf of SBA
Construction Acquisition, Inc. (the "Company"), the name of which will be
changed to "Communication Site Services, Inc." after the closing of the SBA
transaction. The following describes the terms of your employment:
(1) Responsibilities Subject to the general oversight of Steve Bernstein or
me, or our designees, you will direct and supervise,
and otherwise control, the construction of the
communications towers identified on Exhibit A attached
---------
hereto (the "Construction Towers") or any towers
substituted for the Construction Towers which are
approved by the Company (the "Substitution Towers") and
shall use good faith efforts to cause the Construction
Towers and Substitution Towers to be built to the
specifications of the anchor tenants and otherwise in a
manner similar to the other tower sites purchased by
the Company under the terms of that certain Purchase
and Sale Agreement dated as of July __, 1997 among the
Company, SBA Towers Florida, Inc., Communication Site
Services, Inc., Segars Communication Group, Inc.,
Denise L. Segars and E. Robert Segars (the "Purchase
Agreement"). Additionally, if requested, you will
serve, until January 2, 1998, as the Company=s
qualifying agent (as such term is defined under Chapter
489, Florida Statutes) for the Company and will, from
time to time, execute, acknowledge and deliver such
documents and perform such acts as the Company may
reasonably request in connection therewith (including
filing a certification change of status with the
Construction Industry Licensing Board of the Florida
Department of Business and Professional Regulation to
serve as such qualifying agent. Finally, you shall
perform such additional duties and responsibilities as
reasonably requested by Steve Bernstein or me, or our
designees, which duties and responsibilities shall
include identifying additional tower sites
<PAGE>
pursuant to that certain Site Development Agreement
dated __________ __, 1997 between SBA Towers Florida,
Inc. and E. Robert Segars (the "Site Development
Agreement").
(2) Salary $150,000.00 per annum, payable in the manner and at the
Salar times by which the Company generally pays its
employees.
(3) Benefits/
Vacation/
Holidays You shall be entitled to receive the following
benefits: (a) the ays standard medical insurance
coverage offered to employees of the Company for you,
your spouse and dependents under the Company's plan;
(b) the standard dental insurance and other dental
benefits offered to employees of the Company for you,
your spouse and dependents under the Company's plan;
(c) opportunity to participate, from the Closing Date,
as defined in the Purchase Agreement, in any 401(k) or
other pension or retirement benefit or savings plan
offered by the Company to its employees; (d) paid sick
leave equal to paid sick leave to which employees of
the Company with a level of responsibility similar to
that set forth in this Agreement are entitled; and (e)
four weeks paid vacation.
(5) Term The term of your employment shall commence on the date
hereof and shall continue until the later of the date
of completion of the Construction Towers and
Substitution Towers or January 2, 1998. After the term
referred to above, your employment will be "at will."
In all events, your employment will be governed by the
provisions of the Company's policy and procedure manual
as it may be amended from time to time.
(6) Stock Any salary paid to you hereunder or any consideration
due you under the Site Development Agreement dated July
__, 1997 between you and SBA Towers Florida, Inc. (the
"Site Development Agreement") may, at your option, be
deferred (without interest) until such time (if ever)
of the consummation of an initial public offering of
common stock by SBA Communications Corporation
("SBACC"), at which time you shall have the right to
receive, in lieu of and in exchange for such deferred
salary or consideration, common stock from SBACC valued
at the initial public offering price per share less any
underwriting discounts and fees. Subsequent to SBACC=s
initial public offering, you shall have the right to be
paid such salary or other consideration in cash or in
SBACC common stock valued at its then current market
value less a ten percent (10%) discount.
If you find the terms and conditions set forth in this letter acceptable, please
sign where indicated and return the enclosed copy to me.
<PAGE>
Very truly yours,
SBA CONSTRUCTION ACQUISITION, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
ACCEPTED:
______________________
E. ROBERT SEGARS
<PAGE>
SBA COMMUNICATIONS CORPORATION Exhibit 12.1
RATIO OF EARNINGS TO FIXED CHARGES COMPUTATIONS
<TABLE>
<CAPTION>
Year ended Year ended Year ended Year ended Year ended
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
-----------------------------------------------------------------------
Earnings:
<S> <C> <C> <C> <C> <C>
Income (loss) before taxes 83 1,846 3,298 2,366 6,798
Plus: fixed charges 23 45 101 495 876
-----------------------------------------------------------------------
Total Earnings 106 1,891 3,399 2,861 7,674
Fixed Charges:
Interest Expense 9 19 11 139 407
Preferred Dividends 0 0 0 0 983
Interest Component of Operating leases 14 26 90 356 469
-----------------------------------------------------------------------
Total Fixed Charges 23 45 101 495 1,859
Ratio 4.6x 41.82x 33.8x 5.8x 4.1x
</TABLE>
Three months Three months
ended ended
3/31/97 3/31/98
------------------------------
Earnings:
Income (loss) before taxes 2,310 (1,372)
Plus: fixed charges 153 1,997
------------------------------
Total Earnings 2,463 625
Fixed Charges:
Interest Expense 36 1,880
Preferred Dividends 83 438
Interest Component of Operating leases 117 117
------------------------------
Total Fixed Charges 236 2,435
Ratio 10.4x .3x
SBA COMMUNICATIONS CORPORATION
PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES COMPUTATIONS
<TABLE>
<CAPTION>
THREE
YEAR ENDED MONTHS
12/31/97 03/31/98
--------------- --------------
<S> <C> <C>
Earnings:
Income (loss) before taxes (11,965) (4,971)
Plus: fixed charges 19,759 5,096
--------------- --------------
Total Earnings 7,794 125
Fixed Charges:
Interest Expense 19,290 4,979
Preferred Dividends 983 438
Interest Component of Operating leases 469 117
--------------- --------------
Total Fixed Charges 20,742 5,534
Ratio .4x .1x
</TABLE>
Page 1
<PAGE>
EXHIBIT 21.1
Subsidiaries of SBA Communications Corporation
----------------------------------------------
I. SBA Communications Corporation (Florida) owns 100% of SBA Telecommunications,
Inc. (Florida)
A. SBA Telecommunications, Inc. owns 100% of the following entities:
1. SBA, Inc. (Florida)
2. SBA Leasing, Inc. (Florida)
3. SBA Towers, Inc. (Florida)
4. Communication Site Services, Inc. (Florida) ("CSSI")
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the use of
our reports (and to all references to our Firm) included in or made a part of
this registration statement.
ARTHUR ANDERSEN LLP
West Palm Beach, Florida,
July 7, 1998.
1
<PAGE>
EXHIBIT 23.3
----------------------------
ROBSON
----------------------------
SCRIBNER &
----------------------------
STEWART, P.A.
----------------------------
CERTIFIED PUBLIC ACCOUNTANTS
Dennis J. Robson, CPA
Mary C. Scribner, CPA
Suzanne Stewart, CPA
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------------------
As independent certified public accountants, we hereby consent to the use
of our reports (and to all references to our Firm) included in or made a part of
this registration statement.
ROBSON, SCRIBNER & STEWART, P.A.
Ocala, Florida
July 7, 1998
307 N.E. 36th Avenue - Suite 1 . Ocala, FL 34470-1307 . Telephone (352) 694-4184
Telefax (352) 694-1170
MEMBERS OF AMERICAN AND FLORIDA INSTITUTES OF CERTIFIED PUBLIC ACCOUNTANTS
<PAGE>
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
_________
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2)
STATE STREET BANK AND TRUST COMPANY
(Exact name of trustee as specified in its charter)
Massachusetts 04-1867445
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
225 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Maureen Scannell Bateman, Esq. Executive Vice President and General Counsel
225 Franklin Street, Boston, Massachusetts 02110
(617) 654-3253
(Name, address and telephone number of agent for service)
(NAME OF ISSUER)
(SBA Communications Corporation)
FLORIDA (65-0716501)
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
(ADDRESS OF ISSUER)
One Town Center Road 3rd Floor
Boca Raton, Florida 33486
(TYPE OF SECURITIES)
<PAGE>
(12% Senior Discount Notes)
<PAGE>
GENERAL
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO
WHICH IT IS SUBJECT.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System, Washington,
D.C., Federal Deposit Insurance Corporation, Washington, D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee or of its parent,
State Street Corporation.
(See note on page 2.)
ITEM 3. THROUGH ITEM 15. NOT APPLICABLE.
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF
ELIGIBILITY.
1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN
EFFECT.
A copy of the Articles of Association of the trustee, as now
in effect, is on file with the Securities and Exchange
Commission as Exhibit 1 to Amendment No. 1 to the Statement
of Eligibility and Qualification of Trustee (Form T-1) filed
with the Registration Statement of Morse Shoe, Inc. (File
No. 22-17940) and is incorporated herein by reference
thereto.
2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO
COMMENCE BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF
ASSOCIATION.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the
trustee to commence business was necessary or issued is on
file with the Securities and Exchange Commission as Exhibit
2 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the
Registration Statement of Morse Shoe, Inc. (File No. 22-
17940) and is incorporated herein by reference thereto .
3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE
CORPORATE TRUST POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN
THE DOCUMENTS SPECIFIED IN PARAGRAPH (1) OR (2), ABOVE.
A copy of the authorization of the trustee to exercise
corporate trust powers is on file with the Securities and
Exchange Commission as Exhibit 3 to Amendment No. 1 to the
Statement of Eligibility and Qualification of Trustee (Form
T-1) filed with the Registration Statement of Morse Shoe,
Inc. (File No. 22-17940) and is incorporated herein by
reference thereto.
4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS
CORRESPONDING THERETO.
A copy of the by-laws of the trustee, as now in effect, is on
file with the Securities and Exchange Commission as Exhibit 4 to
the Statement of Eligibility and Qualification of Trustee
(Form T-1) filed with the Registration Statement of Eastern
Edison Company (File No. 33-37823) and is incorporated herein by
reference thereto.
3
<PAGE>
5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS IN
DEFAULT.
Not applicable.
6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY SECTION
321(B) OF THE ACT.
The consent of the trustee required by Section 321(b) of the
Act is annexed hereto as Exhibit 6 and made a part hereof.
7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED
PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING AUTHORITY.
A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority is annexed hereto as Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on June 4, 1998.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Gerald R. Wheeler
__________________________________
NAME GERALD R. WHEELER
TITLE VICE PRESIDENT
4
<PAGE>
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, as amended, in connection with the proposed issuance by SBA
COMMUNICATIONS. of itsSenior Discount Notes, we hereby consent that reports of
examination by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Gerald R. Wheeler
_________________________________
NAME GERALD R. WHEELER
TITLE VICE PRESIDENT
DATED: JUNE 4, 1998
5
<PAGE>
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company,
Massachusetts and foreign and domestic subsidiaries, a state banking institution
organized and operating under the banking laws of this commonwealth and a member
of the Federal Reserve System, at the close of business December 31, 1997,
-----------------
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act and in accordance
with a call made by the Commissioner of Banks under General Laws, Chapter 172,
Section 22(a).
<TABLE>
<CAPTION>
Thousands of
ASSETS Dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin...................................................... 2,220,829
Interest-bearing balances............................................................................... 10,076,045
Securities................................................................................................... 10,373,821
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary..................................................................... 5,124,310
Loans and lease financing receivables:
Loans and leases, net of unearned income ............................................................... 6,270,348
Allowance for loan and lease losses..................................................................... 82,820
Allocated transfer risk reserve......................................................................... 0
Loans and leases, net of unearned income and allowances................................................. 6,187,528
Assets held in trading accounts.............................................................................. 1, 241,555
Premises and fixed assets.................................................................................... 410,029
Other real estate owned...................................................................................... 100
Investments in unconsolidated subsidiaries................................................................... 38,831
Customers' liability to this bank on acceptances outstanding................................................. 44,962
Intangible assets............................................................................................ 224,049
Other assets................................................................................................. 1,507,650
----------
Total assets................................................................................................. 37,449,709
==========
LIABILITIES
Deposits:
In domestic offices..................................................................................... 10,115,205
Noninterest-bearing................................................................................ 7,739,136
Interest-bearing................................................................................... 2,376,069
In foreign offices and Edge subsidiary.................................................................. 14,791,134
Noninterest-bearing................................................................................ 71,889
Interest-bearing................................................................................... 14,719,245
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary..................................................................... 7,603,920
Demand notes issued to the U.S. Treasury and Trading Liabilities............................................. 194,059
Trading liabilities.......................................................................................... 1,036,905
Other borrowed money......................................................................................... 459,252
Subordinated notes and debentures............................................................................ 0
Bank's liability on acceptances executed and outstanding..................................................... 44,962
Other liabilities............................................................................................ 972,782
Total liabilities............................................................................................ 35,218,219
----------
EQUITY CAPITAL
Perpetual preferred stock and related
surplus...................................................................................................... 0
Common stock................................................................................................. 29,931
Surplus...................................................................................................... 444,620
Undivided profits and capital reserves/Net unrealized holding gains (losses)................................. 1,763,076
Cumulative foreign currency translation adjustments.......................................................... (6,137)
Total equity capital......................................................................................... 2,231,490
----------
Total liabilities and equity capital......................................................................... 37,449,709
----------
</TABLE>
6
<PAGE>
I, Rex S. Schuette, Senior Vice President and Comptroller of the above namedbank
do hereby declare that this Report of Condition has been prepared in conformance
with the instructions issued by the Board of Governors of theFederal Reserve
System and is true to the best of my knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report
ofCondition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the
instructionsissued by the Board of Governors of the Federal Reserve System and
is true and correct.
David A. Spina
Marshall N. Carter
Truman S. Casner
7
<PAGE>
5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS
IN DEFAULT.
Not applicable.
6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY
SECTION 321(B) OF THE ACT.
The consent of the trustee required by Section 321(b) of the Act is
annexed hereto as Exhibit 6 and made a part hereof.
7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED
PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING
AUTHORITY.
A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority is annexed hereto as Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter of the
obligor, the trustee has relied upon the information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer to Item 2. of this statement will be amended, if necessary, to
reflect any facts which differ from those stated and which would have been
required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation duly
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the June 4, 1998.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Gerald R. Wheeler
-----------------------------
NAME Gerald R. Wheeler
TITLE VICE PRESIDENT
8
<PAGE>
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, as amended, in connection with the proposed issuance by SBA
COMMUNICATIONS CORPORATION. of its SENIOR DISCOUNT NOTES, we hereby consent that
reports of examination by Federal, State, Territorial or District authorities
may be furnished by such authorities to the Securities and Exchange Commission
upon request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Gerald R. Wheeler
------------------------------------------
NAME Gerald R. Wheeler
TITLE VICE PRESIDENT
DATED: JUNE 4, 1998
9
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
SBA COMMUNICATIONS CORPORATION
OFFER TO EXCHANGE
$269,000,000 PRINCIPAL AMOUNT AT MATURITY OF 12% SENIOR DISCOUNT NOTES DUE 2008
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
FOR ANY AND ALL OUTSTANDING
$269,000,000 PRINCIPAL AMOUNT AT MATURITY OF 12% SENIOR DISCOUNT NOTES DUE 2008
PURSUANT TO THE PROSPECTUS, DATED _______, 1998
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON ___________, 1998 (AS SUCH DATE AND TIME MAY BE EXTENDED BY THE
COMPANY IN ITS SOLE DISCRETION, THE "EXPIRATION DATE").
- --------------------------------------------------------------------------------
PLEASE READ CAREFULLY THE ATTACHED INSTRUCTIONS
If you desire to accept the Exchange Offer, this Letter of Transmittal
should be completed, signed, and submitted to:
<TABLE>
<S> <C>
By Registered or Certified Mail, by Overnight Carrier
or by Hand: By Facsimile:
State Street Bank and Trust Company State Street Bank and Trust Company
Two International Place Attention: Kellie Mullen, Corporate Trust, Fourth Floor
Boston, MA 02110 (617) 664-5371
Attention: Kellie Mullen, Corporate Trust, Fourth Floor
Confirm By Telephone:
(617) 664-5602
</TABLE>
Delivery of this Letter of Transmittal to an address other than as set
forth above or transmission of instructions via a facsimile number other than
that set forth above will not constitute a valid delivery.
The undersigned hereby acknowledges receipt of the Prospectus dated
_______, 1998 (the "Prospectus") of SBA Communications Corporation, a company
incorporated under the laws of the state of Florida (the "Company"), and this
Letter of Transmittal (the "Letter of Transmittal"), that together constitute
the Company's offer (the "Exchange Offer") to exchange $1,000 principal amount
(or fraction thereof) of a new series of 12% Senior Discount Notes due 2008 (the
"New Notes") for each $1,000 principal amount (or fraction thereof) of its
outstanding 12% Senior Discount Notes due 2008 (the "Old Notes"). The New Notes
and the Old Notes are collectively referred to as the "Notes." Capitalized
terms used but not defined herein have the meanings ascribed to them in the
Prospectus.
THE REGISTRATION STATEMENT ON FORM S-4 (FILE NO. 333-_____) OF WHICH THE
PROSPECTUS IS A PART WAS DECLARED EFFECTIVE BY THE SECURITIES AND EXCHANGE
COMMISSION ON _______, 1998.
Either this Letter of Transmittal or an Agent's Message (as defined) is
to be completed by a holder of Old Notes (which term, for purposes of the
Exchange Offer, includes any participant in the DTC system whose name appears on
a security position listing as the holder of such Old Notes) in order to tender
Old Notes. All
<PAGE>
deliveries of Old Notes must be made either by (i) endorsement and delivery of
Definitive Registered Notes or (ii) by book-entry transfer of Book-Entry
Interests to the account maintained by the Exchange Agent at DTC pursuant to the
procedures set forth in the Prospectus under "The Exchange Offer--Procedures For
Tendering Book." Holders of Old Notes who are unable to deliver (i) endorsed
Definitive Registered Notes, (ii) confirmation of the book-entry tender of their
Old Notes into the Exchange Agent's account at DTC (a "Book-Entry Confirmation")
or (iii) in either case all other documents required by this Letter of
Transmittal to the Exchange Agent on or prior to the Expiration Date must tender
their Old Notes according to the guaranteed delivery procedures set forth in the
Prospectus under "The Exchange Offer--Guaranteed Delivery Procedures." See
Instruction 1. Delivery of documents to DTC does not constitute delivery to the
Exchange Agent.
The undersigned has completed the appropriate boxes below and signed
this Letter to indicate the action the undersigned desires to take with respect
to the Exchange Offer.
List below the Old Notes to which this Letter relates. If the space
provided is inadequate, the principal amount of Old Notes should be listed on a
separate signed schedule affixed hereto.
<TABLE>
<CAPTION>
=======================================================================================================================
BOX 1
DESCRIPTION OF OLD NOTES TENDERED
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NAME(S) AND ADDRESS(ES) OF
HOLDER(S) OF OLD NOTES, AGGREGATE PRINCIPAL AMOUNT OF PRINCIPAL AMOUNT OF OLD NOTES
(PLEASE FILL IN, IF BLANK) OLD NOTES TENDERED*
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
TOTAL
=======================================================================================================================
</TABLE>
* Unless otherwise indicated in this column, ALL of the Old Notes indicated
in the preceding column of this Box 1 or delivered to the Exchange Agent
herewith shall be deemed tendered. See Instruction 4.
[_] CHECK HERE IF DEFINITIVE REGISTERED NOTES ARE BEING DELIVERED WITH THIS
LETTER OF TRANSMITTAL AND COMPLETE THE FOLLOWING:
Name(s) of Holder(s) _______________________________________
Certificate Number(s) ______________________________________
[_] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution _______________________________
The Depository Trust Company Account Number ____ Transaction Code
Number ____
<PAGE>
By crediting the Old Notes to the Exchange Agent's account at DTC in
accordance with DTC's Automated Tender Offer Program ("ATOP") and by complying
with applicable ATOP procedures with respect to the Exchange Offer, including
transmitting a computer-generated message (an "Agent's Message") to the Exchange
Agent in which the holder of the Old Notes acknowledges and agrees to be bound
by the terms of this Letter of Transmittal, the DTC participant confirms on
behalf of itself and the beneficial owners of such Old Notes all provisions of
this Letter of Transmittal applicable to it and such beneficial owners as fully
as if it had completed the information required herein and executed and
transmitted this Letter of Transmittal to the Exchange Agent.
[_] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE
THE FOLLOWING:
Name(s) of Holder(s) _________________________________________
Name of Institution that guaranteed delivery__________________
If Definitive Registered Notes are being tendered:
Name of Holder(s) ____________________________________________
Certificate number ___________________________________________
If Book-Entry Interests are being tendered:
The Depository Trust Company: Account Number ______________________
Transaction Code Number ______________
<PAGE>
[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO:
Name __________________________________________________________
Address ________________________________________________________
You are entitled to as many copies as you may reasonably request and
if you need more than 10 copies, please so indicate by a notation below.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
<PAGE>
SBA Communications Corporation
One Town Center Road
Boca Raton, Florida 33486
Attention: Jeffrey A. Stoops, Esq.
State Street Bank and Trust Company
Two International Place
Boston, MA 02110
Attention: Kellie Mullen, Corporate Trust, Fourth Floor
Re: Tender of Old Notes for New Notes
---------------------------------
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer
described in the Prospectus and this Letter of Transmittal, the undersigned
hereby tenders to SBA Communications Corporation the principal amount of Old
Notes indicated in Box 1 above (the "Tendered Notes"). Subject to, and
effective upon, the acceptance for exchange of the Tendered Notes, the
undersigned hereby exchanges, assigns, and transfers to, or upon the order of,
SBA Communications Corporation, all right, title, and interest in, to and under
the Tendered Notes. Each DTC participant transmitting by means of DTC a
computer-generated message forming part of a Book-Entry Confirmation, on behalf
of itself and the beneficial owner of the Old Notes tendered thereby,
acknowledges receipt of the Prospectus and this Letter of Transmittal and agrees
to be bound by the terms and conditions of the Exchange Offer as set forth in
the Prospectus and this Letter of Transmittal.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign, and transfer the Tendered
Notes and that the Company will acquire good and unencumbered title thereto,
free and clear of all liens, restrictions, charges, encumbrances, and adverse
claims when the Tendered Notes are acquired by the Company as contemplated
herein. The undersigned and each beneficial owner of Old Notes tendered by the
undersigned will, upon request, execute and deliver any additional documents
reasonably requested by the Company as necessary or desirable to complete and
give effect to the transactions contemplated hereby.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the true and lawful agent and attorney in fact of the undersigned with
respect to the Tendered Notes, with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
(i) deliver the Tendered Notes to the Company or cause ownership of the Tendered
Notes to be transferred to, or upon the order of, the Company, and deliver all
accompanying evidences of transfer and authenticity to, or upon the order of,
the Company upon receipt by the Exchange Agent, as the undersigned's agent, of
the New Notes to which the undersigned is entitled upon the acceptance by the
Company of the Tendered Notes pursuant to the Exchange Offer, and (ii) receive
all benefits and otherwise exercise all rights of beneficial ownership of the
Tendered Notes, all in accordance with the terms of the Exchange Offer.
The undersigned also acknowledges that this Exchange Offer is being made
by the Company in reliance on an interpretation by the staff of the Securities
and Exchange Commission (the "Commission"), as set forth in certain no-action
letters to third parties, that the New Notes issued in exchange for the Old
Notes pursuant to the Exchange Offer may be offered for resale, resold and
otherwise transferred by holders thereof (other than a broker-dealer, as set
forth below, or any such holder that is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act of 1933, as amended (the
"Securities Act"), without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Notes are
acquired in the ordinary course of such holder's business and such holders have
no arrangement with any person to participate in the distribution (within the
meaning of the Securities Act) of such New Notes. By tendering, each holder of
Old
<PAGE>
Notes represents to the Company that (i) the New Notes or Book-Entry Interests
therein to be acquired by such holder and any beneficial owner(s) of such Old
Notes or interests therein ("Beneficial Owner(s)") in connection with the
Exchange Offer are being acquired by such holder and any Beneficial Owner(s) in
the ordinary course of business of the holder and any Beneficial Owner(s), (ii)
the holder and each Beneficial Owner are not participating, do not intend to
participate, and have no arrangement or understanding with any person to
participate, in the distribution of the New Notes, (iii) if the holder is a
resident of the State of California, it falls under the self-executing
institutional investor exemption set forth under Section 25102(i) of the
Corporate Securities Law of 1968 and Rules 260.102.10 and 260.105.14 of the
California Blue Sky Regulations, (iv) if the undersigned is a resident of the
Commonwealth of Pennsylvania, it falls under the self-executing institutional
investor exemption set forth under Sections 203(c), 102(d) and (k) of the
Pennsylvania Securities Act of 1972, Section 102.111 of the Pennsylvania Blue
Sky Regulations and an interpretive opinion dated November 16, 1985, (v) the
holder and each Beneficial Owner acknowledge and agree that any person who is a
broker-dealer registered under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or is participating in the Exchange Offer for the purpose
of distributing the New Notes must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction of the New Notes or interests therein acquired by such person
and cannot rely on the position of the staff of the Commission set forth in
certain no-action letters, (vi) the holder and each Beneficial Owner understands
that a secondary resale transaction described in clause (v) above and any
resales of New Notes or interests therein obtained by such holder in exchange
for Old Notes or interests therein originally acquired by such holder directly
from the Company should be covered by an effective registration statement
containing the selling security holder information required by Item 507 or Item
508, as applicable, of Regulation S-K of the Commission and (vii) neither the
holder nor any Beneficial Owner(s) is an "affiliate," as defined in Rule 405
under the Securities Act, of the Company. Upon a request by the Company, a
holder or beneficial owner will deliver to the Company a legal opinion
confirming its representation made in clause (vii) above. By tendering, each
holder of Old Notes that is a broker-dealer (whether or not it is also an
"affiliate") that will receive New Notes for its own account pursuant to the
Exchange Offer, represents that the Old Notes to be exchanged for the New Notes
were acquired by it as a result of market-making activities or other trading
activities, and acknowledges that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such New
Notes; however, by so acknowledging and by delivering a prospectus, the holder
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
The undersigned understands that tenders of Old Notes pursuant to the
procedures described under the captions "The Exchange Offer--Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer, subject only to withdrawal of
such tenders on the terms set forth in the Prospectus under the caption "The
Exchange Offer--Withdrawal of Tenders." All authority herein conferred or
agreed to be conferred shall survive the death or incapacity of the undersigned
and any Beneficial Owner(s), and every obligation of the undersigned or any
Beneficial Owners hereunder shall be binding upon the heirs, representatives,
successors, and assigns of the undersigned and such Beneficial Owner(s).
The undersigned acknowledges and understands that New Notes will be
issued in exchange for Tendered Notes (i) as Definitive Registered Notes
registered in the name(s) of the undersigned and sent to the address(es) shown
above in Box 1 or, if applicable, Box 2 if Definitive Registered Notes were
tendered or (ii) as Book-Entry Interests delivered by book-entry transfer to the
account of the undersigned shown above under Box 1 or, if applicable, Box 2 if
Book-Entry Interests were tendered.
<PAGE>
Unless otherwise indicated in Box 2 below, please deliver New Notes as
specified in Box 1.
The undersigned, by completing Box 1 above and signing this letter, will
be deemed to have tendered the Old Notes as set forth in such Box above.
================================================================================
BOX 2
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if the New Notes exchanged for Old Notes and/or if
untendered Old Notes or Old Notes that are not accepted for exchange are to be
delivered to someone other than the undersigned, or to the undersigned at an
address or an account maintained at DTC other than that shown above under Box 1.
Please issue New Notes and/or any unexchanged or unaccepted Old Notes to:
Names(s):
_____________________________________________________________________________
(please type or print)
Address:
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(include Zip Code)
Tax Identification or
Social Security No.:
[_] Credit Book-Entry Interests in New Notes and/or unexchanged or unaccepted
Old Notes to the DTC account set forth below:
_________________________________________________________________
================================================================================
<PAGE>
================================================================================
BOX 3
USE OF GUARANTEED DELIVERY
[_] CHECK HERE ONLY IF OLD NOTES ARE BEING
TENDERED BY MEANS OF A NOTICE OF GUARANTEED DELIVERY.
See Instruction 2. If this box is checked, please provide the following
information:
Name(s) of Holder(s): _______________________________________________________
_____________________________________________________________________________
Date of Execution of Notice of Guaranteed Delivery: _________________________
Name of Institution which Guaranteed Delivery: ______________________________
================================================================================
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF OR AN AGENT'S MESSAGE
(TOGETHER WITH A BOOK-ENTRY CONFIRMATION AND ANY OTHER REQUIRED DOCUMENTS OR THE
NOTICE OF GUARANTEED DELIVERY, AS APPLICABLE) MUST BE RECEIVED BY THE EXCHANGE
AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON OR PRIOR TO THE EXPIRATION
DATE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
<PAGE>
================================================================================
BOX 4
TENDERING HOLDER SIGNATURE
(SEE INSTRUCTIONS 1 AND 5)
- --------------------------------------------------------------------------------
X ____________________________________ Signature Guarantee
(If required by Instruction 5)
X ____________________________________ Authorized Signature
(Signature of Owner) X ______________________________
The above lines must be signed by the person Name: __________________________
in whose name such Old Notes are (i) (please print)
registered in the case of Definitive
Registered Notes being tendered or (ii) Title: _________________________
registered on the security position listing
maintained by DTC or, in each case, by any Name of Firm: __________________
person(s) authorized to become holder(s) by (Must be an
documents transmitted herewith. If Eligible
signature is by a trustee, executor, Institution as
administrator, guardian, attorney-in-fact, defined in
officer, or other person acting in a Instruction 2)
fiduciary or representative capacity, such
person must set forth his or her full title
below. See Instruction 5.
Name(s): ______________________________ Address: ______________________
______________________________ ______________________
Capacity: ______________________________ ______________________
(include Zip Code)
Street Address: ________________________ Area Code and Telephone Number:
________________________ ______________________
________________________
(include Zip Code) Date: __________________________
Area Code and Telephone Number:
________________________
Tax Identification or Social Security Number:
________________________
================================================================================
<PAGE>
INSTRUCTIONS TO LETTER OF TRANSMITTAL
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. Delivery of the Old Notes and this Letter of Transmittal.
(A) If the holder is tendering Definitive Registered Notes, such
holder must deliver (i) the certificate(s) representing the Old Notes tendered,
(ii) a properly completed and duly executed copy of this Letter of Transmittal
and (iii) any other documents required by this Letter of Transmittal, all of
which must be received by the Exchange Agent at its address set forth herein
prior to the Expiration Date.
(B) If the holder is tendering Book-Entry Interests, such holder must
(i) utilize DTC's ATOP system to tender such holder's Book-Entry Interests to an
account established at DTC by the Exchange Agent, (ii) make the Agent's Message
and cause a Book-Entry Confirmation to be issued to the Exchange Agent or
deliver a properly completed and duly executed copy of this Letter of
Transmittal and (iii) deliver any other documents required by this Letter of
Transmittal, all of which must be received by the Exchange Agent at its DTC
account or address set forth herein prior to the Expiration Date.
The method of delivery of certificates for Old Notes and all other
required documents is at the election and risk of the tendering holder and
delivery will be deemed made only when actually received by the Exchange Agent.
If delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. Instead of delivery by mail it is recommended that the
holder use an overnight or hand delivery service. In all cases, sufficient time
should be allowed to assure timely delivery. In no event should any Old Notes
or documentation be sent to the Company. Neither the Company nor the registrar
is under any obligation to notify any tendering holder of the Company's
acceptance of Tendered Notes prior to the Expiration Date.
2. Guaranteed Delivery Procedures. Holders, who wish to tender their Old
Notes but who cannot deliver their Old Notes, Letter of Transmittal or any other
documents required by the Letter of Transmittal to the Exchange Agent prior to
the Expiration Date must tender their Old Notes according to the guaranteed
delivery procedures set forth below, including completion of Box 3 (if this
Letter of Transmittal is being delivered). Pursuant to such procedures: (i) such
tender must be made by or through a firm which is a member of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., or is a commercial bank or trust company having an office or
correspondent in the United States, or is otherwise an "eligible guarantor
institution" within the meaning of Rule 17Ad-15 under the Securities Exchange
Act of 1934, as amended (an "Eligible Institution"), and the Notice of
Guaranteed Delivery must be signed by the holder; (ii) prior to the Expiration
Date, the Exchange Agent must have received from the holder and the Eligible
Institution a properly completed and duly executed Notice of Guaranteed Delivery
(by facsimile transmission, mail or hand delivery) setting forth the name and
address of the holder, in the case of Definitive Registered Notes, the
certificate number or numbers of the Tendered Notes, and, in each case, the
principal amount of Tendered Notes, stating that the tender is being made
thereby and guaranteeing that, within five New York Stock Exchange ("NYSE")
trading days after the Expiration Date, either a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof) or a properly
transmitted Agent's Message, together with the Tendered Notes and any other
required documents will be deposited by the Eligible Institution with the
Exchange Agent; and (iii) such Agent's Message or Letter of Transmittal, such
properly completed and executed documents required by this Letter of Transmittal
and such Tendered Notes in proper form for transfer must be received by the
Exchange Agent within five NYSE trading days after the Expiration Date. Failure
to complete the guaranteed delivery procedures outlined above will not, of
itself, affect the validity or effect a revocation of any Letter of Transmittal
form properly completed and executed by an Eligible Holder who attempted to use
the guaranteed delivery process.
3. Beneficial Owner Instructions to Registered Holders. Only a holder in
whose name Definitive Registered Notes are registered on the books of the
registrar (or the legal representative or attorney-in-fact of such
<PAGE>
registered holder) or who is a DTC participant who owns a Book-Entry Interest in
the Old Notes through a security position maintained by DTC may execute and
deliver this Letter of Transmittal. Any Beneficial Owner of Old Notes who is not
the registered holder or who is not a DTC participant who has a security
position in the Old Notes maintained by DTC in its name must arrange promptly
with the registered holder or a DTC participant, as the case may be, to execute
and deliver this Letter of Transmittal or an Agent's Message on his or her
behalf through the execution and delivery to the registered holder or DTC
participant of the "Instructions to Registered Holder or DTC Participant from
Beneficial Owner" form accompanying this Letter of Transmittal.
4. Partial Tenders. If less than the entire number of Old Notes are
tendered, the tendering holder should fill in the number of Old Notes tendered
in the column labeled "Principal Amount of Old Notes Tendered" of Box 1 above.
The entire number of Old Notes delivered to the Exchange Agent will be deemed to
have been tendered unless otherwise indicated. If the entire number of all Old
Notes indicated in Box 1 above is not tendered, Old Notes in a principal amount
equal to Old Notes not tendered as well as New Notes exchanged for any Old Notes
tendered will be delivered to the address or account, as applicable, indicated
in Box 1, unless a different address or account, as applicable, is provided in
Box 2 of this Letter of Transmittal.
5. Signatures on the Letter of Transmittal; Endorsements; Guarantee Of
Signatures. If this Letter of Transmittal is signed by the registered holder(s)
of the Tendered Notes (in the case of Definitive Registered Notes), the
signature must correspond with the name(s) as written on the face of the
Tendered Notes without alteration, enlargement, or any change whatsoever. If
this Letter of Transmittal is signed by the DTC participant whose name appears
on a security position maintained by DTC (in the case of Book-Entry Interests),
the signature must correspond exactly with such participant's name as it appears
on a security position maintained by DTC listing such participant as the owner
of the Old Notes, without any change whatsoever.
If any of the Tendered Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal. If any Tendered
Notes are held in different names on several Old Notes, it will be necessary to
complete, sign, and submit as many separate copies of the Letter of Transmittal
documents as there are names in which Tendered Notes are held.
When this Letter of Transmittal is signed by the holders of the Old
Notes specified herein and tendered hereby, no separate bond powers are
required. If, however, the New Notes are to be issued, or any untendered or
unaccepted Old Notes are to be reissued, to a person other than the holder, then
separate bond powers are required. Signatures on such bond powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal or any Old Notes are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and, unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with this Letter of Transmittal.
Signatures on bond powers required by this Instruction 5 must be
guaranteed by an Eligible Institution. Signatures on this Letter of Transmittal
need not be guaranteed by an Eligible Institution if: (i) this Letter of
Transmittal is signed by the registered holder of Definitive Registered Notes
tendered hereby, (ii) this Letter of Transmittal is signed by any participant in
DTC whose name appears on a security position listing maintained by DTC as the
owner of the Old Notes tendered and such person has not completed Box 2 of this
Letter of Transmittal or (iii) the Old Notes are tendered for the account of an
Eligible Institution.
6. Special Delivery Instructions. Tendering holders of Old Notes should
indicate in Box 2 (i) the name and address to which Definitive Registered Notes
representing New Notes and/or substitute Definitive Registered Notes
representing Old Notes in a principal amount equal to the Old Notes not tendered
or not accepted for
<PAGE>
exchange are to be sent or (ii) the DTC account to which Book-Entry Interests in
the New Notes issued pursuant to the Exchange Offer and/or substitute Book-Entry
Interests in the Old Notes not tendered or not accepted for exchange are to be
issued, in each case only if the recipient of such New Notes or substitute Old
Notes is different from the person signing this Letter of Transmittal. The
employer identification number or social security number of the person named
must also be indicated. If no such instructions are given, such New Notes and/or
Old Notes not tendered or not accepted for exchange will be credited to the
registered holder or DTC account of the person signing this Letter of
Transmittal.
7. Transfer Taxes. The Company will pay all transfer taxes, if any,
applicable to the sale and transfer of Old Notes to it or its order pursuant to
the Exchange Offer. If, however, a transfer tax is imposed for any reason other
than the transfer and sale of Old Notes to the Company or its order pursuant to
the Exchange Offer, then the amount of any such transfer taxes (whether imposed
on the registered holder or on any other person) will be payable by the
tendering holder. If satisfactory evidence of payment of such taxes or exemption
from taxes therefrom is not submitted with this Letter of Transmittal, the
amount of transfer taxes will be billed directly to such tendering holder.
8. Validity of Tenders. All questions as to the validity, form,
eligibility (including time of receipt), and acceptance of Tendered Notes will
be determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the right to reject any and all Old
Notes not validly tendered or any Old Notes the Company's acceptance of which
would, in the opinion of the Company or its counsel, be unlawful. The Company
also reserves the right to waive any conditions of the Exchange Offer or defects
or irregularities in tenders of Old Notes as to any ineligibility of any holder
who seeks to tender Old Notes in the Exchange Offer. The interpretation of the
terms and conditions of the Exchange Offer (including this Letter of Transmittal
and the instructions hereto) by the Company shall be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of Old Notes must be cured within such time as the Company shall determine. The
Company will use reasonable efforts to give notification of defects or
irregularities with respect to tenders of Old Notes, but shall not incur any
liability for failure to give such notification.
9. Waiver of Conditions. The Company reserves the absolute right to
amend, waive, or modify specified conditions of the Exchange Offer as enumerated
in the Prospectus in the case of any Tendered Notes.
10. No Conditional Tender. No alternative, conditional, irregular, or
contingent tender of Old Notes or transmittal of this Letter of Transmittal will
be accepted.
11. Mutilated, Lost, Stolen or Destroyed Old Notes. Any tendering holder
whose Old Notes have been mutilated, lost, stolen, or destroyed should contact
the Exchange Agent at the address indicated above for further instruction.
12. Requests for Assistance or Additional Copies. Questions and requests
for assistance and requests for additional copies of the Prospectus may be
directed to the Exchange Agent at the address specified in the Prospectus.
Holders may also contact their broker, dealer, commercial bank, trust company,
or other nominee for assistance concerning the Exchange Offer.
13. Acceptance of Tendered Notes and Issuance of New Notes; Return Old
Notes. Subject to the terms and conditions of the Exchange Offer, the Company
will accept for exchange all validly tendered Old Notes as soon as practicable
after the Expiration Date and will issue New Notes therefor as soon as
practicable thereafter. For purposes of the Exchange Offer, the Company shall be
deemed to have accepted tendered Old Notes when, as and if the Company has given
written or oral notice thereof (such oral notice being promptly confirmed in
writing) to the Exchange Agent. If any Tendered Notes are not exchanged pursuant
to the Exchange Offer for any reason, such
<PAGE>
unexchanged Old Notes will be returned, without expense, to the undersigned at
the address or DTC account shown above or at a different address or DTC account
as may be indicated herein under Box 2.
14. Withdrawal. Tenders may be withdrawn only pursuant to the limited
withdrawal rights set forth in the Prospectus under the caption "The Exchange
Offer--Withdrawal of Tenders."
15. Incorporation of Letter of Transmittal. This Letter of Transmittal
shall be deemed to be incorporated in and acknowledged and accepted by any
tender through DTC's ATOP procedures by any DTC participant on behalf of itself
and the beneficial owners of any Book-Entry Interests representing Old Notes so
tendered.
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
12% SENIOR DISCOUNT NOTES DUE 2008
OF
SBA COMMUNICATIONS CORPORATION
As set forth in the Prospectus dated _______________, 1998 (the
"Prospectus") of SBA Communications Corporation (the "Company") and in the
accompanying Letter of Transmittal and instructions thereto (the "Letter of
Transmittal"), this form or one substantially equivalent hereto must be used to
accept the Company's Exchange Offer (the "Exchange Offer") to exchange new 12%
Senior Discount Notes due 2008 (the "New Notes") that have been registered under
the Securities Act of 1933, as amended (the "Securities Act"), for all of its
outstanding 12% Senior Discount Notes due 2008 (the "Old Notes") IF the Letter
of Transmittal or any other documents required thereby cannot be delivered to
the Exchange Agent, or Definitive Registered Notes cannot be delivered or the
procedure for book-entry transfer cannot be completed, prior to 5:00 p.m., New
York City Time, on the Expiration Date (as defined in the Prospectus). This form
may be delivered by an Eligible Institution by hand or transmitted by facsimile
transmission, overnight courier or mail to the Exchange Agent as set forth
below. Capitalized terms not defined herein have the meanings ascribed to them
in the Prospectus or the Letter of Transmittal.
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON _______________, 1998 (AS SUCH DATE AND TIME MAY BE EXTENDED BY THE
COMPANY IN ITS SOLE DISCRETION, THE "EXPIRATION DATE").
- --------------------------------------------------------------------------------
PLEASE READ CAREFULLY THE ATTACHED INSTRUCTIONS
<TABLE>
To: State Street Bank and Trust Company, as Exchange Agent
By Registered or Certified Mail, by Overnight Carrier or by By Facsimile:
<S> <C>
Hand:
State Street Bank and Trust Company State Street Bank and Trust Company
Two International Place Attention: Kellie Mullen, Corporate Trust, Fourth Floor
Boston, MA 02110 (617) 664-5371
Attention: Kellie Mullen, Corporate Trust, Fourth Floor
</TABLE>
Delivery of this Notice of Guaranteed Delivery to an address other
than as set forth above or transmission of instructions via a facsimile number
other than that set forth above will not constitute a valid delivery.
This form is not to be used to guarantee signatures. If a signature on
the Letter of Transmittal to be used to tender Old Notes is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the Letter
of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and
subject to the conditions set forth in the Prospectus and the related Letter of
Transmittal (which together constitute the "Exchange Offer"), receipt of which
is hereby acknowledged, the principal amount of Old Notes specified below
pursuant to the guaranteed delivery procedures set forth in the Prospectus and
in Instruction 2 of the Letter of Transmittal.
The undersigned understands that tenders of Old Notes pursuant to the
Exchange Offer may not be withdrawn after 5:00 p.m., New York City time, on the
Expiration Date. Tenders of Old Notes may also be
<PAGE>
withdrawn if the Exchange Offer is terminated without any such Old Notes being
purchased thereunder or as otherwise provided in the Prospectus.
All authority thereto conferred or agreed to be conferred by this
Notice of Guaranteed Delivery shall survive the death, incapacity or dissolution
of the undersigned and every obligation of the undersigned under this Notice of
Guaranteed Delivery shall be binding upon the heirs, personal representatives,
executors, administrators, successors, assigns, trustees in bankruptcy and other
legal representatives of the undersigned.
The undersigned hereby tenders the Old Notes listed below:
<TABLE>
- -------------------------------------------------------------------------------------------------------
Aggregate Principal Amount of Old Notes Principal Amount of Old Notes Tendered
<S> <C>
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: SIGNATURES MUST BE PROVIDED WHERE INDICATED BELOW
SIGN HERE
Name(s) of Holder(s): ____________________________________________
Address(es): ____________________________________________
____________________________________________
Telephone Number: ____________________________________________
Signature(s): ____________________________________________
____________________________________________
Date: ____________________________________________
DTC Account Number (if applicable): _____________________________________
This Notice of Guaranteed Delivery must be signed by (i) the Holder(s)
of Old Notes exactly as its/their name(s) appear on Definitive Registered Notes,
(ii) the Holder(s) of Old Notes exactly as its/their name(s) appear on a
security position listing maintained by DTC as the owner of Old Notes or (iii)
by person(s) authorized to become Holder(s) by documents transmitted with this
Notice of Guaranteed Delivery. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer or other person acting in a
fiduciary or representative capacity, such person must provide the following
information:
<PAGE>
Please print name(s) and address(es) of person signing above
Name(s): _________________________________________________________________
_________________________________________________________________
Capacity: _________________________________________________________________
Address(es): _________________________________________________________________
_________________________________________________________________
_________________________________________________________________
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or is a commercial bank or trust company having an office or correspondent in
the United States, or is otherwise an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), hereby (a) represents that the above named
person(s) "own(s)" the Old Notes tendered hereby within the meaning of Rule 14e-
4 under the Exchange Act, (b) represents that such tender of Old Notes complies
with Rule 14e-4 under the Exchange Act and (c) guarantees that delivery to the
Exchange Agent of the Letter of Transmittal (or facsimile thereof), either
Definitive Registered Notes in proper form for transfer or a confirmation of the
book-entry transfer of Book-Entry Interests representing such Old Notes into the
Exchange Agent's account at DTC, pursuant to the procedures for book-entry
transfer set forth in the Prospectus, and delivery of either a properly
completed and duly executed Letter of Transmittal (or manually signed facsimile
thereof) with any required signatures and any other documents required by the
Letter of Transmittal or an Agent's Message, will be received by the Exchange
Agent by 5:00 p.m., New York City time, on the fifth New York Stock Exchange
trading day after the Expiration Date.
THE UNDERSIGNED ACKNOWLEDGES THAT IT MUST DELIVER THE LETTER OF
TRANSMITTAL OR AGENT'S MESSAGE AND OLD NOTES TENDERED HEREBY TO THE EXCHANGE
AGENT WITHIN THE TIME PERIOD SET FORTH THEREIN AND THAT FAILURE TO DO SO COULD
RESULT IN FINANCIAL LOSS TO THE UNDERSIGNED.
-----------------------------------------------------------------------
SIGN HERE
Name of firm: _______________________________
Authorized Signature: _______________________________
Name (please print): _______________________________
Address: _______________________________
_______________________________
Telephone Number: _______________________________
Date: _______________________________
-----------------------------------------------------------------------
DO NOT SEND ANY DEFINITIVE REGISTERED NOTES WITH THIS FORM. ACTUAL SURRENDER OF
DEFINITIVE REGISTERED NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, AN
EXECUTED LETTER OF TRANSMITTAL.
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. Delivery of this Notice of Guaranteed Delivery. A properly completed
and duly executed copy of this Notice of Guaranteed Delivery and any other
documents required by this Notice of Guaranteed Delivery must be received by the
Exchange Agent at its address set forth herein prior to the Expiration Date. The
method of delivery of this Notice of Guaranteed Delivery and any other required
documents to the Exchange Agent is at the election and risk of the holder, and
the delivery will be deemed made only when actually received by the Exchange
Agent. If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. Instead of delivery by mail, it is recommended
that the holder use an overnight or hand delivery service. In all cases
sufficient time should be allowed to assure timely delivery. For a description
of the guaranteed delivery procedure, see Instruction 2 of the Letter of
Transmittal.
<PAGE>
2. Signatures on this Notice of Guaranteed Delivery. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Old Notes to be
tendered (in the case of Definitive Registered Notes), the signature must
correspond with the name(s) as written on the face of such Old Notes without
alteration, enlargement, or any change whatsoever. If this Notice of Guaranteed
Delivery is signed by the DTC participant whose name appears on a security
position maintained by DTC (in the case of Book-Entry Interests), the signature
must correspond exactly with such participant's name as it appears on a security
position maintained by DTC listing such participant as the owner of the Old
Notes, without any change whatsoever.
If any of the Old Notes to be tendered are owned of record by two or
more joint owners, all such owners must sign this Notice of Guaranteed Delivery.
If any Old Notes to be tendered are held in different names on several Old
Notes, it will be necessary to complete, sign, and submit as many separate
copies of the Notice of Guaranteed Delivery documents as there are names in
which Old Notes to be tendered are held.
If this Notice of Guaranteed Delivery or any Old Notes are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and, unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with this Notice of Guaranteed Delivery.
3. Requests for Assistance of Additional Copies. Questions and requests
for assistance and requests for additional copies of the prospectus may be
directed to the Exchange Agent at the address specified in the Prospectus.
Holders also may contact their broker, dealer, commercial bank, trust company,
or other nominee for assistance concerning the Exchange Offer.
<PAGE>
LETTER TO REGISTERED HOLDERS AND DTC PARTICIPANTS
REGARDING THE OFFER TO EXCHANGE
$269,000,000 PRINCIPAL AMOUNT AT MATURITY OF 12% SENIOR DISCOUNT NOTES DUE 2008
FOR ANY AND ALL OUTSTANDING
$269,000,000 PRINCIPAL AMOUNT AT MATURITY OF 12% SENIOR DISCOUNT NOTES DUE 2008
OF
SBA COMMUNICATIONS CORPORATION
To Registered Holders and The Depository Trust Company Participants:
We are enclosing herewith the materials listed below relating to the
offer by SBA Communications Corporation (the "Company") to exchange its new 12%
Senior Discount Notes due 2008 (the "New Notes"), pursuant to an offering
registered under the Securities Act of 1933, as amended (the "Securities Act"),
for a like principal amount of its issued and outstanding 12% Senior Discount
Notes due 2008 (the "Old Notes") upon the terms and subject to the conditions
set forth in the Company's Prospectus, dated _______________, 1998, and the
related Letter of Transmittal (which together constitute the "Exchange Offer").
Enclosed herewith are copies of the following documents:
1. Prospectus dated _______________, 1998;
2. Letter of Transmittal;
3. Notice of Guaranteed Delivery;
4. Instruction to Registered Holder or DTC Participant from Beneficial
Owner; and
5. Letter which may be sent to your clients for whose account you hold
Definitive Registered Notes or Book-Entry Interests representing Old Notes in
your name or in the name of your nominee, to accompany the instruction form
referred to above, for obtaining such client's instruction with regard to the
Exchange Offer.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE
EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON _______________,
1998, UNLESS EXTENDED.
The Exchange Offer is not conditioned upon any minimum number of Old
Notes being tendered.
To participate in the Exchange Offer, a beneficial holder must either
(i) cause to be delivered to State Street Bank and Trust Company (the "Exchange
Agent") at the address set forth in the Letter of Transmittal Definitive
Registered Notes in proper form for transfer together with a properly executed
Letter of Transmittal or (ii) cause a DTC Participant to tender such holder's
Old Notes to the Exchange Agent's account maintained at the Depository Trust
Company ("DTC") for the benefit of the Exchange Agent through DTC's Automated
Tender Offer Program ("ATOP"), including transmission of a computer-generated
message that acknowledges and agrees to be bound by the terms of the Letter of
Transmittal. By complying with DTC's ATOP procedures with respect to the
Exchange Offer, the DTC Participant confirms on behalf of itself and the
beneficial owners of tendered Old Notes all provisions of the Letter of
Transmittal applicable to it and such beneficial owners as fully as if it
completed, executed and returned the Letter of Transmittal to the Exchange
Agent.
<PAGE>
Pursuant to the Letter of Transmittal, each holder of Old Notes will
represent to the Company that: (i) the New Notes or Book-Entry Interests therein
to be acquired by such holder and any beneficial owner(s) of such Old Notes or
interests therein ("Beneficial Owner(s)") in connection with the Exchange Offer
are being acquired by such holder and any Beneficial Owner(s) in the ordinary
course of business of the holder and any Beneficial Owner(s), (ii) the holder
and each Beneficial Owner are not participating, do not intend to participate,
and have no arrangement or understanding with any person to participate, in the
distribution of the New Notes, (iii) if the holder or Beneficial Owner is a
resident of the State of California, it falls under the self-executing
institutional investor exemption set forth under Section 25102(i) of the
Corporate Securities Law of 1968 and Rules 260.102.10 and 260.105.14 of the
California Blue Sky Regulations, (iv) if the holder or Beneficial Owner is a
resident of the Commonwealth of Pennsylvania, it falls under the self-executing
institutional investor exemption set forth under Sections 203(c), 102(d) and (k)
of the Pennsylvania Securities Act of 1972, Section 102.111 of the Pennsylvania
Blue Sky Regulations and an interpretive opinion dated November 16, 1985, (v)
the holder and each Beneficial Owner acknowledge and agree that any person who
is a broker-dealer registered under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") or is participating in the Exchange Offer for the
purpose of distributing the New Notes must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction of the New Notes or interests therein acquired by
such person and cannot rely on the position of the staff of the Commission set
forth in certain no-action letters, (vi) the holder and each Beneficial Owner
understand that a secondary resale transaction described in clause (v) above and
any resales of New Notes or interests therein obtained by such holder in
exchange for Old Notes or interests therein originally acquired by such holder
directly from the Company should be covered by an effective registration
statement containing the selling security holder information required by Item
507 or Item 508, as applicable, of Regulation S-K of the Commission and (vii)
neither the holder nor any Beneficial Owner(s) is an "affiliate," as defined in
Rule 405 under the Securities Act, of the Company. Upon a request by the
Company, a holder or beneficial owner will deliver to the Company a legal
opinion confirming its representation made in clause (vii) above. If the
tendering holder of Old Notes is a broker-dealer (whether or not it is also an
"affiliate") or any Beneficial Owner(s) that will receive New Notes for its own
or their account pursuant to the Exchange Offer, the tendering holder will
represent on behalf of itself and the Beneficial Owner(s) that the Old Notes to
be exchanged for the New Notes were acquired as a result of market-making
activities or other trading activities, and acknowledge on its own behalf and on
the behalf of such Beneficial Owner(s) that it or they will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such New Notes; however, by so acknowledging and by delivering a prospectus,
such tendering holder will not be deemed to admit that it or any Beneficial
Owner is an "underwriter" within the meaning of the Securities Act.
The enclosed "Instruction to Registered Holder or DTC Participant from
Beneficial Owner" form contains an authorization by the beneficial owners of Old
Notes for you to make the foregoing representations.
The Company will not pay any fee or commission to any broker or dealer
or to any other persons (other than the Exchange Agent) in connection with the
solicitation of tenders of Old Notes pursuant to the Exchange Offer. The
Company will pay or cause to be paid any transfer taxes payable on the transfer
of Old Notes to it, except as otherwise provided in Instruction 7 of the
enclosed Letter of Transmittal.
Additional copies of the enclosed material may be obtained from State
Street Bank and Trust Company, Two International Place, Boston, MA 02110,
Attention: Kellie Mullen, Corporate Trust, Fourth Floor.
Very truly yours,
SBA COMMUNICATIONS CORPORATION
<PAGE>
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU THE
AGENT OF SBA COMMUNICATIONS CORPORATION OR STATE STREET BANK AND TRUST COMPANY
OR AUTHORIZE YOU TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON THEIR BEHALF IN
CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH
AND THE STATEMENTS CONTAINED THEREIN.
<PAGE>
INSTRUCTION TO REGISTERED HOLDER OR DTC PARTICIPANT
FROM BENEFICIAL OWNER
FOR
12% SENIOR DISCOUNT NOTES DUE 2008
OF
SBA Communications Corporation
The undersigned hereby acknowledges receipt of the Prospectus dated
_______________, 1998 (the "Prospectus"), of SBA Communications Corporation, a
company incorporated under the laws of Florida (the "Company"), and the
accompanying Letter of Transmittal (the "Letter of Transmittal") that together
constitute the Company's offer (the "Exchange Offer"). Capitalized terms used
but not defined herein have the meanings assigned to them in the Prospectus and
the Letter of Transmittal.
This will instruct you as to the action to be taken by you relating to
the Exchange Offer with respect to the 12% Senior Discount Notes due 2008 (the
"Old Notes") held by you for the account of the undersigned.
The principal amount of the Old Notes held by you for the account of
the undersigned is (fill in amount): $_____________ principal amount of Old
Notes.
With respect to the Exchange Offer, the undersigned hereby instructs
you (check appropriate box):
[_] To TENDER the following principal amount of Old Notes held by you for
the account of the undersigned (insert amount of Old Notes to be tendered, if
any):
$_____________ principal amount of Old Notes.
[_] NOT to TENDER any Old Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Old Notes held by you
for the account of the undersigned, it is understood that you are authorized:
(a) to make, on behalf of the undersigned (and the undersigned, by
its signature below, hereby makes to you), the representations and
warranties contained in the Letter of Transmittal that are to be made with
respect to the undersigned as a beneficial owner, including but not limited
to the representations that (i) the New Notes or Book-Entry Interests
therein to be acquired by the undersigned (the "Beneficial Owner(s)") in
connection with the Exchange Offer are being acquired by the undersigned in
the ordinary course of business of the undersigned, (ii) the undersigned is
not participating, does not intend to participate, and has no arrangement
or understanding with any person to participate, in the distribution of the
New Notes, (iii) if the undersigned is a resident of the State of
California, it falls under the self-executing institutional investor
exemption set forth under Section 25102(i) of the Corporate Securities Law
of 1968 and Rules 260.102.10 and 260.105.14 of the California Blue Sky
Regulations, (iv) if the undersigned is a resident of the Commonwealth of
Pennsylvania, it falls under the self-executing institutional investor
exemption set forth under Sections 203(c), 102(d) and (k) of the
Pennsylvania Securities Act of 1972, Section 102.111 of the Pennsylvania
Blue Sky Regulations and an interpretive opinion dated November 16, 1985,
(v) the undersigned acknowledges and agrees that any person who is a
broker-dealer registered under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or is participating in the Exchange Offer for
the purpose of distributing the New Notes must comply with the registration
and prospectus
<PAGE>
delivery requirements of the Securities Act in connection with a secondary
resale transaction of the New Notes or interests therein acquired by such
person and cannot rely on the position of the staff of the Commission set
forth in certain no-action letters, (vi) the undersigned understands that a
secondary resale transaction described in clause (v) above and any resales
of New Notes or interests therein obtained by such holder in exchange for
Old Notes or interests therein originally acquired by such holder directly
from the Company should be covered by an effective registration statement
containing the selling security holder information required by Item 507 or
Item 508, as applicable, of Regulation S-K of the Commission and (vii) the
undersigned is not an "affiliate," as defined in Rule 405 under the
Securities Act, of the Company. Upon a request by the Company, a holder or
beneficial owner will deliver to the Company a legal opinion confirming its
representation made in clause (vii) above. If the undersigned is a broker-
dealer (whether or not it is also an "affiliate") that will receive New
Notes for its own account pursuant to the Exchange Offer, the undersigned
represents that the Old Notes to be exchanged for the New Notes were
acquired by it as a result of market-making activities or other trading
activities, and acknowledges that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such
New Notes; however, by so acknowledging and by delivering a prospectus, the
undersigned does not and will not be deemed to admit that is and
"underwriter" within the meaning of the Securities Act;
(b) to agree, on behalf of the undersigned, as set forth in the
Letter of Transmittal; and
(c) to take such other action as necessary under the Prospectus or
the Letter of Transmittal to effect the valid tender of such Old Notes.
SIGN HERE
Name of Beneficial Owner(s): ______________________________________
Signature(s): ______________________________________
Name(s) (please print): ______________________________________
Address: ______________________________________
______________________________________
Telephone Number: ______________________________________
Taxpayer Identification or Social Security Number: __________________
Date: ______________________________________
<PAGE>
LETTER TO CLIENTS
REGARDING THE OFFER TO EXCHANGE
$269,000,000 PRINCIPAL AMOUNT AT MATURITY OF 12% SENIOR DISCOUNT NOTES DUE 2008
FOR ANY AND ALL OUTSTANDING
$269,000,000 PRINCIPAL AMOUNT AT MATURITY OF 12% SENIOR DISCOUNT NOTES DUE 2008
OF
SBA COMMUNICATIONS CORPORATION
To Our Clients:
We are enclosing herewith a Prospectus, dated _______________, 1998,
of SBA Communications Corporation (the "Company") and a related Letter of
Transmittal (which together constitute the "Exchange Offer") relating to the
offer by the Company to exchange its new 12% Senior Discount Notes due 2008 (the
"New Notes"), pursuant to an offering registered under the Securities Act of
1933, as amended (the "Securities Act"), for a like principal amount of its
issued and outstanding 12% Senior Discount Notes due 2008 (the "Old Notes") upon
the terms and subject to the conditions set forth in the Prospectus and the
Letter of Transmittal.
PLEASE NOTE THAT THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON ________, 1998, UNLESS EXTENDED.
The Exchange Offer is not conditioned upon any minimum number of Old
Notes being tendered.
We are the Registered Holder or DTC participant through which you hold
an interest in the Old Notes. A tender of such Old Notes can be made only by us
pursuant to your instructions. The Letter of Transmittal is furnished to you for
your information only and cannot be used by you to tender your beneficial
ownership of Old Notes held by us for your account.
We request instructions as to whether you wish to tender any or all of
your Old Notes held by us for your account pursuant to the terms and subject to
the conditions of the Exchange Offer. We also request that you confirm that we
may on your behalf make the representations contained in the Letter of
Transmittal that are to be made with respect to you as beneficial owner.
Pursuant to the Letter of Transmittal, each holder of Old Notes must
make certain representations and warranties that are set forth in the Letter of
Transmittal and in the attached form that we have provided to you for your
instructions regarding what action we should take in the Exchange Offer with
respect to your interest in the Old Notes.
