<PAGE>
As filed with the Securities and Exchange Commission on January 6, 2000
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
SBA Communications Corporation
(Exact name of Registrant as specified in its charter)
Florida 65-0716501
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
---------------
One Town Center Road Jeffrey A. Stoops
Third Floor Chief Financial Officer
Boca Raton, Florida 33486 SBA Communications Corporation
(561) 995-7670 One Town Center Road
(Address, including zip code, and Third Floor
telephone number, Boca Raton, Florida 33486
including area code, of Registrant's (561) 995-7670
principal executive offices) (Name, address, including zip code, and
telephone number,
including area code, of agent for
service)
---------------
Copies to:
Robert C. Boehm, Esq. Rise B. Norman, Esq.
Akerman, Senterfitt & Eidson, P.A. Simpson Thacher & Bartlett
One S.E. Third Avenue 425 Lexington Avenue
Miami, FL 33131 New York, New York 10017
(305) 374-5600 (212) 455-2000
---------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, 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, please 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(c)
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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
Amount of
Proposed Maximum Registration
Title of Shares to be Registered Aggregate Offering Price Fee(1)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A common stock, par value $.01 per share............... $100,000,000 $26,400
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o).
---------------
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, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and is not soliciting an offer to buy these +
+securities in any jurisdiction where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion dated January , 2000
PROSPECTUS
Shares
[LOGO OF SBA]
SBA Communications Corporation
Class A Common Stock
-------------
We are offering shares of our Class A common stock. Our Class A common
stock is quoted on the Nasdaq National Market under the symbol "SBAC."
On January 5, 2000, the last reported sale price on the Nasdaq National Market
was $17.00 per share.
Investing in the shares involves risks. "Risk Factors" begins on page 8.
<TABLE>
<CAPTION>
Per Share Total
--------- -----
<S> <C> <C>
Public offering price.......................................... $ $
Underwriting discount.......................................... $ $
Proceeds to SBA, before expenses............................... $ $
</TABLE>
We and the selling shareholders have granted the underwriters a 30-day option
to purchase up to additional shares of Class A common stock on the same
terms and conditions as set forth above solely to cover over-allotments, if
any.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
Lehman Brothers expects to deliver the shares to purchasers on or about ,
2000.
-------------
Lehman Brothers Deutsche Banc Alex. Brown
Raymond James & Associates, Inc.
Fidelity Capital Markets
a division of National Financial
Services Corporation
Facilitating Electronic Distribution
, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Where You Can Find More
Information....................... i
Information Incorporated by
Reference......................... ii
Prospectus Summary................. 1
Summary Unaudited Pro Forma
Financial Data.................... 5
Summary Historical Financial Data.. 6
Risk Factors....................... 8
Use of Proceeds.................... 16
Dividend Policy.................... 16
Capitalization..................... 17
Unaudited Pro Forma Condensed
Consolidated Financial
Statements........................ 18
Selected Historical Financial
Data.............................. 22
Management"s Discussion and
Analysis of Financial Condition
and Results of Operations......... 24
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Industry Overview................... 32
Business............................ 37
Management.......................... 48
Principal and Selling Shareholders.. 50
Description of Capital Stock........ 52
Description of Existing Debt........ 56
Shares Eligible for Future Sale..... 58
United States Federal Income Tax
Considerations to Non-U.S.
Holders............................ 59
Underwriting........................ 62
Legal Matters....................... 65
Independent Accountants............. 65
</TABLE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports and other information with the
Securities and Exchange Commission. You may read our Commission filings over
the Internet at the Commission's website at http://www.sec.gov. You may also
read and copy documents at the Commission's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Full addresses of
the Commission's reference rooms are: Judiciary Plaza, 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549; 7 World Trade Center, New York, New York
10048; Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Please call the Commission at 1-800-SEC-0330 for further
information on the public reference rooms.
We have filed with the Commission a registration statement on Form S-3 under
the Securities Act of 1933, as amended, with respect to the shares of Class A
common stock offered by this prospectus. This prospectus, which is a part of
the registration statement, does not contain all of the information set forth
in the registration statement. For further information about us and our Class A
common stock, you should refer to the registration statement. This prospectus
summarizes material provisions of contracts and other documents to which we
refer you. Since the prospectus may not contain all of the information that you
may find important, you should review the full text of these documents. We have
included copies of these documents as exhibits to our registration statement.
----------------
You should only rely on the information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of Class A common stock only in jurisdictions where offers and
sales are permitted. The information contained in this prospectus is accurate
only as of the date of this prospectus, regardless of the time of delivery of
this prospectus or of any sale of Class A common stock.
i
<PAGE>
INFORMATION INCORPORATED BY REFERENCE
The Commission allows us to provide information about our business and other
important information to you by "incorporating by reference" the information we
file with the Commission. This means that we can disclose the information to
you by referring in this prospectus to the documents we file with the
Commission. Under the Commission's regulations, any statement contained in a
document incorporated by reference in this prospectus is automatically updated
and superseded by any information contained in this prospectus, or in any
subsequently filed document of the types described below.
We incorporate into this prospectus by reference the following documents
filed by us with the Commission, each of which should be considered an
important part of this prospectus:
<TABLE>
<CAPTION>
Period Covered or Date of
Commission Filing (File No. 000-30110) Filing
-------------------------------------- -----------------------------
<C> <S>
Annual Report on Form 10-K...................... Year ended December 31, 1998
Quarterly Reports on Form 10-Q.................. Quarters ended March 31,
1999, June 30, 1999, and
September 30, 1999
Current Reports on Form 8-K..................... February 24, 1999; July 14,
1999; July 26, 1999; August
19, 1999; October 15, 1999;
November 1, 1999; November 8,
1999; and December 17, 1999
Description of our Class A common stock
contained in Registration Statement on Form 8-A
and any amendment or report filed for the
purpose of updating such description........... June 9, 1999
All subsequent documents filed by us under
Sections 13(a), 13(c), 14 or 15(d) of the After the date of this
Exchange Act................................... prospectus
</TABLE>
You may request a copy of each of our filings at no cost, by writing or
telephoning us at the following address, telephone or facsimile number:
SBA Communications Corporation
One Town Center Road, 3rd Floor
Boca Raton, FL 33486
Phone: (561) 995-7670
Fax: (561) 997-0343
Exhibits to a document will not be provided unless they are specifically
incorporated by reference in that document.
ii
<PAGE>
PROSPECTUS SUMMARY
This summary highlights selected information about us. It is not complete and
may not contain all of the information that you should consider before
investing in our Class A common stock. You should carefully read this entire
document, including the "Risk Factors" section beginning on page 8 and the
Consolidated Financial Statements and their related notes beginning on page F-
1. Unless otherwise indicated, all information in this prospectus assumes that
the underwriters will not exercise their over-allotment option.
SBA Communications
We are a leading independent owner and operator of wireless communications
infrastructure in the United States. We generate revenues from our two primary
businesses--site leasing and site development services. Since our founding in
1989, we have participated in the development of more than 13,000 antenna sites
in 49 of the 51 major wireless markets in the United States. In 1997, we began
aggressively expanding our site leasing business by capitalizing on our
nationally recognized site development experience and strong relationships with
wireless service providers to take advantage of the trend toward colocation and
independent tower ownership. As of December 31, 1999, we owned or controlled
1,163 towers and had letters of intent or definitive agreements to acquire 94
towers. We also had non-binding mandates to build over 335 additional towers
for anchor tenants and had over 700 strategic sites in various phases of
development. In 1998 and 1999 we built, for our own account, 310 and 438
towers. We believe our history and experience in providing site development
services gives us a competitive advantage in choosing the most attractive
locations in which to build new towers or buy existing towers, as measured by
our success in increasing tower revenues and cash flows. Our same tower revenue
growth for 1999 on the 494 towers we owned as of December 31, 1998 was 33%
based on tenant leases executed as of December 31, 1999.
Our primary focus is the leasing of antenna space on our multi-tenant towers
to a variety of wireless service providers under long-term lease contracts. We
lease antenna space on: (1) the towers we construct through build-to-suit
programs; (2) existing sites we acquire; (3) the towers we develop
strategically; and (4) sites we lease, sublease and/or manage for third
parties. Under a build-to-suit program, we build a tower for a wireless service
provider. We retain ownership of the tower and the exclusive right to colocate
additional tenants on the tower. Many wireless service providers are choosing
the build-to-suit option as an alternative to tower ownership, and we believe
that this outsourcing trend is likely to continue. Our non-binding mandates
come from a variety of wireless carriers including, AT&T Wireless, BellSouth
Mobility DCS, Georgia PCS, Horizon PCS, Southwestern Bell, Sprint PCS and
VoiceStream. We have also grown through selective acquisitions of towers from
smaller independent owners. We also develop towers strategically, for our own
account, by identifying an attractive location and completing all pre-
construction procedures, such as zoning, necessary to secure the site. We then
market the tower site to potential customers.
Our site development business consists of site development consulting and
site development construction. In our site development business, we provide a
full range of end-to-end services which typically occur in five phases: (1)
network pre-design; (2) communication site selection; (3) communication site
acquisition; (4) local zoning and permitting; and (5) site construction, switch
construction and antenna installation. We will continue to use our site
development expertise to complement our site leasing business and secure
additional new tower build opportunities. We have capitalized on our leadership
position in the site development business, our existing national field
organization and our strong relationships with wireless service providers to
develop our build-to-suit and strategic siting programs.
1
<PAGE>
We have a diverse range of customers, including cellular, personal
communications service, or PCS, wireless data and Internet services, paging,
specialized mobile radio, or SMR, and enhanced specialized mobile radio, or
ESMR providers as well as other users of wireless transmission and reception
equipment. Our customers currently comprise many of the major wireless
communications companies, including AT&T Wireless, BellSouth, Georgia PCS,
Horizon PCS, LEAP Wireless, Metricom, Nextel, Omnipoint, Southwestern Bell,
Sprint PCS, Teligent and VoiceStream.
While we believe that our site development business will grow with the
expected overall growth of wireless and other telecommunications networks, we
believe our revenues and gross profit from the consulting segment of that
business will continue to decline as carriers find new ways to obtain network
development through outsourced tower ownership. We also believe that, over the
longer term, our site leasing revenues will continue to increase due to the
same outsourcing trend and as the number of towers we own or control grows.
Industry Overview
We believe that the rapid growth in demand for wireless services will
continue to increase the need for communication sites (which include towers,
rooftops and other structures on which antennas are placed). The growth in
demand for wireless services and communication sites is the result of several
factors, including:
. 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;
. the emergence of new wireless technologies, such as wireless data and
Internet services;
. business and consumer preferences for higher quality voice and data
transmission and the popularity of the "one-rate" plans;
. the need to expand services and fill-in and upgrade existing networks;
. increasing mobility of the U.S. population and the growing awareness of
the benefits of mobile communications;
. favorable changes in telecommunications regulations; and
. the issuance of new wireless network licenses requiring the construction
of new wireless networks.
In addition, our site leasing business benefits from the industry's
diversified recurring revenue and effective operating leverage as a result of
several factors, including:
. the long-term nature of lease contract revenues;
. low customer churn rates due to the high direct and indirect costs of
relocation;
. low variable operating costs, which cause increases in revenues to
generate disproportionately larger increases in tower cash flow;
. low on-going maintenance capital expenditure requirements;
. a customer base diversified across geographic markets, industry segments
(PCS, wireless data and Internet, cellular, paging, ESMR and SMR) and
individual customers within these segments; and
. 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 the area.
We believe that wireless service providers face greater competition today and
are now focusing their capital and operations primarily on activities that
build subscriber growth, such as marketing and distribution. Therefore, they
will increasingly seek to outsource communication site ownership, construction,
management and maintenance.
2
<PAGE>
Business Strategy
Our strategy is to lease antenna space to multiple tenants on towers that we
construct or acquire. We plan to enhance our position as a leading owner and
operator of communication sites and provider of site development services. Key
elements of our strategy include:
. Maximizing use of tower capacity
. Developing new towers that we will own and operate
. Acquiring existing towers
. Building on strong relationships with major wireless service providers
. Maintaining our expertise in site development services
. Capitalizing on management experience
Recent Events
On December 16, 1999, we increased our senior credit facility from $175.0
million to $300.0 million and modified certain other terms. The $125.0 million
increase included a new $50.0 million term loan and a $75.0 million increase to
our existing revolving line of credit. In connection with and to permit this
increase, we solicited and received consents from the holders of our senior
discount notes.
On December 6, 1999, we entered into an exclusive service agreement with
Georgia PCS, a Sprint PCS network affiliate, to provide site acquisition,
development, colocation, build-to-suit and equipment installation services. The
service agreement gives us the right to build and own any new towers required
by Georgia PCS. We estimate that the agreement will cover the location of up to
200 antenna sites by Georgia PCS through March 31, 2001, including up to 100
new build-to-suit towers.
On September 28, 1999, we acquired 53 wireless communications towers from
Horizon PCS for $15.7 million. Horizon PCS provides towers for Sprint's PCS
network and manages Sprint PCS's towers in Ohio, West Virginia and Kentucky.
The acquired towers currently provide an annualized cash flow of approximately
$.9 million. We also entered into an exclusive service agreement with Horizon
PCS under which we will provide site acquisition, development, colocation,
build-to-suit and equipment installation services in specific regions. We
estimate that the service agreement will cover the location of as many as 300
antenna sites by Horizon PCS through December 31, 2001, including a minimum of
100 new build-to-suit towers.
Principal Executive Offices
Our principal executive offices are located at One Town Center Road, Third
Floor, Boca Raton, Florida 33486, and our telephone number is (561) 995-7670.
We were founded in 1989 and incorporated in Florida in 1997.
3
<PAGE>
The Offering
<TABLE>
<C> <S>
Class A common stock offered by SBA........ shares
Class A common stock offered by the selling
shareholders in the over-allotment
option.................................... shares (a)
Common stock to be outstanding after the
offering.................................. shares of Class A common
stock (a)(b)
7,644,264 shares of Class B
common stock
shares of common stock (a)(b)
Voting rights.............................. The Class A common stock and the
Class B common stock generally
vote as a single class. The Class
A common stock has one vote per
share and the Class B common
stock has ten votes per share.
Florida corporate law and our
articles of incorporation require
separate class votes on some
matters. Through his beneficial
ownership of Class B common
stock, Steven E. Bernstein will
control approximately % of the
total voting power of both
classes of the common stock after
the offering. See "Principal and
Selling Shareholders." We use the
term "common stock" to mean both
the Class A and Class B common
stock.
Other rights............................... Each class of common stock has
the same rights to dividends and
upon liquidation. The Class B
common stock is convertible into
Class A common stock on a share-
for-share basis. The Class B
common stock automatically
converts into Class A common
stock upon the transfer of the
shares to anyone other than
certain categories of persons
specified in our articles of
incorporation.
Nasdaq National Market symbol.............. SBAC
Use of proceeds............................ We estimate that our net proceeds
from the offering will be
approximately $93.7 million. We
expect to use these proceeds to
repay outstanding debt, to
finance the construction and
acquisition of towers and related
businesses and for general
working capital purposes. We will
not receive the proceeds from any
sale of Class A common stock by
the selling shareholders.
</TABLE>
- --------
(a) We have agreed that if any or all of the selling shareholders decide not to
sell their shares upon exercise of the over-allotment option, we will issue
any shares necessary to satisfy the option.
(b) Does not include (1) 3,057,248 shares of Class A common stock issuable upon
exercise of outstanding stock options, (2) 884,543 shares that are reserved
for issuance upon exercise of options that may be granted in the future
under our 1999 Equity Participation Plan, (3) 470,138 shares that are
reserved for issuance under our 1999 Employee Stock Purchase Plan, (4)
402,500 shares issuable upon exercise of the outstanding warrant that we
granted Alex. Brown & Sons Inc., a predecessor to the investment banking
business of Deutsche Bank Securities Inc., in connection with a 1997
issuance of our capital stock or (5) the 320,000 or 400,000 shares that are
issuable to the former shareholders of Com-Net Construction Services, Inc.
if 1999 and 2000 EBITDA targets established in connection with the
acquisition of that company are met.
4
<PAGE>
SUMMARY UNAUDITED PRO FORMA FINANCIAL DATA
The following table presents our summary unaudited pro forma financial and
other data for the year ended December 31, 1998 and as of and for the nine
months ended September 30, 1999. The pro forma summary operating data for the
year ended December 31, 1998 and the nine months ended September 30, 1999 give
effect to the pro forma transactions, which are (1) all individually immaterial
acquisitions completed during the year ended December 31, 1998 and the nine
months ended September 30, 1999, (2) the issuance of Class A common stock in
our 1999 initial public offering and the application of those net proceeds and
(3) the issuance of Class A common stock in this offering and the application
of the net proceeds as described in "Use of Proceeds," as if each had occurred
at the beginning of the periods presented. The unaudited pro forma balance
sheet data as of September 30, 1999 have been prepared as if the issuance of
Class A common stock in this offering and the application of the net proceeds
had occurred on that date. The pro forma adjustments are based upon available
information and certain assumptions that we believe are reasonable. The pro
forma financial data are for informational purposes only and do not purport to
present what our results of operations or financial position would actually
have been had these transactions actually occurred on the date presented or to
project our results of operations or financial position at any future period.
You should read the information set forth below together with "Selected
Historical Financial Data" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in this
prospectus and the Consolidated Financial Statements and their related notes
incorporated by reference in this prospectus.
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
December 31, 1998 September 30, 1999
---------------------- ----------------------
(dollars in thousands except per share data)
(unaudited)
<S> <C> <C>
Operating Data:
Revenues:
Site development
revenue............... $ 66,121 $ 49,486
Site leasing revenue... 20,453 20,473
---------------------- ----------------------
Total revenues.......... 86,574 69,959
---------------------- ----------------------
Cost of revenues
(exclusive of
depreciation shown
below)
Cost of site
development revenue... 53,304 38,493
Cost of site leasing
revenue............... 8,782 8,883
---------------------- ----------------------
Total cost of revenues.. 62,086 47,376
---------------------- ----------------------
Gross profit............ 24,488 22,583
Selling, general and
administrative(a)(b)... 20,944 15,057
Depreciation and
amortization........... 12,464 13,057
---------------------- ----------------------
Operating loss.......... (8,920) (5,531)
Interest income......... 4,080 675
Interest expense........ (2,496) (2,139)
Non-cash amortization of
original issue discount
and debt issuance
costs.................. (14,550) (16,205)
Other................... 373 28
---------------------- ----------------------
Loss before income taxes
and extraordinary
item................... (21,513) (23,172)
Benefit for income
taxes.................. 1,524 369
---------------------- ----------------------
Loss before
extraordinary item..... (19,989) (22,803)
Extraordinary item...... -- (1,150)
---------------------- ----------------------
Net loss................ $ (19,989) $ (23,953)
====================== ======================
Basic and diluted loss
per common share before
extraordinary item..... $ $
Extraordinary item......
---------------------- ----------------------
Basic and diluted loss
per common share....... $ $
====================== ======================
Basic and diluted
weighted average number
of shares of common
stock..................
====================== ======================
Other Data:
Adjusted EBITDA(c)...... $ 4,149 $ 7,712
Annualized tower cash
flow(d)................ $ 12,952 $ 17,067
</TABLE>
<TABLE>
<CAPTION>
As of September 30,
1999
-------------------
(unaudited)
<S> <C>
Balance Sheet Data:
Property, plant and equipment (net)......................... $ 284,509
Total assets................................................ 440,696
Total debt.................................................. 255,674
Common stockholders' equity................................. 140,522
</TABLE>
- --------
(Footnotes on page 7)
5
<PAGE>
SUMMARY HISTORICAL FINANCIAL DATA
The following table sets forth summary historical financial data as of and
for the years ended December 31, 1997 and 1998 and as of September 30, 1999,
and for the nine months ended September 30, 1998 and 1999. The financial data
for each of the full fiscal years have been derived from, and are qualified by
reference to, our audited financial statements, which Arthur Andersen LLP, our
independent certified public accountants, have audited. The financial data as
of September 30, 1999 and for the nine months ended September 30, 1998 and 1999
have been derived from our unaudited consolidated financial statements. You
should read the information set forth below in conjunction with "Selected
Historical Financial Data" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in this
prospectus and the Consolidated Financial Statements and their related notes
incorporated by reference in this prospectus.
<TABLE>
<CAPTION>
Nine Months
Year Ended December 31, Ended September 30,
----------------------- -----------------------
1997 1998 1998 1999
----------- ------------ ---------- -----------
(dollars in thousands except per share data)
(unaudited)
<S> <C> <C> <C> <C>
Operating Data:
Revenues:
Site development revenue.. $ 48,241 $ 46,705 $ 33,624 $ 39,723
Site leasing revenue...... 6,759 12,396 8,132 18,009
---------- ------------ ---------- -----------
Total revenues............. 55,000 59,101 41,756 57,732
---------- ------------ ---------- -----------
Cost of revenues (exclusive
of depreciation shown
below):
Cost of site development
revenue.................. 31,470 36,500 26,015 30,322
Cost of site leasing
revenue.................. 5,356 7,281 5,039 8,393
---------- ------------ ---------- -----------
Total cost of revenues..... 36,826 43,781 31,054 38,715
---------- ------------ ---------- -----------
Gross profit............... 18,174 15,320 10,702 19,017
Selling, general and
administrative(a)(b)...... 12,033 18,302 13,127 13,714
Depreciation and
amortization.............. 514 5,802 2,804 10,983
---------- ------------ ---------- -----------
Operating income (loss).... 5,627 (8,784) (5,229) (5,680)
Interest income............ 644 4,303 3,374 767
Interest expense........... (407) (2,357) -- (3,240)
Non cash amortization of
original issue discount
and debt issuance costs... -- (14,550) (10,811) (16,205)
Other...................... -- (37) -- 28
---------- ------------ ---------- -----------
Income (loss) before income
taxes and extraordinary
item...................... 5,863 (21,425) (12,667) (24,330)
(Provision) benefit for
income taxes(e)........... (5,596) 1,524 -- 403
---------- ------------ ---------- -----------
Net income (loss) before
extraordinary item........ 267 (19,901) (12,667) (23,927)
Extraordinary item......... -- -- -- (1,150)
---------- ------------ ---------- -----------
Net income (loss).......... 267 (19,901) (12,667) (25,077)
Dividends on preferred
stock..................... (983) (2,575) (1,862) 733
---------- ------------ ---------- -----------
Net loss available to
common shareholders....... $ (716) $ (22,476) $ (14,529) $ (24,344)
========== ============ ========== ===========
Basic and diluted loss per
common share before
extraordinary item........ $ (2.64) $ (1.73) $ (1.42)
Extraordinary item......... -- -- (0.07)
------------ ---------- -----------
Basic and diluted loss per
common share.............. $ (2.64) $ (1.73) $ (1.49)
============ ========== ===========
Basic and diluted weighted
average number of shares
of common stock........... 8,526,052 8,407,238 16,348,073
============ ========== ===========
Other Data:
Adjusted EBITDA(c)......... $ 7,155 $ (2,377) $ (2,281) $ 5,490
Annualized tower cash
flow(d)................... 1,947 8,088 5,634 15,488
Net cash provided by
operating activities...... 7,829 7,471 16,422 11,463
Net cash used in investing
activities................ (17,676) (138,124) (103,561) (147,973)
Net cash provided by
financing activities...... 15,645 151,286 133,527 112,472
Towers owned at the
beginning of period....... -- 51 51 494
Towers constructed......... 15 310 233 288
Towers acquired............ 36 133 80 174
Total towers at the end of
period.................... 51 494 364 956
</TABLE>
- --------
(Footnotes on following page)
6
<PAGE>
<TABLE>
<CAPTION>
As of
December 31, As of
----------------- September 30,
1997 1998 1999
------- -------- -------------
<S> <C> <C> <C>
Balance Sheet Data (at end of period)
(dollars in thousands): (unaudited)
Property, plant and equipment (net).......... $17,829 $150,946 $ 284,509
Total assets................................. 44,797 214,573 347,184
Total debt................................... 10,184 182,573 255,912
Redeemable preferred stock................... 30,983 33,558 --
Common stockholders' equity (deficit)........ (4,344) (26,095) 46,772
</TABLE>
- --------
(a) For the year ended December 31, 1997, selling, general and administrative
expenses include non-cash compensation expense of $1.0 million incurred in
the consolidation of the predecessor companies. For the year ended December
31, 1998, selling, general and administrative expenses include non-cash
compensation expense of $0.6 million incurred in connection with the
issuance of stock options and Class A common stock. For the nine months
ended September 30, 1999, selling, general and administrative expenses
include non-cash compensation expense of $0.2 million incurred in
connection with the issuance of stock options.
(b) Selling, general and administrative expenses include corporate development
expenses associated with our site leasing business that were incurred in
connection with the acquisition or construction of owned towers. These
expenses consist of compensation and overhead costs that are not directly
related to the administration or management of existing towers. All of
these costs are expensed as incurred.
(c) 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. Adjusted EBITDA excludes
the effect of the non-cash compensation expense referred to in footnote (a)
above. Adjusted 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 Adjusted EBITDA differently and, therefore, Adjusted
EBITDA as presented for us may not be comparable to Adjusted EBITDA
reported by other companies. See our Consolidated Statements of Cash Flows
in our Consolidated Financial Statements incorporated by reference in this
prospectus.
(d) We define "tower cash flow" as site leasing revenue less cost of site
leasing revenue (exclusive of depreciation). Tower cash flow includes
deferred revenue attributable to certain leases. We believe tower cash flow
is useful because it allows you to compare tower performance before the
effect of expenses (selling, general and administrative) that do not relate
directly to tower performance. We define "annualized tower cash flow" as
tower cash flow for the last calendar quarter attributable to our site
leasing business multiplied by four. Pro forma annualized tower cash flow
also includes the effect of fourth quarter acquisitions as if each had
occurred at the beginning of the period presented.
(e) Provision for income taxes for the year ended December 31, 1997 includes
the tax effect of our conversion to a C corporation.
7
<PAGE>
RISK FACTORS
This prospectus includes "forward looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. Although
we believe that our plans, intentions and expectations reflected in or
suggested by these forward-looking statements are reasonable, we cannot assure
you that these plans, intentions or expectations will be achieved. Important
factors that could cause actual results to differ materially from the forward
looking statements we make in this prospectus are set forth below and elsewhere
in this prospectus. All forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by the
following cautionary statements.
We may not secure as many site leasing tenants as planned.
We may not be successful in growing our site leasing business. Our success
depends to a large extent on our management's expectations and assumptions
concerning future tenant demand for independently-owned communication sites and
numerous other factors, many of which are beyond our control. Any material
error in any of these expectations or assumptions could have a material adverse
effect on our growth rate. Because most of our towers are newly constructed,
and because these towers have little or no positive cash flow at the time of
their construction, the risks of lower tenant demand for tower space are much
greater for us than for a tower company which has grown its portfolio by
acquiring towers with existing cash flow.
We compete for site leasing tenants with: (1) wireless service providers that
own and operate their own tower infrastructure and lease, or may in the future
decide to lease, antenna space to other providers; (2) site development
companies that acquire antenna space on existing towers for wireless service
providers, manage new tower construction and provide site development services;
(3) other large independent tower companies; and (4) smaller local independent
tower operators. Wireless service providers that own and operate their own
tower infrastructure generally are substantially larger and have greater
financial resources than we do. Several of the independent tower companies also
have larger tower infrastructure and greater financial resources than we do. We
believe that tower location and capacity, price, quality of service and density
within a geographic market historically have been and will continue to be the
most significant competitive factors affecting the site leasing business.
The number of towers we build, the number of tenants we add to our towers and
our site development business revenues fluctuate from quarter to quarter.
The number of towers we build, the number of tenants we add to our towers and
the demand for our site development services fluctuate from period to period
and within periods. Numerous factors cause these fluctuations, including:
. the timing of our customers' capital expenditures;
. the number and significance of active customer engagements during a
quarter;
. delays incurred in connection with a project or a tenant installation of
equipment;
. employee hiring;
. the use of consultants; and
. the rate and volume of wireless service providers' tower build-outs.
While the demand for our site development services fluctuates, we incur
significant fixed costs, such as maintaining a staff and office space in
anticipation of future contracts, even when there is no current business. The
timing of revenues is difficult to forecast as our 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.
With respect to new tenant leases, in some cases revenue commencement trails
execution of the lease due to contractual terms, which are typical in the
industry, and which provide for revenue to commence
8
<PAGE>
upon installation of the tenant's equipment on the tower, which can be 90 days
or more after the execution of the lease. Seasonal factors, such as weather,
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 new tower builds and revenues and could have a material adverse effect on
our growth rate, prospects, financial condition or results of operations.
Consequently, the number of towers we build and the operating results of our
site leasing and development businesses for any particular period may vary
significantly, and should not be considered as indicative of long-term results.
We face zoning and other restrictions on our ability to construct new towers.
Our growth strategy depends on our ability to construct and operate towers in
a timely and cost-effective manner. A number of factors beyond our control can
affect our ability to construct new towers, including:
. zoning and local permitting requirements;
. Federal Aviation Administration 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. We cannot assure you (1)
that there will be a significant need for the construction of new towers once
existing wireless service providers complete their tower infrastructure build-
out, (2) of the number of mandates that we will be awarded or the number of
mandates that will result in constructed towers, (3) that we will be able to
overcome regulatory or other barriers to new construction or (4) that the
number of towers planned for construction will be completed in accordance with
the requirements of our customers. Certain of our anchor tenant leases contain
penalty or forfeiture provisions in the event we do not complete the towers
within specified time periods.
We face increasing competition for new tower opportunities and acquisitions of
existing towers.
We compete for new tower opportunities primarily with site developers,
wireless carriers and other independent tower companies. We believe that
competition for new tower 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 we do.
Our growth strategy depends on our ability to acquire and operate existing
towers not built by us to augment our existing tower network. Increased
competition for acquisitions may result in fewer acquisition opportunities for
us and higher acquisition prices. We regularly explore acquisition
opportunities, and we are currently actively negotiating to acquire additional
towers. As of December 31, 1999, we had letters of intent or definitive
agreements to acquire 94 towers.
We may not be able to identify, finance and complete future acquisitions of
towers or tower companies on acceptable terms or may not be able to profitably
manage and market available space on any towers that we acquire. We may also
face challenges in integrating newly acquired towers or tower companies and may
face difficulties in retaining current lessees on newly acquired towers. The
extent to which we are unable to construct or acquire additional towers, or
profitably manage these tower operations, may have a material adverse effect on
our results of operations.
We are not profitable and expect to continue to incur losses.
We incurred net losses of $19.9 million for the year ended December 31, 1998
and $25.1 million for the nine months ended September 30, 1999. Our losses are
principally due to significant depreciation, amortization and interest expense.
We have not achieved profitability and expect to continue to incur losses for
the foreseeable future.
9
<PAGE>
Our mandates may not yield binding agreements.
As of December 31, 1999, we had non-binding mandates to build over 335 towers
under build-to-suit programs for wireless service providers. Although we
believe 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 leases are executed. These steps include,
in some cases, finalizing build-out plans by the customers who have awarded the
mandates, completing due diligence by us and our customers and finalizing other
definitive documents between the parties. As a result, we cannot assure you as
to the percentage of current and future non-binding mandates that will
ultimately result in binding anchor tenant leases and constructed towers.
We expect revenues from the consulting segment of our site development business
to continue to decline.
Our growth strategy is primarily focused on expanding our site leasing
business, as opposed to our site development business. However, you should be
aware that a substantial portion of our revenues has historically come from the
consulting segment of our site development business. We believe that wireless
service providers have begun to move away from the traditional build-out
formula where those providers contract for site development services for a fee
and invest the capital necessary to build and own their own network of
communication towers. We believe that the use of build-to-suit programs is
rapidly becoming the preferred method of wireless network expansion. As
wireless service providers have moved away from the traditional build-out
formula, our site development revenues from the consulting segment declined in
1997, 1998 and the first nine months of 1999, and we expect a further decline
during the remainder of 1999 and in 2000. We expect this trend to continue for
the foreseeable future as our customers continue to move toward build-to-suit
programs and other outsourcing alternatives and away from wireless service
provider-funded site development and ownership.
We will need to seek additional financing to fund our business plan.
Our business strategy contemplates substantial capital expenditures in
connection with the expansion of our tower infrastructure by agreeing with
wireless carriers to assume ownership or control of their existing towers, by
pursuing build-to-suit opportunities and by exploring other tower acquisition
opportunities.
Our cash capital expenditures for the nine months ended September 30, 1999
were $148.0 million with another approximately $50.0 million of cash capital
expenditures anticipated in the fourth quarter of 1999. We currently estimate
that we will make at least $150.0 million to $200.0 million of cash capital
expenditures in fiscal year 2000 for the construction and acquisition of
communication sites, which primarily includes towers. Based on our current
operations and anticipated revenue growth, we believe that, if our business
strategy is successful, cash flow from operations and available cash, together
with the proceeds from this offering and the increase in available borrowings
under our senior credit facility, will be sufficient to fund our anticipated
cash capital expenditures through the middle of 2001. Thereafter, however, or
in the event we exceed our currently anticipated cash capital expenditures by
the middle of 2001, or are unable to fully draw on our senior credit facility,
we anticipate that we will need to seek additional equity or debt financing to
fund our business plan. Additional financing may not be available on
commercially acceptable terms or at all, and additional debt financing may not
be permitted by the terms of our existing indebtedness, including our senior
discount notes. Prior to March 1, 2003, interest expense on our outstanding
senior discount notes will consist solely of non-cash accretion of original
issue discount and these notes will not require cash interest payments. After
that time, our outstanding senior discount notes will have accreted to $269.0
million and will require annual cash interest payments of approximately $32.3
million. If we are required to issue additional common equity to finance our
capital expenditures, it could be dilutive to our existing shareholders. To the
extent we are unable to finance future capital expenditures, we will be unable
to achieve our currently contemplated business goals.
10
<PAGE>
The expansion of our business may strain our resources.
Expanding our business may impose significant strains on our management,
operating systems and financial resources. In addition, we anticipate that our
operating expenses may increase during the next few years from their 1999
levels as we construct and acquire additional tower assets. Our failure to
manage our growth or unexpected difficulties encountered during expansion could
have a material adverse effect on our results of operations. The pursuit and
integration of new tower build-outs in addition to future acquisitions,
investments, joint ventures and strategic alliances will require substantial
attention from our senior management, which will limit the amount of time
available to devote to our existing operations.
From January 1, 1995 to December 31, 1999, our work force increased from 82
to 582 employees. This growth has placed, and will likely continue to place, a
substantial strain on our administrative, operational and financial resources.
In addition, as part of our business strategy, we may acquire complementary
businesses or expand into new businesses. We may not be able to manage our
growth successfully and our management, personnel or operational and financial
control systems may not be adequate to support expanded or complementary
operations. Any of these inabilities or inadequacies could have a material
adverse effect on our growth rate, prospects, financial condition or results of
operations.
If demand for wireless communication services decreases, our revenue will be
adversely affected.
Substantially all of our customers to date have been providers of wireless
communications services and, therefore, our success is dependent on their
success. Demand for our services is dependent on demand for communication sites
from wireless service providers, which, in turn, is dependent on the demand for
wireless services. A slowdown in the growth of, or reduction in demand, in a
particular wireless communication segment could adversely affect the demand for
communication sites. 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 these
communication sites depends on a number of factors beyond our control,
including:
. the level of demand for wireless services;
. the financial condition and access to capital of wireless service
providers;
. the strategy of wireless service providers with respect to owning or
leasing communication sites;
. government licensing of broadcast rights; and
. changes in telecommunications regulations and general economic
conditions.
In addition, wireless voice service providers frequently enter into roaming
agreements with competitors allowing them to use one another's wireless
communications facilities to accommodate customers who are out of range of
their home provider's services. These roaming agreements may be viewed by
wireless voice service providers as a superior alternative to leasing antenna
space on communications sites owned or controlled by us. The proliferation of
these roaming agreements could have a material adverse effect on our results of
operations.
We depend on a relatively small number of customers for most of our revenues.
We derive a significant portion of our revenues from a small number of
customers. For example, during 1997, 1998, and the first nine months of 1999,
our five largest customers accounted for approximately 89.9%, 91.4%, and 60.2%
respectively, of our revenues from site development services. Sprint PCS, our
largest customer for the years ended December 31, 1997, 1998, and the nine
months ended September 30, 1999, accounted for 53.6%, 41.3%, and 21.3%
respectively, of our revenues from site development services during those
periods. Other large customers include Pacific Bell Mobile Systems, which
accounted for 14.0% and 13.5% of our revenues from site development services
for the years ended December 31, 1997 and 1998, and BellSouth Mobility DCS,
which accounted for 23.8% of our revenues from site development services for
the year ended December 31, 1998 and 19.1% for the nine months ended September
30, 1999. For the nine months
11
<PAGE>
ended September 30, 1999, our largest site leasing customers were PageNet,
Sprint PCS, Nextel, and BellSouth Mobility DCS which accounted for 17.1%, 9.4%,
9.4% and 8.2% of our site leasing revenues. Our site development customers
engage us 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 we may not be successful in
establishing relationships with new clients. Moreover, our existing customers
may not continue to engage us for additional projects. The substantial majority
of our existing non-binding mandates are from AT&T Wireless, BellSouth Mobility
DCS, Horizon PCS, Georgia PCS and Sprint PCS. The loss of any significant
customer could have a material adverse effect on our growth rate, prospects,
financial condition or results of operations.
Due to the long-term expectations of revenue from tenant leases, the tower
industry is very sensitive to the creditworthiness of its tenants. Wireless
service providers often operate with substantial leverage, and financial
problems for our customers could result in uncollected accounts receivable, in
the loss of customers and the associated lease revenues, or in a reduced
ability of these customers to finance expansion activities. For example, we
expect our site leasing gross profit in the fourth quarter of 1999 to be
negatively impacted by the recent bankruptcy liquidation proceeding filed by
Conxus. Pursuant to this proceeding, Conxus rejected several subleases that it
had entered into with us and which were part of our lease/sublease business.
Our substantial indebtedness could adversely affect our financial health and
prevent us from fulfilling our payment obligations.
We have a significant amount of indebtedness. The following chart shows
certain important credit information:
<TABLE>
<CAPTION>
At September 30,
1999
----------------
(dollars in
thousands)
<S> <C>
Total indebtedness.......................................... $255,912
Stockholders' equity........................................ $ 46,772
</TABLE>
Our substantial indebtedness could have important consequences to you. For
example, it could:
. increase our vulnerability to general adverse economic and industry
conditions;
. limit our ability to fund future working capital, capital expenditures,
research and development costs and other general corporate requirements;
. require us to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness, thereby reducing the
availability of our cash flow to fund working capital, capital
expenditures, research and development efforts and other general
corporate purposes;
. limit our flexibility in planning for, or reacting to, changes in our
business and the industry in which we operate;
. place us at a competitive disadvantage to our competitors that are less
leveraged; and
. limit, along with the financial and other restrictive covenants in our
indebtedness, among other things, our ability to borrow additional
funds. Failing to comply with those covenants could result in an event
of default which, if not cured or waived, could have a material adverse
effect on our growth rate, prospects, financial condition or results of
operations.
Our ability to service our debt obligations will depend on our future
operating performance, which will be affected by prevailing economic conditions
in the wireless communications industry, and financial, business and other
factors, certain of which are beyond our control. If we are unable to generate
sufficient cash flow from operations to service our indebtedness, we will be
forced to adopt an alternative strategy that may include
12
<PAGE>
actions such as reducing, delaying or eliminating acquisitions of towers or
related service companies, delaying tower construction and other capital
expenditures, selling assets, restructuring or refinancing our indebtedness or
seeking additional equity capital. We may not be able to effect any of these
alternative strategies on satisfactory terms, if at all. The implementation of
any of these alternative strategies could have a material adverse effect on our
growth rate.
Our senior credit facility and the indenture governing our senior discount
notes each contains certain restrictive covenants. The senior credit facility
also requires us to maintain specified financial ratios and satisfy certain
financial condition tests. Our ability to meet these financial ratios and tests
can be affected by events beyond our control, and we may not be able to meet
those tests. A breach of any of these covenants could result in a default under
the senior credit facility and the indenture governing our senior discount
notes. Upon the occurrence of certain bankruptcy events, the outstanding
principal, together with all accrued interest, will automatically become
immediately due and payable. If any other event of default should occur under
the senior credit facility, our lenders can elect to declare all amounts of
principal outstanding under the senior credit facility, together with all
accrued interest, to be immediately due and payable. Either of these events
could also result in the triggering of cross-default or cross-acceleration
provisions in other instruments, permitting acceleration of the maturity of
additional indebtedness. If we were unable to repay amounts that become due
under the senior credit facility, our lenders could proceed against the
collateral granted to them to secure that indebtedness. If the indebtedness
under the senior credit facility were to be accelerated, our assets may not be
sufficient to repay in full the indebtedness. Substantially all of our assets
are pledged as security under the senior credit facility.
Our earnings have been insufficient to cover our fixed charges since the
issuance of our senior discount notes. We expect our earnings to continue to be
insufficient to cover our fixed charges for the foreseeable future. We may be
able to incur substantial additional indebtedness in the future. If new debt is
added to our current debt levels, the related risks that we face could
intensify.
We must comply with a variety of extensive regulations.
We are subject to a variety of regulations, including those at the federal,
state and local level. Both the Federal Communications Commission and the
Federal Aviation Administration regulate towers and other sites used for
wireless communications transmitters and receivers. Such regulations control
siting, lighting and marking of towers and may, depending on the
characteristics of the tower, require prior approval or 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. 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. Construction or
modification of these structures is also subject to the National Environmental
Policy Act, which requires additional review of any tower that may have a
significant effect upon the quality of the human environment. Owners of towers
may have an obligation to paint the towers or install lighting to conform to
FCC and FAA standards and to maintain such painting or lighting. Tower owners
also bear the responsibility for notifying the FAA of any tower lighting
failures. We generally indemnify our 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 our ability to respond to customers' demands. In
addition, these regulations may increase the timing and costs associated with
new tower construction. Additional regulations could be adopted which could
increase these delays or result in additional costs to us. These factors could
have a material adverse effect on our growth rate, prospects, financial
condition or results of operations and on our ability to implement and/or
achieve our business
13
<PAGE>
objectives in the future. Our customers may also become subject to new
regulations or regulatory policies that adversely affect the demand for
communication sites.
Our operations are also 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.
Under certain of these environmental laws, we could be held strictly liable for
the remediation of hazardous substance contamination at our facilities or at
third-party waste disposal sites, and could also be held liable for any
personal or property damage related to the contamination. Although we believe
that we are in substantial compliance with, and have no material liability
under, applicable environmental laws, the costs of compliance with existing or
future environmental laws and liability related to those laws may have a
material adverse effect on our business.
We and the wireless service providers that use our towers are also subject to
government requirements and other guidelines relating to radio frequency, or
RF, emissions. The potential connection between RF emissions and certain
negative health effects, including some forms of cancer, has been the subject
of substantial studies by the scientific community in recent years. To date,
the results of these studies have been inconclusive. Although we have not been
subject to any claims relating to RF emissions, we may be subject to these
claims in the future.
Our towers are subject to damage from natural disasters.
Our towers are subject to risks associated with natural disasters such as
tornadoes, hurricanes and earthquakes. We maintain insurance to cover the
estimated cost of replacing damaged towers, but these insurance policies are
subject to caps and deductibles. We also maintain third party liability
insurance to protect us in the event of an accident involving a tower. A tower
accident for which we are uninsured or underinsured, or damage to a tower or
group of towers, could have a material adverse effect on our financial
condition.
New technologies may undermine the success of our operations.
The emergence of new technologies could have a negative impact on our
operations. For example, the FCC has granted license applications for several
low-earth orbiting satellite systems that are intended to provide mobile voice
and data services. Although these systems are highly capital intensive and have
only begun to be tested, mobile satellite systems could compete with land-based
wireless communications systems. In addition, products are currently being
developed which may permit multiple wireless carriers to use a single antenna.
These systems and products could reduce the demand for our infrastructure
services or space on our towers. These events could have a material adverse
effect on our growth rate, prospects, financial condition or results of
operations.
Because of our holding company structure, we depend on our subsidiaries for
cash flow. Our access to this cash flow is restricted.
We are a holding company with no business operations of our own. Our only
significant asset is and will be the outstanding capital stock of our
subsidiaries. We conduct, and will conduct, all of our business operations
through our subsidiaries. Accordingly, our only source of cash to pay our
obligations is distributions from our subsidiaries of their net earnings and
cash flow. We currently expect that the earnings and cash flow of our
subsidiaries will be retained and used by them in their operations, including
to service their debt obligations. Even if our subsidiaries determined to make
a distribution to us, applicable state law and contractual restrictions,
including the dividend covenants contained in our senior credit facility, may
not permit these dividends or distributions.
Steven E. Bernstein will control the outcome of shareholder votes.
Steven E. Bernstein, our President and Chief Executive Officer, beneficially
owns 100% of the outstanding shares of Class B common stock. Through his
beneficial ownership of Class B common stock, Mr. Bernstein
14
<PAGE>
controls approximately 77.6% of the total voting power of both classes of the
common stock. As a result, Mr. Bernstein will have the ability to control the
outcome of all matters determined by a vote of our common shareholders,
including the election of all of our directors.
We depend on the services of our executive officers.
Our success depends to a significant extent upon the continued services of
Steven E. Bernstein, our President and Chief Executive Officer, Daniel W.
Eldridge, our President--Com-Net Construction Services, Ronald G. Bizick, II,
our Executive Vice President-East, Michael N. Simkin, our Executive Vice
President-West, Jeffrey A. Stoops, our Chief Financial Officer, and Robert M.
Grobstein, our Chief Accounting Officer. Each of Messrs. Bizick, Simkin and
Stoops has an employment agreement. We do not have an employment agreement with
Messrs. Bernstein, Eldridge, or Grobstein. Mr. Bernstein's compensation and
other terms of employment are determined by the Board of Directors. The loss of
the services of any of Messrs. Bernstein, Eldridge, Bizick, Simkin, Stoops,
Grobstein or other key managers or employees, could have a material adverse
effect upon our prospects or results of operations.
We need to attract, retain and manage skilled employees.
Our business involves the delivery of professional services and is labor-
intensive. Our success depends in large part upon our ability to attract,
develop, motivate and retain skilled employees. We compete with other wireless
communications firms and other enterprises for employees with the skills
required to perform our services. We cannot assure you that we will be able to
attract and retain a sufficient number of highly-skilled employees in the
future or that we will continue to be successful in training, retaining and
motivating employees. The loss of a significant number of employees and/or our
inability to hire a sufficient number of qualified employees could have a
material adverse effect on our results of operations or growth rate.
If we or our existing shareholders sell additional shares of our Class A common
stock after the offering, it could hurt the market price of our Class A common
stock.
If we sell a substantial number of shares of our Class A common stock after
the offering, those sales could adversely affect the market price of our Class
A common stock and could impair our ability to raise capital through the sale
of equity securities. Upon completion of the offering, we will have shares
(assuming the selling shareholders fulfill the over-allotment option in full)
of common stock outstanding. In addition, we have reserved 3,057,248 shares of
Class A common stock issuable upon exercise of outstanding stock options,
884,543 shares that may be issued upon exercise of options that may be granted
in the future under our 1999 Equity Participation Plan, 470,138 shares for
issuance under our 1999 Employee Stock Purchase Plan and 402,500 shares
issuable upon exercise of the outstanding warrant that we granted Deutsche Bank
Securities Inc. We will also be required to issue up to 720,000 shares of Class
A common stock to the former shareholders of Com-Net if 1999 and 2000 EBITDA
targets established in connection with the acquisition of that company are met.
Of the 28,871,000 shares of our common stock outstanding, 28,091,000 shares are
freely transferable without restriction under the Securities Act, unless they
are held by our "affiliates" as that term is used under the Securities Act. The
remaining 780,000 shares are "restricted securities" as that term is defined in
Rule 144 of the Securities Act and subject to the volume restrictions of Rule
144. The shares sold in the offering will be freely transferable without
restriction under the Securities Act, unless they are held by our affiliates.
Certain shareholders have demand and piggyback registration rights for a total
of up to 16,854,556 shares of our common stock.
In connection with the offering and subject to certain exceptions, we, all of
our executive officers and directors and the selling shareholders have agreed
not to sell any shares of Class A common stock, or any securities which may be
converted into or exchanged for any such shares of Class A common stock or
substantially similar securities, for a period of 90 days after the date of
this prospectus without the prior written consent of Lehman Brothers Inc.
15
<PAGE>
Our articles of incorporation and by-laws include provisions that may
discourage a change of control transaction which may affect the rights of
holders of our Class A common stock.
Our articles of incorporation allow our Board of Directors to issue up to
30,000,000 shares of preferred stock and to fix the rights, privileges and
preferences of these shares without any further vote or action by the
shareholders. The rights of the holders of our Class A common stock will be
subject to, and may be adversely affected by, the rights of the holders of any
preferred stock that may be issued in the future. While we have no present
intention to issue shares of preferred stock, any issuance of preferred stock
could be used to discourage, delay or make more difficult a change in control,
which could be beneficial to the holders of our Class A common stock. In
addition, our articles of incorporation provide for a staggered Board of
Directors and our by-laws impose restrictions on calling special meetings of
shareholders and introducing shareholder proposals. Each of these features
could also be used to discourage, delay or make more difficult a change in
control.
USE OF PROCEEDS
Our net proceeds from the offering, after deduction of the underwriting
discount and estimated offering expenses, will be approximately $93.7 million.
We expect to use approximately $60.0 million of the net proceeds from the
offering to repay outstanding debt. We expect to use the remainder to finance
the construction and acquisition of towers and related businesses, and for
general working capital purposes. An affiliate of Lehman Brothers, one of the
underwriters in the offering, is a lender under the senior credit facility. We
have used borrowings under the senior credit facility to finance our business
plan. The weighted average interest rate of revolving credit loans outstanding
under the senior credit facility was 9.68% at December 31, 1999. The revolving
credit loans mature on December 31, 2004. Pending these uses, we will invest
the net proceeds in short-term government obligations. See "Description of
Existing Debt--The Senior Credit Facility." We will not receive the proceeds
from any sale of Class A common stock by the selling shareholders.
DIVIDEND POLICY
We have never paid dividends on the common stock, and we do not anticipate
paying dividends in the foreseeable future. Any determination to pay cash
dividends in the future will be at the discretion of our Board of Directors and
will depend upon our results of operations, financial condition, contractual
restrictions and other factors deemed relevant at that time by the Board of
Directors.
Our ability to pay dividends on the common stock is dependent upon the
ability of our subsidiaries to pay dividends, or otherwise loan, advance or
transfer funds, to us. The terms of our indebtedness impose limitations on our
ability to pay dividends or make other distributions on our capital stock.
16
<PAGE>
CAPITALIZATION
The following table sets forth our consolidated capitalization as of
September 30, 1999 on an historical basis and as adjusted for this offering and
the application of the net proceeds. You should read this table in conjunction
with "Selected Historical Financial Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere
in this prospectus and the Consolidated Financial Statements and their related
notes incorporated by reference in this prospectus.
<TABLE>
<CAPTION>
As of September 30,
1999
---------------------
Actual As Adjusted
-------- -----------
(dollars in
thousands)
(unaudited)
<S> <C> <C>
Cash and cash equivalents(a)............................. $ 2,705 $ 96,217
======== ========
Long-term debt (less current maturities):
Senior credit facility(a).............................. 75,000 75,000
12% senior discount notes due 2008..................... 180,674 180,674
Other long-term borrowings............................. 188 --
-------- --------
Total long-term debt................................. 255,862 255,674
-------- --------
Preferred stock (30,000,000 shares authorized; 0 shares
issued)................................................. -- --
Stockholders' equity:
Class A common stock (100,000,000 shares authorized;
21,101,614 issued; issued, as
adjusted)(b)(c)(d).................................... 211 211
Class B common stock (8,100,000 shares authorized;
7,644,264 shares issued).............................. 76 76
Warrants to purchase Class A common stock.............. -- --
Paid-in capital........................................ 97,729 191,479
Accumulated deficit.................................... (51,245) (51,245)
-------- --------
Total stockholders' equity........................... 46,772 140,522
-------- --------
Total capitalization............................... $302,634 $396,196
======== ========
</TABLE>
- --------
(a) As of December 16, 1999, we increased our senior credit facility from
$175.0 million to $300.0 million. This $125.0 million increase included a
new $50.0 million term loan, which was fully funded at closing, and a $75.0
million increase in our revolving credit line. The "as adjusted" number
does not reflect the expected use of proceeds of the offering to repay our
outstanding revolving bank loans. The "as adjusted" number does not give
effect to consent or financing fees paid in connection with the amendment
to our senior credit facility nor does it reflect the December 16, 1999
amendments to our senior credit facility that increased our term loan
outstanding from $25 million at September 30, 1999 to $75 million at
December 16, 1999. We expect the actual amount of borrowings outstanding
under the revolving credit line as of the closing of this offering to be
greater than the amount outstanding at September 30, 1999, as we continue
to borrow to finance our business plan.
(b) The "as adjusted" number does not include (1) 3,057,248 shares of Class A
common stock issuable upon exercise of outstanding stock options, (2)
884,543 shares that are reserved for issuance upon exercise of options that
may be granted in the future under our 1999 Equity Participation Plan, (3)
470,138 shares that are reserved for issuance under our 1999 Employee Stock
Purchase Plan or (4) 402,500 shares issuable upon exercise of the
outstanding warrant that we granted to Deutsche Bank Securities Inc.
(c) The "as adjusted" number also does not include the 320,000 or 400,000
additional shares of Class A common stock that are issuable to the former
shareholders of Com-Net if 1999 and 2000 EBITDA targets established in
connection with the acquisition of that company are met.
(d) Assumes that we do not sell any shares of Class A common stock upon
exercise of the over-allotment option. We have agreed that if any or all of
the selling shareholders decide not to sell their shares upon exercise of
the over-allotment option, we will issue any shares necessary to satisfy
the option.
17
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial statements
are based on our historical financial statements during the periods presented.
The unaudited pro forma consolidated statements of operations give effect to
the pro forma transactions, which are (1) all individually immaterial
acquisitions completed during the year ended December 31, 1998 and nine months
ended September 30, 1999, (2) the issuance of Class A common stock in our 1999
initial public offering and the application of those net proceeds and (3) the
issuance of Class A common stock in this offering and the application of the
net proceeds as described under "Use of Proceeds," as if each had occurred as
of the beginning of the periods presented. The unaudited pro forma consolidated
balance sheet as of September 30, 1999 gives pro forma effect to the issuance
of the Class A common stock in this offering and the application of the net
proceeds as if each had occurred on that date. The pro forma adjustments are
described in the accompanying notes and are based upon available information
and certain assumptions that we believe are reasonable.
These pro forma financial statements are for informational purposes only and
do not purport to present what our results of operations or financial condition
would actually have been had these transactions actually occurred on such dates
or to project our results of operations or financial condition for any future
date or period. You should read the pro forma financial statements and their
related notes together with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this prospectus and
the Consolidated Financial Statements and their related notes incorporated by
reference in this prospectus.
18
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 1998
<TABLE>
<CAPTION>
Pro
Adjustments Adjustments Adjustments Forma
for Completed for Initial for this as
Historical Acquisitions(a) Public Offering Offering Adjusted
---------- --------------- --------------- ----------- --------
(dollars in thousands except per share data)
<S> <C> <C> <C> <C> <C>
Revenues:
Site development...... $ 46,705 $19,416 $ -- $-- $ 66,121
Site leasing.......... 12,396 8,057 -- -- 20,453
--------- ------- ------ ---- --------
Total revenues...... 59,101 27,473 -- -- 86,574
--------- ------- ------ ---- --------
Cost of revenues
(exclusive of
depreciation shown
below):
Site development...... 36,500 16,804 -- -- 53,304
Site leasing.......... 7,281 1,501 -- -- 8,782
--------- ------- ------ ---- --------
Total cost of revenues.. 43,781 18,305 -- -- 62,086
--------- ------- ------ ---- --------
Gross profit............ 15,320 9,168 -- -- 24,488
Selling, general and
administrative......... 18,302 2,642 -- -- 20,944
Depreciation and
amortization........... 5,802 6,662 -- -- 12,464
--------- ------- ------ ---- --------
Operating loss.......... (8,784) (136) -- -- (8,920)
Interest income......... 4,303 -- (223)(b) -- 4,080
Interest expense........ (2,357) (317) 178(c) -- (c) (2,496)
Non-cash amortization of
original issue discount
and debt issuance
costs.................. (14,550) -- -- -- (14,550)
Other................... (37) 410 -- -- 373
--------- ------- ------ ---- --------
Loss before income
taxes.................. (21,425) (42) (46) -- (21,513)
Benefit for income
taxes.................. 1,524 -- -- -- 1,524
--------- ------- ------ ---- --------
Net loss................ (19,901) (42) (46) -- (19,989)
Dividends on preferred
stock.................. (2,575) -- 2,575(d) -- --
--------- ------- ------ ---- --------
Net loss available to
common stockholders.... $ (22,476) $ (42) $2,529 $-- $(19,989)
========= ======= ====== ==== ========
Basic and diluted loss
per common share....... $ (2.64)
========= ========
Basic and diluted
weighted average number
of shares of common
stock.................. 8,526,052
========= ========
</TABLE>
- --------
(a) Reflects the historical, pre-acquisition results of operations (in the
aggregate) for all individually immaterial acquisitions completed by us
for the year ended December 31, 1998 and nine months ended September 30,
1999 and the increase in pro forma depreciation on tower assets acquired
resulting from our application of purchase accounting.
(b) Reflects a reduction of interest income related to the repayment of a
shareholder loan.
(c) Reflects a reduction of pro forma interest expense resulting from the use
of a portion of the net proceeds from the initial public offering to repay
all amounts outstanding under our previous credit facility assuming such
transaction was completed as of January 1, 1998.
(d) Reflects elimination of dividends on preferred stock as a result of the
conversion of the Series A preferred stock into Class A common stock.
19
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Nine Months Ended September 30, 1999
<TABLE>
<CAPTION>
Pro
Adjustments Adjustments Adjustments Forma
for Completed for Initial for this as
Historical Acquisitions(a) Public Offering Offering Adjusted
----------- --------------- --------------- ----------- --------
(dollars in thousands except per share data)
<S> <C> <C> <C> <C> <C>
Revenues:
Site development....... $ 39,723 $ 9,763 $ -- $ -- $ 49,486
Site leasing........... 18,009 2,464 -- -- 20,473
----------- ------- ----- ---- --------
Total revenues........ 57,732 12,227 -- -- 69,959
----------- ------- ----- ---- --------
Cost of revenues
(exclusive of
depreciation shown
below):
Site development....... 30,322 8,171 -- -- 38,493
Site leasing........... 8,393 490 -- -- 8,883
----------- ------- ----- ---- --------
Total cost of
revenues............. 38,715 8,661 -- -- 47,376
----------- ------- ----- ---- --------
Gross profit......... 19,017 3,566 -- -- 22,583
Selling, general and
administrative......... 13,714 1,343 -- -- 15,057
Depreciation and
amortization........... 10,983 2,074 -- -- 13,057
----------- ------- ----- ---- --------
Operating loss....... (5,680) 149 -- -- (5,531)
Interest income......... 767 -- (92)(b) -- 675
Interest expense........ (3,240) (100) 736 (c) 465(c) (2,139)
Non-cash amortization of
original issue discount
and debt issuance
costs.................. (16,205) -- -- -- (16,205)
Other................... 28 -- -- -- 28
----------- ------- ----- ---- --------
Income (loss) before
income taxes and
extraordinary item..... (24,330) 49 644 465 (23,172)
Benefit (provision) for
income taxes........... 403 (34) -- -- 369
----------- ------- ----- ---- --------
Net loss before
extraordinary item..... (23,927) 15 644 465 (22,803)
Extraordinary item...... (1,150) -- -- -- (1,150)
----------- ------- ----- ---- --------
Net loss................ (25,077) 15 644 465 (23,953)
Dividends on preferred
stock.................. 733 -- (733)(d) -- --
----------- ------- ----- ---- --------
Net loss available to
common stockholders.... $ (24,344) $ 15 $ (89) $465 $(23,953)
=========== ======= ===== ==== ========
Basic and diluted loss
per common share before
extraordinary item..... $ (1.42) $
Extraordinary item...... (0.07)
----------- --------
Basic and diluted loss
per common share....... $ (1.49)
=========== ========
Basic and diluted
weighted average number
of shares of common
stock.................. 16,348,073
=========== ========
</TABLE>
- --------
(a) Reflects the historical, pre-acquisition results of operations (in the
aggregate) for all individually immaterial acquisitions completed by us
for the nine months ended September 30, 1999 and the increase in pro forma
depreciation on tower assets acquired resulting from our application of
purchase accounting.
(b) Reflects a reduction of interest income related to the repayment of a
shareholder loan.
(c) Reflects a reduction of pro forma interest expense resulting from the use
of a portion of the net proceeds from the initial public offering and this
offering to repay all amounts outstanding under our senior credit facility
assuming such transaction was completed as of January 1, 1999.
(d) Reflects elimination of dividends on preferred stock as a result of the
conversion of the Series A preferred stock into Class A common stock.
20
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of September 30, 1999
<TABLE>
<CAPTION>
Adjustments Pro Forma
for as
Historical Offering Adjusted(a)
---------- ----------- -----------
(dollars in thousands)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............. $ 2,705 $93,512(b)(c) $ 96,217
Accounts receivable................... 20,598 -- 20,598
Prepaid and other current assets...... 6,519 -- 6,519
Cost and estimated earnings in excess
of billings on uncompleted
contracts............................ 2,523 -- 2,523
-------- ------- --------
Total current assets................ 32,345 93,512 125,857
Property and equipment, net............. 284,509 -- 284,509
Intangible assets, net.................. 16,154 -- 16,154
Other assets............................ 14,176 -- 14,176
-------- ------- --------
Total assets........................ $347,184 $93,512 $440,696
======== ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable...................... $ 28,842 $ -- $ 28,842
Accrued expenses...................... 5,246 -- 5,246
Accrued salaries and payroll taxes.... 2,084 -- 2,084
Notes payable and lines of credit..... 50 (50)(c) --
Billings in excess of costs and
estimated earnings on uncompleted
contracts............................ 1,294 -- 1,294
Other current liabilities............. 3,150 -- 3,150
-------- ------- --------
Total current liabilities........... 40,666 (50) 40,616
-------- ------- --------
Other liabilities:
Deferred tax liabilities.............. 3,174 -- 3,174
Notes payable......................... 75,188 (188)(c) 75,000
Senior discount notes................. 180,674 -- 180,674
Other long-term liabilities........... 710 -- 710
-------- ------- --------
Total long-term liabilities......... 259,746 (188) 259,558
-------- ------- --------
Redeemable preferred stock
Stockholders' equity:
Common stock Class A.................... 211 -- 211
Class B........................... 76 -- 76
Additional paid in capital............ 97,729 93,750(b)(c) 191,479
Accumulated deficit................... (51,245) -- (51,245)
-------- ------- --------
Total stockholders' equity.......... 46,772 93,750 140,522
-------- ------- --------
Total liabilities and stockholders'
equity............................. $347,184 $93,512 $440,696
======== ======= ========
</TABLE>
- --------
(a) The "pro forma as adjusted" number does not reflect the expected use of
proceeds of the offering to repay our outstanding revolving bank loans. We
have given effect to the December 16, 1999 amendments to our senior credit
facility that increased our term loan outstanding from $25 million at
September 30, 1999 to $75 million at December 16, 1999. The balance sheet
amounts do not give effect to consent or financing fees paid in connection
with the amendment to our senior credit facility. We expect the actual
amount of borrowings outstanding under the revolving credit line as of the
closing of this offering to be greater than the amount outstanding at
September 30, 1999 as we continue to borrow to finance our business plan.
(b) Reflects the estimated net proceeds from the offering of approximately
$93.7 million, which is net of the estimated underwriting discount and
offering expenses totaling approximately $6.3 million.
(c) Reflects use of proceeds from the offering to repay approximately $0.2
million of installment loans of Com-Net.
21
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
The following table sets forth selected historical financial data as of and
for the years ended December 31, 1994, 1995, 1996, 1997 and 1998 and as of
September 30, 1999 and for the nine months ended September 30, 1998 and 1999.
The financial data for each of the full fiscal years have been derived from,
and are qualified by reference to, our audited financial statements, which
Arthur Andersen LLP, our independent certified public accountants, have
audited. The financial data set forth below as of September 30, 1999 and for
the nine months ended September 30, 1998 and 1999, have been derived from our
unaudited consolidated financial statements. The financial statements for
periods ending on or prior to December 31, 1996 are the combined financial
statements of SBA, Inc. and SBA Leasing, Inc., two predecessor companies that
we acquired during the first quarter of 1997. You should read the information
set forth below in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in this
prospectus and the Consolidated Financial Statements and their related notes
incorporated by reference in this prospectus.
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
----------------------------------------------- -----------------------
1994 1995 1996 1997 1998 1998 1999
------- ------- -------- ------- ---------- ---------- -----------
(dollars in thousands except per share data)
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Data:
Revenues:
Site development
revenue............... $10,604 $22,700 $ 60,276 $48,241 $ 46,705 $ 33,624 $ 39,723
Site leasing revenue... 896 2,758 4,530 6,759 12,396 8,132 18,009
------- ------- -------- ------- ---------- ---------- -----------
Total revenues.......... 11,500 25,458 64,806 55,000 59,101 41,756 57,732
------- ------- -------- ------- ---------- ---------- -----------
Cost of revenues
(exclusive of
depreciation shown
below):
Cost of site
development revenue... 7,358 13,993 39,822 31,470 36,500 26,015 30,322
Cost of site leasing
revenue............... 647 2,121 3,638 5,356 7,281 5,039 8,393
------- ------- -------- ------- ---------- ---------- -----------
Total cost of revenues.. 8,005 16,114 43,460 36,826 43,781 31,054 38,715
------- ------- -------- ------- ---------- ---------- -----------
Gross profit............ 3,495 9,344 21,346 18,174 15,320 10,702 19,017
Selling, general and
administrative(a)(b)... 1,627 5,968 17,754 12,033 18,302 13,127 13,714
Depreciation and
amortization........... 5 73 160 514 5,802 2,804 10,983
------- ------- -------- ------- ---------- ---------- -----------
Operating income
(loss)................. 1,863 3,303 3,432 5,627 (8,784) (5,229) (5,680)
Interest income......... 2 6 7 644 4,303 3,374 767
Interest expense........ (19) (11) (139) (407) (2,357) -- (3,240)
Non cash amortization of
original issue discount
and debt issuance
costs.................. -- -- -- -- (14,550) (10,811) (16,205)
Other................... -- -- -- -- (37) -- 28
------- ------- -------- ------- ---------- ---------- -----------
Income (loss) before
income taxes and
extraordinary item..... 1,846 3,298 3,300 5,863 (21,425) (12,667) (24,330)
(Provision) benefit for
income taxes(c)........ (738) (1,319) (1, 320) (5,596) 1,524 -- 403
------- ------- -------- ------- ---------- ---------- -----------
Net income (loss) before
extraordinary item..... 1,108 1,979 1,980 267 (19,901) (12,667) (23,927)
Extraordinary item...... -- -- -- -- -- -- (1,150)
------- ------- -------- ------- ---------- ---------- -----------
Net income (loss)....... 1,108 1,979 1,980 267 (19,901) (12,667) (25,077)
Dividends on preferred
stock.................. -- -- -- (983) (2,575) (1,862) 733
------- ------- -------- ------- ---------- ---------- -----------
Net income (loss)
available to common
shareholders........... $ 1,108 $ 1,979 $ 1,980 $ (716) $ (22,476) $ (14,529) $ (24,344)
======= ======= ======== ======= ========== ========== ===========
Basic and diluted loss
per common share before
extraordinary item..... $ (2.64) $ (1.73) $ (1.42)
Extraordinary item...... -- -- (0.07)
---------- ---------- -----------
Basic and diluted loss
per common share....... $ (2.64) $ (1.73) $ (1.49)
========== ========== ===========
Basic and diluted
weighted average number
of shares of common
stock.................. 8,526,052 8,407,238 16,348,073
========== ========== ===========
Other Data:
Adjusted EBITDA(d)...... $ 1,868 $ 3,376 $ 10,603 $ 7,155 $ (2,377) $ (2,281) $ 5,490
Annualized tower cash
flow(e)................ 344 752 991 1,947 8,088 5,634 15,488
Net cash provided by
(used in) operating
activities............. 873 (533) 1,215 7,829 7,471 16,422 11,463
Net cash used in
investing activities... (51) (660) (145) (17,676) (138,124) (103,561) (147,973)
Net cash provided by
(used in) financing
activities............. (689) 1,298 (1,036) 15,645 151,286 133,527 112,472
Towers owned at the
beginning of period.... -- -- -- -- 51 51 494
Towers constructed...... -- -- -- 15 310 233 288
Towers acquired......... -- -- -- 36 133 80 174
Total towers at the end
of period.............. -- -- -- 51 494 364 956
</TABLE>
- -------
(Footnotes on following page)
22
<PAGE>
<TABLE>
<CAPTION>
As of December 31, As of
----------------------------------------- September 30,
1994 1995 1996 1997 1998 1999
------- ------- ------- ------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data (at
end of period) (unaudited)
(dollars in thousands):
Property, plant and
equipment (net)........ $ 61 $ 647 $ 632 $17,829 $150,946 $284,509
Total assets............ 2,610 7,429 18,060 44,797 214,573 347,184
Total debt(f)........... 1 1,500 4,921 10,184 182,573 255,912
Redeemable preferred
stock.................. -- -- -- 30,983 33,558 --
Common stockholders'
equity (deficit)....... 1,745 4,793 102 (4,344) (26,095) 46,772
</TABLE>
- --------
(a) For the year ended December 31, 1995, selling, general and administrative
expenses include 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, selling, general
and administrative expenses include non-cash compensation expense of $7.0
million incurred in connection with the consolidation of the predecessor
companies 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. For the year ended December 31, 1997, selling, general
and administrative expenses include non-cash compensation expense of $1.0
million incurred in the consolidation of the predecessor companies. For the
year ended December 31, 1998, selling, general and administrative expenses
include non-cash compensation expense of $0.6 million incurred in
connection with the issuance of stock options and Class A common stock. For
the nine months ended September 30, 1999, selling, general and
administrative expenses include a non-cash compensation expense of $0.2
million incurred in connection with the issuance of stock options.
(b) Selling, general and administrative expenses include corporate development
expenses associated with our site leasing business that were incurred in
connection with the acquisition or construction of owned towers. These
expenses consist of compensation and overhead costs that are not directly
related to the administration or management of existing towers. All of
these costs are expensed as incurred.
(c) Provision for income taxes represents a pro forma calculation (40%) for the
years ended December 31, 1994, 1995 and 1996, when we were treated as an S
corporation under Subchapter S of the Internal Revenue Code of 1986, as
amended. We converted to a C corporation in 1997. Provision for income
taxes for the year ended December 31, 1997 includes the tax effect of our
conversion to a C corporation.
(d) 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. Adjusted EBITDA excludes
the effect of the non-cash compensation expense referred to in footnote (a)
above. Adjusted 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 Adjusted EBITDA differently and, therefore, Adjusted
EBITDA as presented for us may not be comparable to Adjusted EBITDA
reported by other companies. See our Consolidated Statements of Cash Flows
in our Consolidated Financial Statements incorporated by reference in this
prospectus.
(e) We define "tower cash flow" as site leasing revenue less cost of site
leasing revenue (exclusive of depreciation). Tower cash flow includes
deferred revenue attributable to certain leases. We believe tower cash flow
is useful because it allows you to compare tower performance before the
effect of expenses (selling, general and administrative) that do not relate
directly to tower performance. We define "annualized tower cash flow" as
tower cash flow for the last calendar quarter attributable to our site
leasing business multiplied by four. Pro forma annualized tower cash flow
also includes the effect of fourth quarter acquisitions as if each had
occurred at the beginning of the period presented.
(f) Total debt does not include amounts owed to the shareholder of $0.1 million
and $10.7 million as of December 31, 1995 and 1996, respectively. These
amounts were paid in March 1997.
23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
We are a leading independent owner and operator of wireless communications
infrastructure in the United States. Our strategy is to use our historical
leadership position in the site development business, a project revenue
business, to expand our ownership and leasing of communication towers, a
recurring revenue business. We are transitioning our revenue stream from
project driven revenues more to recurring revenues through the leasing of
antenna space at or on communications facilities.
While we intend to continue to offer site development services to wireless
carriers and other telecommunications providers where demand and profitable
opportunities exist, we will emphasize our site leasing business through the
construction of owned towers for lease to wireless service providers, the
acquisition of existing sites and the leasing, subleasing and management of
other antennae sites. We believe that as the site development industry matures
and as wireless service providers choose to outsource ownership of
communication sites in order to conserve capital, our revenues and gross profit
from the site development consulting segment of that business will continue to
decline in the near term. We also believe that, over the longer term, site
leasing revenues will increase as carriers move to outsource tower ownership
and the number of towers we own grows.
As a result of these trends and the shift in focus of our business, our
earnings have declined in 1999 from prior periods and net interest expense,
depreciation, amortization and capital expenditures have increased sharply as
we accumulated towers. Our EBITDA, however, has increased in 1999 as compared
to 1998. Additionally, our capital expenditures may increase even more in 2000
as compared to 1999. We also anticipate that our operating expenses will remain
at or above current levels as we continue to construct and acquire tower
assets.
We derive our revenues from two businesses - site development and site
leasing. Our site development business consists of site development consulting
and site development construction. We provide site development services, both
consulting and construction, on a contract basis that is usually customer and
project specific. We generally charge for site development services on either a
time and materials basis or a fixed price basis. The majority of these services
are performed on a fixed fee basis. We also provide site leasing services on a
contract basis. Revenue from our site development business may fluctuate from
period to period depending on construction activities, which are a function of
our clients' build-out schedules, weather and other factors. Our antenna 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.
We have focused our capital deployment on building new towers and "mom and
pop" acquisitions. Of the 1,163 towers we owned at December 31, 1999, 763 were
new builds. In general, we have chosen to build rather than buy the substantial
majority (64%) of our towers due to what we believe are more favorable
economics. To date, our construction cost of a new tower averages approximately
$225,000, while we believe the industry's average acquisition cost of a tower
over the last two years has been approximately $400,000. At December 31, 1999,
we had non-binding mandates from wireless service providers to build over 335
additional towers under build-to-suit programs, the majority of which we expect
will result in binding anchor tenant lease agreements. We believe we have one
of the largest numbers of non-binding build-to-suit mandates from wireless
service providers in the industry. We are also pursuing over 700 new strategic
builds in locations chosen by us based on our industry knowledge and
experience.
While we have focused primarily on new build towers for growth, we have also
acquired 400 towers as of December 31, 1999. Our acquisition strategy has
focused on small, "mom and pop" acquisition targets, those which we believe
offer better opportunities for value. We seek to acquire towers where we can,
through
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additional tenant leases, increase cash flow to substantially reduce the tower
cash flow multiple from the multiple paid at acquisition. The 400 tower
acquisitions to date have been completed at an average acquisition price of
approximately $373,000 per tower and a 14.6 times multiple of annualized tower
cash flow to purchase price, or an aggregate purchase price of $149.4 million.
In addition to what we have already acquired, we are currently actively
negotiating to acquire existing towers. At December 31, 1999, we had letters of
intent or definitive agreements to acquire 94 towers in 23 separate
transactions for an aggregate purchase price of approximately $39.2 million, or
an average acquisition price of $417,000 per tower, and a 16.7 times multiple
of annualized tower cash flow to purchase price. We cannot assure you that we
will be able to close these transactions, or identify towers or tower companies
to acquire in the future.
On April 30, 1999, we acquired Com-Net Construction Services, Inc. Com-Net
provides turnkey construction services of towers and terminal switches
primarily throughout the mid-western, eastern and western United States and for
the year ended December 31, 1998 had construction revenues of over $20.0
million. We issued 780,000 shares of our Class A common stock to the
shareholders of Com-Net, of which 480,000 shares have been pledged back to us
and are subject to forfeiture if the acquired company does not achieve certain
1999 earnings targets. In addition, the shareholders of Com-Net may receive up
to $2.5 million in cash and 320,000 additional shares of Class A common stock
if certain 1999 EBITDA targets are met by the acquired company and up to an
additional 400,000 shares of Class A common stock if certain 2000 EBITDA
targets are met.
On the same date, we acquired an affiliate of Com-Net, Com-Net Development
Group, LLC. Com-Net Development Group owned 18 completed or substantially
completed towers in Texas, Ohio and Tennessee and over 30 sites in various
stages of development under build-to-suit programs. We paid $1.0 million in
cash and assumed debt of approximately $2.5 million for Com-Net Development
Group.
Results of Operations
As we continue our transition into site leasing, operating results in prior
periods may not be meaningful predictors of future prospects. You should be
aware of the dramatic changes in the nature and scope of our business when
reviewing the ensuing discussion of comparative historical results. We expect
that the acquisitions consummated to date and any future acquisitions, as well
as our new tower builds, will have a material impact on future revenues,
expenses and net income. In particular, depreciation and amortization and net
interest expense increased significantly in the period ended September 30, 1999
over the year earlier period, and are expected to continue to increase
significantly in future periods. We believe that our new tower builds will have
a material effect on future operations, which effect will probably be negative
until the time, if ever, that the newly constructed towers attain higher levels
of tenant use.
Nine Months of 1999 Compared to Nine Months of 1998
Total revenues increased 38.3% to $57.7 million for the nine months of 1999
from $41.8 million for the first nine months of 1998 due to increases in both
site development and site leasing revenue. Site development revenue increased
18.1% to $39.7 million in the first nine months of 1999 from $33.6 million in
the first nine months of 1998 due to increased site development construction
revenue, which more than offset a decrease in site development consulting
revenue. Site development consulting revenue decreased 43.6% to $12.8 million
for the first nine months of 1999 from $22.6 million for the first nine months
of 1998, due primarily to the decreased demand for site acquisition and zoning
services from PCS licensees stemming from the increasing acceptance by wireless
carriers of outsourced communication site infrastructure through build-to-suit
programs. Site development construction revenue increased 144.5% to $27.0
million for the first nine months of 1999 from $11.0 million for 1998, due
primarily to the acquisition of Com-Net on April 30, 1999 as well as the
expanded activities of our CSSI construction company subsidiary. Site leasing
revenue increased 121.5% to $18.0 million for the first nine months of 1999
from $8.1 million for the first nine months of 1998, due primarily to the
substantially greater number of towers in our portfolio during the first nine
months of 1999 compared to the first nine months of 1998 and new tenant leases
added to our towers.
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Total cost of revenue increased 24.7% to $38.7 million for the first nine
months of 1999 from $31.1 million for the first nine months of 1998. A greater
rate of increase in revenues offset the increase in cost of revenues and
resulted in improved gross profit margin. Site development cost of revenue
increased 16.6% to $30.3 million in the first nine months of 1999 from $26.0
million in the first nine months of 1998 due to an increased level of activity.
Site development consulting cost of revenue decreased 51.0% to $8.9 million for
the first nine months of 1999 from $18.2 million for the first nine months of
1998 due primarily to a decreased level of activity. Site development
construction cost of revenue increased to $21.4 million for the first nine
months of 1999 from $7.8 million for the first nine months of 1998, due
primarily to the acquisition of Com-Net as well as increased revenues from
CSSI. Site leasing cost of revenue increased 66.6% to $8.4 million for the
first nine months of 1999 from $5.0 million for the first nine months of 1998,
due primarily to the increased number of towers owned resulting in an increased
amount of ground lease payments.
Gross profit increased 77.7% to $19.0 million for the first nine months of
1999 from $10.7 million for the first nine months of 1998, due to increased
revenue and higher margins. Gross profit from site development increased 23.5%
to $9.4 million in the first nine months of 1999 from $7.6 million in the first
nine months of 1998 due to higher site development construction gross profit
which more than offset decreased site development consulting gross profit. Site
development consulting gross profit declined primarily due to decreased
revenue. Gross profit margin on site development consulting increased in the
first nine months of 1999 to 30% from 19% in the first nine months of the 1998
period. This increase is attributable to a changing mix in the timing of
projects, as the earlier phases of consulting projects tend to be more
profitable. Gross profit margin on site development construction dropped in the
first nine months of 1999 to 21% from 29% in the first nine months of 1998,
reflecting the integration of Com-Net which has historically had gross profit
margins in the 15%-20% range and the use by CSSI of more subcontract labor
required by greater levels of activity. During September 1999, as part of its
bankruptcy liquidation proceeding Conxus rejected subleases of ours. Annualized
revenues and expenses associated with these leases were $1.0 million and $0.8
million. We expect site leasing gross profit in the fourth quarter of 1999 to
be negatively impacted by approximately $0.3 million.
Gross profit for the site leasing business increased 210.9% to $9.6 million
in the first nine months of 1999 from $3.1 million in the first nine months of
the 1998 period, and site leasing gross profit margin improved to 53% in the
first nine months of 1999 from 38% in the first nine months of 1998. The
increased gross profit and improved margin were both due to the substantially
greater number of towers owned in the first nine months of the 1999 period and
the lease-up of our towers with additional tenants. As a percentage of total
revenues, gross profit increased to 32.9% of total revenues in the first nine
months of 1999 from 25.6% in the first nine months of 1998 due primarily to
increased levels of site leasing revenues and higher margins in site leasing
gross profit.
Selling, general and administrative expenses increased 4.5% to $13.7 million
for the first nine months of 1999 as compared to $13.1 million for the first
nine months of 1998. This increase is primarily attributable to the additional
selling and administrative expenses associated with Com-Net. As a percentage of
total revenues, selling, general and administrative expenses decreased to 23.8%
for the first nine months of 1999 from 31.4% in the first nine months of 1998.
Depreciation and amortization increased to $11.0 million for the first nine
months of 1999 as compared to $2.8 million for the first nine months of 1998.
This increase is directly related to the increased amount of fixed assets
(primarily towers) we owned in the first nine months of 1999 as compared to the
first nine months of 1998.
Operating loss increased to $(5.7) million for the first nine months in 1999
from $(5.2) million for the first nine months of 1998 as a result of increased
depreciation and amortization expenses in the first nine months of
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1999, which more than offset increased gross profits. Other income (expense)
increased to $(18.7) million for the first nine months of 1999 from $(7.4)
million for the first nine months of 1998. This increase resulted primarily
from the non-cash amortization of original issue discount associated with our
senior discount notes and greater interest expense associated with outstanding
borrowings under the senior credit facility in 1999. Net loss was $(25.1)
million for the first nine months of 1999 as compared to a net loss of $(12.7)
million for the first nine months of 1998 due to increased depreciation,
amortization and net interest expense. The extraordinary item in the first nine
months of 1999 of $1.1 million relates to the write-off of deferred financing
fees associated with a prior bank credit agreement.
Basic and diluted loss per common share decreased to ($1.49) for the first
nine months of 1999 from $(1.73) for the first nine months of 1998. This
decrease was attributable to the increased weighted average number of shares in
the first nine months of 1999 as compared to the first nine months of 1998.
1998 Compared to 1997
Total revenues increased 7.5% to $59.1 million for 1998 from $55.0 million
for 1997. Total site development revenue decreased 3.2% to $46.7 million in
1998 from $48.2 million in 1997 due to a substantial decline in site
development consulting revenue, which was largely offset by a substantial
increase in site development construction revenue. Site development consulting
revenue decreased 41.6% to $27.4 million for 1998 from $47.0 million for 1997,
due primarily to the decreased demand for site acquisition and zoning services
from PCS licensees, as well as the increasing acceptance by wireless carriers
of outsourced communication site infrastructure through build-to-suit programs.
Site development construction revenue increased to $19.3 million for 1998 from
$1.2 million for 1997, due to the acquisition of CSSI in September 1997 and
higher levels of activity. Site leasing revenue increased 83.4% to $12.4
million for 1998 from $6.8 million for 1997, due to a substantial number of
revenue producing towers added during the period through new builds and
acquisitions.
Total cost of revenues increased 18.9% to $43.8 million for 1998 from $36.8
million for 1997. Site development cost of revenue increased 16.0% to $36.5
million in 1998 from $31.5 million in 1997 due to a substantial increase in
site development construction cost of revenue, which was partially offset by a
decrease in site development consulting cost of revenue. Site development
consulting cost of revenue decreased 28.5% to $21.9 million for 1998 from $30.6
million for 1997, due to a decreased level of activity. Site development
construction cost of revenue increased to $14.6 million for 1998 from $0.8
million for 1997, due again to the inclusion of the construction subsidiary for
a full twelve months in 1998 versus three months in 1997. Site leasing cost of
revenue increased 35.9% to $7.3 million for 1998 from $5.4 million for 1997,
due primarily to the increased volume of towers owned resulting in an increased
amount of lease payments to land owners.
Gross profit decreased 15.7% to $15.3 million for 1998 from $18.2 million for
1997, due to the decrease in site development consulting revenue and lower
margins earned on such revenue, which more than offset gross profits from
increased site development construction and site leasing. Gross profit for site
development consulting services decreased 66.1% to $5.6 million for 1998 from
$16.4 million for 1997. The lower gross profit margins experienced in 1998 were
due to more work being performed on a fixed fee basis and the completion of a
number of large projects on which we experienced proportionately higher
expenses than in the earlier stages of a project. Gross profit for site
development construction services increased to $4.7 million for 1998 from $0.4
million for 1997 due to higher revenue. Gross profit for the site leasing
business increased 264.6% to $5.1 million for 1998 from $1.4 million for 1997
due primarily to higher revenue but also due to higher gross profit margins
earned on towers owned as opposed to the margins earned on our lease/sublease
business which contributed most of our 1997 site leasing revenue. As a
percentage of total revenues, gross profit decreased to 25.9% for 1998 as
compared to 33.0% for 1997 due to significantly lower site development
consulting gross profit.
Selling, general and administrative expenses increased 52.1% to $18.3 million
for 1998 from $12.0 million for 1997 primarily due to the addition of
personnel, the expansion of office space and overall increases in
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operating expenses attributable to the growth in the organization and building
of our tower development infrastructure. We also incurred $1.0 million of
direct expenses on acquisitions or proposed new tower builds which were not
completed. As a percentage of total revenues, selling, general and
administrative expenses increased to 31.0% for 1998 from 21.9% in 1997.
Depreciation and amortization increased to $5.8 million for 1998 as compared
to $0.5 million for 1997. This increase was directly related to the increased
amount of fixed assets, primarily towers, we owned in 1998 as compared to 1997.
Operating income (loss) decreased to $(8.8) million for 1998 from $5.6
million for 1997 as a result of the factors discussed above. Other income
(expense) decreased to $(12.6) million for 1998 from $0.2 million for 1997.
This decrease resulted primarily from the interest expense associated with the
senior discount notes offset by interest income that was earned on cash
balances. Net income (loss) was $(19.9) million for 1998 as compared to net
income of $0.3 million for 1997.
Liquidity and Capital Resources
SBA Communications Corporation is a holding company with no business
operations of its own. Our only significant asset is the outstanding capital
stock of our subsidiaries. We conduct all our business operations through our
subsidiaries. Accordingly, our only source of cash to pay our obligations is
distributions with respect to our ownership interest in our subsidiaries from
the net earnings and cash flow generated by these subsidiaries. We cannot
assure you that our subsidiaries will generate sufficient cash flow to pay a
dividend or distribute funds or that we will be permitted to pay any dividends
under the terms of the senior credit facility.
Net cash provided by operations during the nine months ended September 30,
1999 was $11.5 million compared to $16.4 million in 1998. Net cash used in
investing activities for 1999 was $148.0 million compared to $103.6 million for
1998. This increase is attributable to a higher level of tower acquisition and
new build activity in 1999 versus 1998. Net cash provided from financing
activities for 1999 was $112.5 million compared to $133.5 million for 1998. The
1999 amount includes the proceeds from our initial public offering of Class A
common stock, while the 1998 amount includes the proceeds of the senior
discount notes.
Our balance sheet reflected negative working capital of $(8.3) million as of
September 30, 1999, as compared to positive working capital of $8.1 million as
of December 31, 1998.
During February 1999, we entered into a senior credit facility, through our
Telecommunications subsidiary, with a group of lenders, which was amended and
restated on December 16, 1999 to increase the amount of the facility and to
make certain other amendments, including changes to the financial covenants.
Our senior credit facility, as amended, consists of two term loans in an
aggregate amount of $75.0 million and a $225.0 million revolving line of
credit. Availability under the senior credit facility is determined by a number
of factors, including the number of towers built by us with anchor tenants on
the date of completion, the financial performance of our other towers, site
development and construction segments, as well as by other financial covenants,
financial ratios and other conditions. The revolving line of credit and the
$25.0 million term loan mature on December 31, 2004 and reduced availability of
the revolving credit commitments and amortization of the term loan begins on
March 31, 2001. The $50.0 million term loan matures on December 31, 2005 and
amortization of this term loan begins on March 31, 2002. Borrowings under the
senior credit facility bear interest at the eurodollar rate plus a margin
ranging from 2.25% to 3.50% (determined by a leverage ratio) or a "base rate"
(as defined in the senior credit facility) plus a margin ranging from 1.25% to
2.50% (determined by a leverage ratio). The senior credit facility is secured
by substantially all of the assets of Telecommunications and its direct and
indirect subsidiaries and requires Telecommunications to maintain certain
financial covenants and places restriction on, among other things, the
incurrence of debt and liens, disposition of assets, transactions with
affiliates and certain investments. Deferred financing fees related to
obtaining and expanding the senior credit facility were approximately $6.8
million. To permit us to increase the amount of our senior credit facility we
solicited and received consents from the holders of our senior discount
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notes and paid to these holders $5.3 million in connection with these consents.
As of September 30, 1999, we had approximately $113.0 million of total
availability under the senior credit facility, of which $75.0 million has been
borrowed.
In June 1999, we completed an initial public offering of 11.3 million shares
of Class A common stock. We raised $101.7 million, which produced net proceeds
after deduction of the underwriting discount and estimated offering expenses of
$93.7 million. We used approximately $32.8 million of these net proceeds to pay
all outstanding dividends on all outstanding shares of our Series A preferred
stock and to redeem all shares of our Series B preferred stock. We also used
$46.0 million to repay all revolving credit loans under the senior credit
facility. Remaining proceeds were used for the construction and acquisition of
towers and for general working capital purposes. As a result of our initial
public offering, all 8,050,000 shares of Series A preferred stock were
converted into 8,050,000 shares of Class A common stock and we no longer have
any shares of preferred stock outstanding.
In the event that the business acquired in the Com-Net acquisition achieves
certain EBITDA targets in 1999 and 2000, we may be obligated to issue up to
720,000 additional shares of Class A common stock.
We currently anticipate building a significant number of towers for which we
have non-binding mandates pursuant to our build-to-suit program or pursuant to
our strategic site initiatives. We also intend to continue to explore
opportunities to acquire additional towers, tower companies and/or related
businesses. The exact amount of our future capital expenditures will depend on
a number of factors. Our future capital expenditures will depend in part upon
acquisition opportunities that become available during the period, the needs of
our build-to-suit customers and the availability to us of additional debt or
equity capital on acceptable terms. Our cash capital expenditures for the nine
months ended September 30, 1999 were $148.0 million. We currently estimate that
we will have made at least $50.0 million of cash capital expenditures during
the fourth quarter of 1999 for the construction and acquisition of
communication sites, primarily towers, and the cash portion of the contingent
purchase price payment related to the acquisition of Com-Net. We currently plan
to make cash capital expenditures in 2000 of at least $150.0 million to $200.0
million. Substantially all of these planned capital expenditures are expected
to be funded by borrowings under our senior credit facility, the anticipated
proceeds from this offering and cash flow from operations. In the event that
there is not sufficient availability under the senior credit facility when an
acquisition or construction opportunity arises, we would be required to seek
additional debt or equity financing. We cannot assure you that any required
financing will be available on commercially reasonable terms or at all or that
any additional debt financing would be permitted by the terms of our existing
indebtedness. In addition, we intend to file with the Commission a shelf
registration onForm S-4 registering 1,000,000 shares of Class A common stock
which we may issue in connection with the acquisition of towers or related
businesses.
Our ability to make scheduled payments of principal of, or to pay interest
on, our debt obligations, and our ability to refinance any of our debt
obligations, or to fund planned capital expenditures, will depend on our future
performance, which, to a certain extent, is subject to general economic,
financial, competitive, legislative, regulatory and other factors that are
beyond our control. Our business strategy contemplates substantial capital
expenditures in connection with our planned tower build-out and acquisitions.
Based on our current operations and anticipated revenue growth, we believe
that, if our business strategy is successful, cash flow from operations,
available borrowings under the senior credit facility and the anticipated
proceeds from this offering will be sufficient to fund all anticipated cash
capital expenditures through the middle of 2001. Thereafter, however, or in the
event we exceed our currently anticipated capital expenditures, we anticipate
that we will need to seek additional equity or debt financing to fund our
business plan. Failure to obtain any new required financing could require us to
significantly reduce our planned capital expenditures and scale back the scope
of our tower build-out or acquisitions, either of which could have a material
adverse effect on our financial condition or results of operations. In
addition, we may need to refinance all or a portion of our indebtedness,
including the senior discount notes and/or the senior credit facility, on or
prior to its scheduled maturity. We cannot assure you that we 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
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in amounts sufficient to service our indebtedness and make anticipated capital
expenditures. In addition, we cannot assure you that we will be able to effect
any required refinancing of our indebtedness, including our senior discount
notes, on commercially reasonable terms or at all.
Year 2000
During 1999, we implemented a new financial system. The system is certified
as Year 2000 compliant. As of the date of this prospectus, all of our systems
are operating and we have not experienced any material Year 2000 issues. At
this time, we are unaware of any third party Year 2000 issues that would
materially affect our financial condition.
Inflation
The impact of inflation on our operations has not been significant to date.
However, we cannot assure you that a high rate of inflation in the future will
not adversely affect our operating results.
Cautionary Information Regarding Forward-Looking Statements
This prospectus contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act.
Discussions containing forward-looking statements may be found in the material
set forth in this section and under "Prospectus Summary," "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Industry Overview" and "Business," as well as in the prospectus generally.
These statements concern expectations, beliefs, projections, future plans and
strategies, anticipated events or trends and similar expressions concerning
matters that are not historical facts. Specifically, this prospectus contains
forward-looking statements regarding:
. our business strategy to transition our business from site development
services toward the site leasing business, including our intent to make
strategic acquisitions of towers and tower companies;
. anticipated trends in the maturation of the site development industry
and its effect on our revenues and profits;
. our estimates regarding the future development of the site leasing
industry and its effect on our site leasing revenues;
. our plan to continue to construct and acquire tower assets and the
resulting effect on our revenues, capital expenditures, expenses and net
income;
. our ability to successfully conclude letters of intent or definitive
agreements for newly built towers or acquisitions of existing towers and
the resulting effect on our financial operations;
. the effect on our financial operations of Conxus rejecting certain of
their subleases with us pursuant to their bankruptcy proceedings;
. our estimate of the amount of capital expenditures for fiscal year 2000
that will be required for the construction or acquisition of
communications sites and the contingent share issuance related to the
acquisition of Com-Net; and
. our intention to fund capital expenditures for fiscal year 2000 from
cash from operations, borrowings under our senior credit facility and
the proceeds of this offering.
These forward-looking statements reflect our current views about future events
and are subject to risks, uncertainties and assumptions. We wish to caution
readers that certain important factors may have affected and could in the
future affect our actual results and could cause actual results to differ
significantly from those expressed in any forward-looking statement. The most
important factors that could prevent us from achieving our goals, and cause the
assumptions underlying forward-looking statements and the actual results to
differ
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materially from those expressed in or implied by those forward-looking
statements include, but are not limited to, the following:
. our ability to secure as many site leasing tenants as planned;
. our ability to expand our site leasing business and our site development
business;
. our ability to complete construction of new towers on a timely and cost-
efficient basis, including our ability to successfully address zoning
issues, carrier design changes, changing local market conditions and the
impact of adverse weather conditions;
. our ability to identify and acquire new towers, including our capability
to timely complete due diligence and obtain third party consents;
. our ability to retain current lessees on newly acquired towers;
. our ability to realize economies of scale for newly acquired towers;
. the continued dependence on towers by the wireless communications
industry;
. our ability to compete effectively for new tower opportunities in light of
increased competition; and
. our ability to raise substantial additional financing to expand our tower
holdings.
These and other risks and uncertainties affecting us are discussed in greater
detail in the "Risk Factors" section of this prospectus and in our other
filings with the Commission. All subsequent written and oral forward-looking
statements attributable to us or persons acting on our behalf are expressly
qualified in their entirety by the cautionary statements included in this
document. We undertake no obligation to publicly update or revise any forward-
looking statements, whether as a result of new information, future events or
otherwise.
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INDUSTRY OVERVIEW
General
We are a leading independent owner and operator of wireless communications
infrastructure in the United States. In order to capitalize on the trend toward
colocation and independent tower ownership in this industry, we have
aggressively expanded our site leasing business by using our nationally
recognized site development experience and strong relationships with wireless
service providers to source opportunities to build and acquire communication
sites. The wireless communications industry continues to grow rapidly 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, 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 voice services by consumers and the emergence of wireless
data and Internet services, has led to an increased demand for higher quality,
uninterrupted service and improved coverage. This demand for higher quality
service and coverage 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. We believe that, as the
wireless communications industry has become more competitive, wireless service
providers have outsourced certain network services and build-out activities and
colocated transmission equipment with other providers on multi-tenant towers,
in order to maximize their operating and capital efficiencies. 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 us to develop and own
communication sites, lease antenna space on these sites and provide related
network infrastructure and support services.
Development of the Tower Industry
The U.S. wireless communications industry was transformed in the 1970s
through the issuance of licenses by the FCC to provide high quality
communications services to vehicle-mounted and hand-held portable telephones,
pagers and other devices. The licensees built and began operating wireless
networks that were supported by communication sites, transmission equipment and
other infrastructure. In the early 1980s, the number of towers began to expand
significantly with the development of more advanced wireless communications
systems, particularly cellular and paging. Nevertheless, as additional towers
were built by the wireless carriers, they often were built for a single purpose
rather than as multiple tenant towers. In addition, these towers were generally
owned and maintained by carriers and were treated as corporate cost centers
operated primarily for the purpose of transmitting or receiving these carriers'
signals.
During the mid-to-late 1980s, a number of independent operators of towers
began to emerge. These independent tower operators focused on owning and
managing towers with multiple tenants by adding lessees to existing and
reconstructed towers. We believe the majority of these operators were small
business owners with a small number of local towers and few services other than
site leasing. In the last five years, however, several larger independent tower
operators have emerged as demand for wireless services has continued to grow
and as additional high frequency licenses have been awarded for new wireless
services (including PCS, wireless data and Internet, narrowband paging and
wireless local loop), each requiring networks with extensive tower
infrastructure. These independent tower operators have sought to acquire
smaller operators as well as clusters of towers formerly owned by carriers and
broadcasters.
Today, a variety of companies, including wireless voice and data carriers,
local and long distance telecommunications companies, broadcasting companies,
independent tower operators, utilities and railroad companies, own towers.
Despite the increasing demand for towers, the tower industry in the United
States remains highly fragmented, with only a few independent tower operators
owning a large number of towers. The
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<PAGE>
pace of consolidation has begun to accelerate, however, as the larger
independent operators continue to acquire small local operators and purchase
towers from wireless communications companies. In addition, wireless carriers
are building out new, or filling in existing, tower footprints for new and
existing wireless services. Independent operators have also expanded into a
number of associated network and communication site services, including the
design of communication sites and networks, the selection and acquisition of
tower and rooftop sites (including the resolution of zoning and permitting
issues) and the construction of towers. Previously, carriers typically handled
these services through in-house departments, and local nonintegrated service
contractors focused on specific segments such as site acquisition.
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 antennas 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 antenna installations, or antenna 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 antennas that it can support.
Set forth below is a diagram illustrating the basic functions of each of the
primary components of a "wireless network."
[GRAPHIC OF WIRELESS COMMUNICATIONS NETWORK]
Communication sites consist of towers, rooftops and other structures upon
which antennas are placed. A typical tower usually 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
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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 antennas. In cases of 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. Antennas may
also be installed on structures such as 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, ESMR and
wireless data and Internet 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 have emerged as important segments of
this industry.
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 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 our 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. Each separate transmitter can reuse the same frequency, subject to
certain interference limitations. The design of each wireless system involves
the placement of transmission equipment in locations, subject to availability,
that will make optimal use of available frequency based upon projected usage
patterns and the ability to use them for wireless transmission under applicable
zoning requirements.
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<PAGE>
Wireless Communications
The wireless communications industry now provides a broad range of services,
including cellular, PCS, paging, SMR, ESMR and wireless data and Internet. 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 is based upon Paul Kagan Associates, Inc.'s September 1999 industry
estimates regarding projected subscriber growth for certain types of wireless
communications services.
<TABLE>
<CAPTION>
1999-2004 1999-2009
Estimated Projected Projected Compounded Compounded
1999 2004 2009 Annual Annual
Subscribers Subscribers Subscribers Growth Rate Growth Rate
----------- ----------- ----------- ----------- -----------
(in millions except percentages)
<S> <C> <C> <C> <C> <C>
Cellular........... 67.2 99.4 109.9 8.1% 5.0%
PCS................ 15.3 74.9 112.6 37.4 22.1
ESMR............... 4.4 10.6 12.6 19.2 11.2
Total Wireless..... 86.9 185.0 235.1 16.3 10.5
Penetration........ 31% 64% 78%
</TABLE>
Although Paul Kagan Associates, Inc. is a leading industry analyst, we cannot
assure you that their projections of industry growth will be realized.
Projections are inherently uncertain and actual results will likely differ from
these projections, possibly materially.
We believe that more communication sites will be required in the future to
accommodate the expected increase in demand for wireless communications
services. In addition, we see additional opportunities with the development of
higher frequency technologies, such as PCS, which have a reduced cell range as
a result of signal propagation characteristics that require a more dense
network of towers. In particular, wireless data carriers require a
significantly higher density than traditional voice carriers. Also, network
services may be required to service the network build-outs of new carriers and
the network upgrades and expansion of existing carriers.
Current emerging wireless communications systems, including PCS and ESMR,
represent an immediate and sizable market for providers of communication site
services as they build out large nationwide and regional networks. 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.
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 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 potential applications include local multi-point distribution
services, consisting of 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 Nucentrix and CAI Wireless, and data networks
being constructed and operated by BellSouth Wireless Data, Metricom and Ardis.
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<PAGE>
Characteristics of the Tower Industry
In addition to the increased demand for wireless services and the need to
develop and expand wireless communications networks, we believe that other
trends influencing the wireless communications industry have important
implications for independent tower operators. In this increasingly competitive
wireless industry environment, we believe that many providers are dedicating
their capital and operations primarily to those activities that directly
contribute to subscriber growth, such as marketing and distribution. Many
providers have, therefore, sought 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.
We also believe that, in addition to the favorable growth and outsourcing
trends in the wireless communications industry and barriers to entry as a
result of local zoning restrictions associated with new tower sites, tower
operators benefit from several favorable characteristics. The ability of tower
operators to provide antenna sites to customers on multiple tenant towers
protects 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 these risks. We believe 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.
We believe that 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 if it were to relocate an antenna to another site and
consequently be forced to re-engineer its network. Moving a single antenna may
alter the pre-engineered maximum signal coverage, requiring a reconfigured
network at significant cost to maintain the same coverage. Municipal approvals
are increasingly difficult to obtain and may also affect the provider's
decision to relocate. We believe that the costs associated with network
reconfiguration and municipal approval and the time required to complete these
activities are not generally justified by any potential savings in reduced site
leasing expense.
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<PAGE>
BUSINESS
General
We are a leading independent owner and operator of wireless communications
infrastructure in the United States. We generate revenues from our two primary
businesses--site leasing and site development services. Since our founding in
1989, we have participated in the development of more than 13,000 antenna sites
in 49 of the 51 major wireless markets in the United States. In 1997, we began
aggressively expanding our site leasing business by capitalizing on our
nationally recognized site development experience and strong relationships with
wireless service providers to take advantage of the trend toward colocation and
independent tower ownership. As of December 31, 1999, we owned or controlled
1,163 towers and had letters of intent or definitive agreements to acquire 94
towers. We also had non-binding mandates to build over 335 additional towers
for anchor tenants and had over 700 strategic sites in various phases of
development. In 1998 and 1999 we built, for our own account, 310 and 438
towers. We believe our history and experience in providing site development
services gives us a competitive advantage in choosing the most attractive
locations in which to build new towers or buy existing towers, as measured by
our success in increasing tower revenues and cash flows. Our same tower revenue
growth for 1999 on the 494 towers we owned as of December 31, 1998 was 33%
based on tenant leases executed as of December 31, 1999.
Our primary focus is the leasing of antenna space on our multi-tenant towers
to a variety of wireless service providers under long-term lease contracts. We
lease antenna space on: (1) the towers we construct through build-to-suit
programs; (2) existing sites we acquire; (3) the towers we develop
strategically; and (4) sites we lease, sublease and/or manage for third
parties. Under a build-to-suit program, we build a tower for a wireless service
provider. We retain ownership of the tower and the exclusive right to colocate
additional tenants on the tower. Many wireless service providers are choosing
the build-to-suit option as an alternative to tower ownership, and we believe
that this outsourcing trend is likely to continue. Our non-binding mandates
come from a variety of wireless carriers including, AT&T Wireless, BellSouth
Mobility DCS, Georgia PCS, Horizon PCS, Southwestern Bell, Sprint PCS and
VoiceStream. We have also grown through selective acquisitions of towers from
smaller independent owners. We also develop towers strategically, for our own
account, by identifying an attractive location and completing all pre-
construction procedures, such as zoning, necessary to secure the site. We then
market the tower site to potential customers.
Our site development business consists of site development consulting and
site development construction. In our site development business, we provide a
full range of end-to-end services which typically occur in five phases: (1)
network pre-design; (2) communication site selection; (3) communication site
acquisition; (4) local zoning and permitting; and (5) site construction, switch
construction and antenna installation. We will continue to use our site
development expertise to complement our site leasing business and secure
additional new tower build opportunities. We have capitalized on our leadership
position in the site development business, our existing national field
organization and our strong relationships with wireless service providers to
develop our build-to-suit and strategic siting programs.
We have a diverse range of customers, including cellular, PCS, wireless data
and Internet services, paging, SMR, and ESMR providers as well as other users
of wireless transmission and reception equipment. Our customers currently
comprise many of the major wireless communications companies, including AT&T
Wireless, BellSouth, Georgia PCS, Horizon PCS, LEAP Wireless, Metricom, Nextel,
Omnipoint, Southwestern Bell, Sprint PCS, Teligent and VoiceStream.
While we believe that our site development business will grow with the
expected overall growth of wireless and other telecommunications networks, we
believe our revenues and gross profit from the consulting segment of that
business will continue to decline as carriers find new ways to obtain network
development through outsourced tower ownership. We also believe that, over the
longer term, our site leasing revenues will continue to increase due to the
same outsourcing trend and as the number of towers we own or control grows.
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<PAGE>
Business Strategy
Our strategy is to lease antenna space to multiple tenants on towers that we
construct or acquire. We plan to enhance our position as a leading owner and
operator of communication sites and provider of site development services. Key
elements of our strategy include:
. Maximizing Use of Tower Capacity. We believe that many of our towers
have or will have significant capacity available for antenna space
leasing and that increased use of our owned towers can be achieved at a
low incremental cost. We generally construct our towers to accommodate
multiple tenants in addition to the anchor tenant, and a substantial
majority of our towers are high capacity lattice or guyed towers. We
actively market space on our own towers through our internal sales
force.
. Developing New Towers That We Will Own and Operate. As wireless service
providers increasingly outsource their investment in, and ownership of,
towers, we can meet their outsourcing needs by using our expertise and
relationships in the site development business to construct towers with
anchor tenants through build-to-suit programs. We can also independently
identify attractive locations for new towers and strategically complete
pre-construction procedures necessary to secure tower sites in advance
of customer demand. We believe that we have one of the largest number of
non-binding build-to-suit mandates from wireless service providers in
the industry. As of December 31, 1999, we had non-binding mandates to
build over 335 additional towers under build-to-suit programs for
carriers. Under our build-to-suit programs, we have built towers for
many carriers, including AT&T Wireless, BellSouth Mobility DCS, GTE,
LEAP Wireless, Nextel, Omnipoint, PrimeCo PCS, Southwestern Bell, Sprint
PCS, Tritel PCS and VoiceStream. Furthermore, we are in varying stages
of development on over 700 additional sites which we believe will be
attractive locations for new tower construction. In 1999, we built 438
towers for our own account.
. Acquiring Existing Towers. We believe that our existing national field
organization gives us a competitive advantage in identifying
opportunities for the acquisition of existing towers. Our strategy is to
acquire towers that can service multiple tenants and are attractive to
wireless service providers based on their location, height and available
capacity. While we generally target smaller acquisitions, we believe
that there are many potential acquisition candidates and that the number
of available towers will grow as large cellular, PCS and other wireless
service providers continue to divest their tower holdings. We have
strict valuation criteria and believe that certain tower properties can
be purchased at reasonable price levels. In 1999, we acquired 231
towers. As of December 31, 1999, we had letters of intent or definitive
agreements to acquire 94 towers.
. Building on Strong Relationships with Major Wireless Service
Providers. We are well-positioned to be a preferred partner in build-to-
suit programs, site development projects and tower space leasing because
of our strong relationships with wireless service and other
telecommunications providers and our proven operating experience. 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. We continually market our build-
to-suit programs to our site development service customers.
. Maintaining our Expertise in Site Development Services. We continue to
perform an array of site development services for wireless service and
other telecommunications providers across the United States, including
AT&T Wireless, BellSouth, Horizon PCS, IXC Communications, LEAP
Wireless, MediaOne Group, Metricom, Nextel, Pacific Bell Mobile
Services, Southwestern Bell, Sprint PCS and VoiceStream. We have a broad
national field organization that allows us to identify and participate
in site development projects across the country and that gives us a
knowledge of local markets and strong customer relationships with
wireless service and other telecommunications providers. We believe our
site development experience provides us with a competitive advantage in
selecting the best locations for tower ownership.
. Capitalizing on Management Experience. Our management team has extensive
experience in site leasing and site development services. Management
believes that its industry expertise and strong relationships with
wireless carriers will allow us to continue to build and acquire a high
quality
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<PAGE>
portfolio of towers. Steven E. Bernstein, our President and Chief
Executive Officer, has more than 13 years of experience in the wireless
communications industry and our other executive officers have an average
of approximately five years of experience in this industry. In addition,
management is highly motivated to produce strong operating results based
on their significant equity ownership.
Company Services
We are a leading independent provider of communication sites and services,
offering an array of site leasing and site development services to the
telecommunications industry, primarily to wireless service providers. We offer
our customers the flexibility of choosing between the provision of a full
ready-to-operate site or any of the component services involved in the
operation of a full ready-to-operate site. The site leasing services we
provide include owning, leasing or managing communication sites and leasing
antenna space on communication sites to wireless service providers. The site
development services we provide, directly or through subcontractors, include
all activities associated with the selection, acquisition and construction of
communication sites for wireless service providers and switching facilities
for a broader group of telecommunications providers.
Site Leasing Business
The site leasing business consists of:
. the ownership of communication sites pursuant to build-to-suit programs,
strategic builds and acquisitions;
. the leasing or subleasing of antenna space on communication sites to
wireless service providers; and
. the maintenance and management of communication sites.
We lease and sublease antenna space on our communication sites to a variety
of wireless service providers. We own or lease the ground under these
communication sites from third parties, and in some cases manage communication
sites for third parties in exchange for a percentage of the revenues or tower
cash flow. We determine tower cash flow 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. The substantial majority of our owned or controlled towers are
the result of build-to-suit programs. In our build-to-suit programs, we use
some or all of the five phases of our site development business as we would
when providing site development services to a third party. After a tower has
been constructed, we lease antenna space on the tower. We generally receive
monthly lease payments from customers payable under written antenna site
leases. The majority of our outstanding customer leases, and the new leases we
typically enter into, 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
antenna 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. We also provide a lease/sublease service as part
of our site leasing business whereby we lease space on a communication site
and sublease the space to a wireless service provider.
We believe that the site leasing portion of our business has significant
potential for growth, and we intend to expand our site leasing business
through increasing activity from our new tower builds and selective
acquisitions. Our tower portfolio has continued to grow from 51 at year-end
1997 to 494 in 1998 to 1,163 in 1999.
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<PAGE>
The following table indicates the number of our acquired and built towers on
a state by state basis as of December 31, 1999:
<TABLE>
<CAPTION>
New
Location of Towers Acquired Builds Total % of Total
------------------ -------- ------ ----- ----------
<S> <C> <C> <C> <C>
North Carolina............................ 2 117 119 10.2
Tennessee................................. 23 87 110 9.5
South Carolina............................ 2 107 109 9.4
Georgia................................... 9 90 99 8.5
Ohio...................................... 55 22 77 6.6
Florida................................... 44 21 65 5.6
Texas..................................... 32 29 61 5.2
New York.................................. 41 17 58 5.0
Pennsylvania.............................. 26 21 47 4.0
Wisconsin................................. 9 36 45 3.9
Alabama................................... 10 25 35 3.0
Oklahoma.................................. 12 21 33 2.8
Virginia.................................. 3 29 32 2.8
Connecticut............................... 2 26 28 2.4
Kentucky.................................. 11 13 24 2.1
Michigan.................................. 2 22 24 2.1
Missouri.................................. 16 5 21 1.8
Minnesota................................. 16 4 20 1.7
Illinois.................................. 10 5 15 1.3
Massachusetts............................. 3 9 12 1.0
Iowa...................................... 8 3 11 *
Louisiana................................. 11 0 11 *
West Virginia............................. 10 1 11 *
Mississippi............................... 10 0 10 *
Oregon.................................... 0 10 10 *
New Hampshire............................. 0 9 9 *
Colorado.................................. 7 1 8 *
Delaware.................................. 0 8 8 *
Indiana................................... 3 3 6 *
Kansas.................................... 6 0 6 *
Maryland.................................. 0 6 6 *
Nebraska.................................. 1 5 6 *
New Mexico................................ 6 0 6 *
Arkansas.................................. 3 1 4 *
New Jersey................................ 1 3 4 *
South Dakota.............................. 3 0 3 *
California................................ 2 0 2 *
Rhode Island.............................. 0 2 2 *
Washington................................ 0 2 2 *
Arizona................................... 0 1 1 *
Idaho..................................... 0 1 1 *
North Dakota.............................. 1 0 1 *
Utah...................................... 0 1 1 *
--- --- ----- ----
Total................................... 400 763 1,163 100
=== === ===== ====
</TABLE>
--------
* Less than 1%.
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Build-to-Suit Programs
Under our build-to-suit programs, we generally construct towers only after
having signed an antenna site lease agreement with an anchor tenant and having
made the determination that the initial or planned capital investment for those
towers would not exceed a targeted multiple of expected tower cash flow from
those towers after a certain period of time. In selling our build-to-suit
programs, our sales representatives use their existing relationships in the
wireless communications industry to target wireless service providers
interested in outsourcing their network buildout. Our sales representatives
make proposals for build-to-suit towers in response to competitive bids or
specific requests and in circumstances where we believe the provider would have
an interest in build-to-suit towers. Although the terms vary from proposal to
proposal, we typically sign a five-year lease agreement with an anchor tenant,
with four or five additional five-year renewal periods at the option of the
lessee. 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 some 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 us, the
provider will award us a non-binding mandate to pursue specific sites. Based on
the status of the geographic areas we have been given a mandate to pursue, we
will perform due diligence investigations for a designated period during which
time we 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 our due diligence investigation during the mandate, we conclude
that it is economically feasible to construct the towers requested by the
wireless service provider, we will enter into an antenna site lease agreement
with the provider. In certain limited circumstances we are contractually
obligated to build a tower for the carrier regardless of the outcome of our due
diligence investigation. We have negotiated several master build-to-suit
agreements, including antenna site lease terms, with providers in specific
markets that we believe will facilitate our obtaining build-to-suit programs
from these providers in those markets. The antenna site lease agreements
typically provide that all obligations are conditioned on our receiving all
necessary zoning approvals where zoning remains to be obtained. Certain of the
antenna site lease agreements contain penalty or forfeiture provisions in the
event the tower is not completed within specified time periods.
Strategic Siting
Our strategic siting activities focus on developing new towers in locations
chosen by us, instead of by an anchor tenant in a build-to-suit program. As of
December 31, 1999, of our total 763 new builds, 103 were through our strategic
siting programs, and we expect this number to grow in the future. We try to
identify attractive locations for new towers and complete pre-construction
procedures necessary to secure the site in advance of demand from a specific
customer. We may invest in the zoning and permitting of these strategic sites,
and even the construction of the towers, when we have not yet obtained an
anchor tenant if we believe that demand for the site will exist in the near
term, or that a competitor of ours may acquire the site if we wait until an
anchor tenant is secured. We may also build a strategic site without a tenant
for competitive or zoning reasons. However, we generally will not build a tower
on a strategic site until we have signed a lease with a tenant. We are limited
under the terms of our senior credit facility to building towers on strategic
sites without signed tenants to a number not exceeding 7% of our total tower
portfolio at any time.
Acquisitions
We actively pursue acquisitions of communication sites. Our acquisition
strategy, like our new build strategy, is financially-oriented as opposed to
geographically or customer-oriented. Our goal is to acquire towers that have an
initial or planned capital investment not exceeding a targeted multiple of
expected tower cash flow from the acquired towers after a certain period of
time. We determine tower cash flow by subtracting
41
<PAGE>
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.
Our dedicated mergers and acquisitions personnel direct our acquisition
activities and 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 us from time to
time in connection with acquisitions. In addition to our mergers and
acquisitions personnel, we rely on our national field representatives to
identify potential acquisitions. Our field representatives identify generally
smaller acquisition prospects, involving one to ten towers, and often provide
us with the exclusive opportunity to structure and consummate a transaction
with the potential seller. We believe that our field representatives and
knowledge of potential acquisition candidates gained through our substantial
site development business experience provide us with a competitive advantage.
This information will permit us to identify and consummate acquisitions on more
favorable terms than would be available to us through competitively-bid or
brokered acquisition prospects. As is the case with our new tower builds, our
focus is to acquire multi-tenant communication sites with under-used capacity
in locations that we believe will be attractive to wireless service providers
that have not yet built out their service in these locations.
Lease/Sublease
Under our lease/sublease program, we lease antenna space on a communication
site and then sublease the space to wireless service providers. When these
lease/subleases were first signed, these providers chose 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 antenna sites from us. The subleases generally have original terms
of five years, with four or five renewal periods of five years each at the
option of the lessee, and usually provide for annual or periodic price
increases.
Maintenance and Management
Once acquired or constructed, we maintain and manage our communication sites
through a combination of in-house personnel and independent contractors. We
also manage communication sites for third parties. 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. We hire independent contractors locally to perform routine
maintenance functions such as landscaping, pest control, snow removal,
vehicular access, site access and equipment installation oversight. We engage
independent contractors on a fixed fee or time and materials basis or, in a few
limited circumstances where these contractors were sellers of towers to us, for
a percentage of tower cash flow.
Our network operations center in Boca Raton, Florida centrally monitors
security access and lighting for our towers, as well as other functions. As the
number of communication sites we own and manage increases, we anticipate
incurring greater expenditures to expand our maintenance infrastructure,
including expenditures for personnel and computer hardware and software. We
expect these expenditures to be marginal compared to the anticipated increased
revenues from site leasing.
Site Development Business
We offer various site development services to our customers including network
predesign, site selection, site acquisition, zoning and permitting, and
construction and installation. These services are the same ones we employ for
our own benefit when we build towers for our ownership.
Once we are awarded a site development project, we dispatch a site
development team to the project site and establish a temporary field office for
the duration of the project. The site development team is typically composed of
our permanent employees and supplemented with local hires employed only for
that particular
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<PAGE>
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 of our permanent employees are either relocated to another
project or directed to return to one of our offices.
We generally set prices for each site development service separately.
Customers are billed for these services on a fixed price or time and materials
basis and we may negotiate fees on individual sites or for groups of sites.
We provide tower construction, antenna installation and terminal switch
construction on a turnkey basis throughout the southeastern, eastern,
midwestern and western United States through our construction subsidiary, Com-
Net Construction Services, Inc. We began offering direct, as opposed to
subcontracted, construction services in 1997 with our acquisition of
Communications Site Services, Inc., which provided us with in-house tower
construction and antenna installation capability. We expanded our operations
through the acquisition of Com-Net Construction Services, Inc. in 1999 to
include additional tower construction and antenna installation capability, as
well as the ability to construct terminal switches for competitive local
exchange carriers, Internet service providers and other telecommunications
providers.
We currently provide all of our construction services under the name of Com-
Net Construction Services, Inc. Com-Net provides development and construction
services, including clearing sites, laying foundations and electrical and
telecommunications lines, constructing terminal switches, equipment shelters
and towers. We have constructed and expect to continue to construct a portion
of our towers in the future, and provide antenna installation services for
tenants on our towers. In addition to building our own towers, we have designed
and built tower sites for a number of customers, including AT&T Wireless,
BellSouth Cellular Corporation, GTE, Nextel and Sprint PCS. We believe we cost-
effectively and timely complete construction projects, in part, because our
site development personnel are cross-trained in all areas of site development,
construction and antenna installation.
Customers
Since commencing operations, we have performed site leasing and site
development services for many of the largest wireless service providers. The
majority of our contracts have been for PCS broadband, ESMR, cellular and
paging customers. We also serve wireless data and Internet, PCS narrowband,
SMR, multichannel multipoint distribution service, or MMDS, and multipoint
distribution service, or MDS, wireless providers. In both our site development
and site leasing businesses, we work with large national providers and smaller
local, regional or private operators. In 1998, our largest site development
customers were Sprint PCS, BellSouth Mobility DCS and Pacific Bell Mobile
Services, representing 41.3%, 23.8% and 13.5%, respectively. For the nine
months ended September 30, 1999, Sprint PCS and BellSouth provided 21.3% and
19.1% of our site development revenues. PageNet represented 33.4% of our site
leasing revenue for 1998 and 17.1% for the nine months ended September 30,
1999. These PageNet revenues come primarily from our lease/sublease component
of our site leasing business. For the nine months ended September 30, 1999 our
other major site leasing customers were Sprint PCS, Nextel, and BellSouth
Mobility DCS, representing 9.4%, 9.4%, and 8.2%, respectively. No other
customer represented more than 10.0% of our revenues.
43
<PAGE>
During the past two years, we provided services for a number of customers,
including:
<TABLE>
<S> <C>
Aerial Communications Pacific Bell Mobile Service
ALLTEL PageNet
AT&T Wireless Services Powertel
Bell Atlantic NYNEX Mobile Systems PrimeCo PCS
BellSouth Mobility DCS Southwestern Bell
Horizon PCS Sprint PCS
IXC Communications Telecorp PCS
KMC Telecom Teligent
LEAP Wireless Tritel PCS
MediaOne Group Triton PCS
Metricom 360(degrees) Communications Company
Nextel US West Communication
Omnipoint VoiceStream
WinStar
</TABLE>
Sales and Marketing
Our sales and marketing goals are:
. to continue to grow our site leasing business;
. to further cultivate existing customers to obtain mandates for build-to-
suit programs as well as to sell site development services;
. to use our contacts and industry knowledge to better identify attractive
locations for new tower builds;
. to use existing relationships and develop new relationships with
wireless service providers to lease antenna space on our owned or
managed communication sites;
. to form affiliations with select communications systems vendors who use
end-to-end services, including those provided by us, which will enable
us to market our services and product offerings through additional
channels of distribution; and
. to sustain a market leadership position in the site development business.
Historically, we have capitalized on the strength of our experience,
performance and relationships with wireless service providers to position
ourselves for additional site development business. We have leveraged these
attributes to obtain build-to-suit mandates, and we expect to continue to do so
in the future. We also use these attributes to identify attractive locations to
build towers on strategic sites.
We have a dedicated sales force which is supplemented by members of our
executive management team. Our salespeople are based regionally as well as in
the corporate office. Our senior management focuses on maintaining and
cultivating relationships with wireless service providers. Our strategy is to
delegate sales efforts to those employees of ours who have the best
relationships with the wireless service providers. We assign our
representatives specific accounts based on historical experience with or
geographic proximity to a provider and the quality of the relationship between
our representative and the provider. Most wireless service providers have
national corporate headquarters with regional offices. We believe that most
decisions for site development and site leasing services are made by providers
at the regional level with input from their corporate headquarters. Our sales
representatives work with provider representatives at the local level and at
the national level when appropriate. Our sales staff compensation is heavily
weighted to incentive-based goals and measurements. In addition to our
marketing and sales staff, we rely upon our executive and operations personnel
on the national and field office levels to identify sales opportunities within
existing customer accounts, as well as acquisition opportunities.
44
<PAGE>
Our primary marketing and sales support is centralized and directed from our
headquarters office in Boca Raton, Florida and is supplemented by our regional
offices. We have a full-time staff dedicated to our marketing efforts. The
marketing and sales support staff are charged with implementing our marketing
strategies, prospecting and producing sales presentation materials and
proposals.
Competition
We compete for site leasing tenants with:
. wireless service providers that own and operate their own tower
footprints and lease, or may in the future decide to lease, antenna
space to other providers;
. site development companies that acquire antenna space on existing towers
for wireless service providers, manage new tower construction and
provide site development services;
. other large independent tower companies; and
. smaller local independent tower operators.
Wireless service providers that own and operate their own tower networks
generally are substantially larger and have greater financial resources than we
do. We believe that tower location and capacity, price, quality of service and
density within a geographic market historically have been and will continue to
be the most significant competitive factors affecting the site leasing
business. We also compete for development and new tower construction
opportunities with wireless service providers, site developers and other
independent tower operating companies and believe 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 we do.
The following is a list of our primary competitors for new tower builds and
tower acquisitions: American Tower Corporation, Crown Castle International
Corp., LCC International, Lodestar Communications, Pinnacle Tower, Spectrum
Resources and SpectraSite Communications.
We believe that the majority of our competitors in the site development
business operate within local market areas exclusively, while some firms appear
to offer their services nationally, including American Tower Corporation,
Bechtel, Black & Veach, Mastec, NLS, Pyramid and SpectraSite Communications.
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. We believe that providers base
their decisions on site development services on a number of criteria, including
a company's experience, track record, local reputation, price and time for
completion of a project. We believe that we compete favorably in these areas.
Employees
As of December 31, 1999, we had 582 employees, none of whom is represented by
a collective bargaining agreement. We consider our employee relations to be
good. Due to the nature of our business, we experience a "run-up" and "run-
down" in the number of employees as site development and new tower build
projects are completed in one area of the country and are commenced in a
different area.
Properties
We are headquartered in Boca Raton, Florida, where we currently lease
approximately 32,000 square feet of space. We open and close project offices
from time to time in connection with our site development business, and new
tower build projects which offices are generally leased for periods not to
exceed 18 months. We have entered into longer leases for regional and Com-net
office locations where we expect our activities to be longer-term.
45
<PAGE>
Legal Proceedings
From time to time, we are involved in various legal proceedings relating to
claims arising in the ordinary course of business. We are not a party to any
legal proceeding, the adverse outcome of which, individually or taken together
with all other legal proceedings, is expected to have a material adverse effect
on our prospects, financial condition or results of operations.
Regulatory and Environmental Matters
Federal Regulations. Both the FCC and FAA regulate towers used for wireless
communications transmitters and receivers. These regulations control the siting
and marking of towers and may, depending on the characteristics of particular
towers, require prior approval and 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, the FCC, in
conjunction with the FAA, has developed standards to consider proposals for new
or modified antennas. These standards mandate that the FCC and the FAA consider
the height of proposed antennas, the relationship of the structure to existing
natural or man-made obstructions and the proximity of the antennas to runways
and airports. Proposals to construct or to modify existing antennas 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 a 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 also bear the responsibility
of notifying the FAA of any tower lighting outage. In addition, any applicant
for an FCC antenna structure registration must certify that, consistent with
the Anti-Drug Abuse Act of 1988, neither the applicant nor its principals have
been convicted of a federal drug crime. We generally indemnify our customers
against any failure to comply with applicable regulatory standards. Failure to
comply with the applicable requirements may lead to civil penalties.
The Telecommunications Act of 1996 amended the Communications Act of 1934 by
preserving state and local zoning authorities jurisdiction over the
construction, modification and placement of towers. The new law, however,
limits local zoning authority by prohibiting any action that would (1)
discriminate between different providers of personal wireless services or (2)
ban altogether the construction, modification or placement of radio
communication towers. Finally, the Telecommunications Act of 1996 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 antennas 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, which requires federal agencies to evaluate the environmental
impacts of their decisions under certain circumstances. The FCC has issued
regulations implementing the National Environmental Policy Act. These
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, which will be
subject to public comment. This process could significantly delay the
registration of a particular tower.
As an owner and operator of real property, we are subject to certain
environmental laws that impose strict, joint and several liability for the
cleanup of on-site or off-site contamination and related personal or property
damages. We are 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
46
<PAGE>
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 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. We believe that we are in substantial compliance with
and we have no material liability under any applicable environmental laws.
These costs of compliance with existing or future environmental laws and
liability related thereto may have a material adverse effect on our 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, we conduct the site
acquisition portions of our site development services business through licensed
real estate brokers or agents, who may be our employees 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.
47
<PAGE>
MANAGEMENT
Executive Officers and Directors
Our executive officers and directors are as follows:
<TABLE>
<CAPTION>
Name Age Position
------------------------ --- --------
<S> <C> <C>
Steven E. Bernstein..... 39 Chairman of the Board, President and Chief Executive Officer
Ronald G. Bizick, II.... 32 Executive Vice President--East
Daniel W. Eldridge...... 39 President, Com-Net Construction Services, Inc.
Robert M. Grobstein..... 40 Chief Accounting Officer
Michael N. Simkin....... 47 Executive Vice President--West
Jeffrey A. Stoops....... 42 Chief Financial Officer and Director
Donald B. Hebb, Jr...... 56 Director
C. Kevin Landry......... 55 Director
Robert S. Picow......... 43 Director
Richard W. Miller....... 58 Director
</TABLE>
Steven E. Bernstein, our founder, has been our President, Chief Executive
Officer and Chairman since our inception in 1989. From 1986 to 1989, Mr.
Bernstein was employed by McCaw Cellular Communications. 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, Executive Vice President--East, has been an executive
officer with us since 1993. He is responsible for all facets of our operations
in the Eastern United States. Prior to joining us 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.
Daniel W. Eldridge, President, Com-Net Construction Services, Inc. has been
an executive officer with us since April 1999 as a result of our acquisition of
Com-Net. Mr. Eldridge has fifteen years of experience in the communications
industry. Prior to founding Com-Net in 1990, Mr. Eldridge was general manager
of a firm providing network infrastructure build-out to wireless and wireline
carriers nationwide. From 1985 to 1987, Mr. Eldridge was a civil system
engineer for MCI. He has a Bachelor of Arts degree from East Tennessee State
University.
Robert M. Grobstein, CPA, Chief Accounting Officer, has been an executive
officer with us since December 1993. He is responsible for risk management,
financial reporting and accounting. From January 1990 to March 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, Executive Vice President--West, joined us in April 1998.
Mr. Simkin is responsible for all facets of our operations in the Western
United States. From July 1997 to February 1998, he was Chief Executive Officer
of Centennial Communications Corporation, an international 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 an M.B.A. from the University of California at Berkeley.
Jeffrey A. Stoops, Chief Financial Officer, joined us in April 1997 and was
elected as a director of ours in August 1999. Mr. Stoops is responsible for all
finance, mergers and acquisitions, capital market activities and
48
<PAGE>
legal matters for us. Prior to joining us, Mr. Stoops was a partner with
Gunster, Yoakley, Valdes-Fauli & Stewart, P.A., a South Florida law firm, where
he practiced for 13 years in the corporate, securities and mergers and
acquisitions areas. Mr. Stoops received his Bachelor of Science degree and his
J.D. degree from Florida State University, and is a member of the Florida Bar
and also serves as our General Counsel.
Donald B. Hebb, Jr. was elected as a director of ours in February 1997. Mr.
Hebb also has been a Managing Member of the general partner of ABS Capital
Partners II, L.P., a private equity fund, and related entities, since March
1993. Prior to that time, he was a Managing Director of Alex. Brown, investing
private equity funds. Prior to that time, Mr. Hebb served as President and
Chief Executive Officer of Alex. Brown and in that capacity, initiated the
Alex. Brown Merchant Banking Group early in 1990. Mr. Hebb was the nominee of
ABS for election as a director pursuant to a shareholder agreement that
terminated upon consummation of our initial public offering.
C. Kevin Landry was elected as a director of ours in March 1997. Mr. Landry
has been a Managing Director and Chief Executive Officer of TA Associates, Inc.
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 previously served as a
director of Alex. Brown Inc. Mr. Landry was the nominee of TA Associates for
election as a director pursuant to a shareholder agreement that terminated upon
consummation of our initial public offering.
Robert S. Picow was elected as a director of ours in November 1998. Mr. Picow
founded Allied Communications, a distributor of communications equipment, in
1982. He served as the Chief Executive Officer of Allied until its sale in 1996
to Brightpoint, Inc., a publicly traded communications equipment company. Mr.
Picow also served as a director of Brightpoint from June 1996 to August 1997.
Richard W. Miller was elected as a director of ours in April 1999. Mr. Miller
previously served on our Board of Directors from May 1997 to August 1998. 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.
49
<PAGE>
PRINCIPAL AND SELLING SHAREHOLDERS
The table below sets forth, as of December 31, 1999, certain information with
respect to the beneficial ownership of our capital stock by (1) each person who
we know to be a beneficial owner of more than 5% of any class or series of our
capital stock; (2) each of the directors and executive officers individually;
and (3) all directors and executive officers as a group. At December 31, 1999,
we had outstanding the following shares of capital stock: 21,226,737 shares of
Class A common stock and 7,644,264 shares of Class B common stock. At December
31, 1999, no other classes or series of capital stock had any shares issued and
outstanding.
<TABLE>
<CAPTION>
Percentage of Percentage of
Total Voting Total Voting
Power of Class Number of Power of Class
A Common Number of Shares to be A Common
Executive Officers and Number of Stock Prior to Shares to be Owned After Stock After
Directors (a) Title of Class Shares (b) Offering (b) Sold Offering Offering
---------------------- -------------------- ---------- -------------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Steven E.
Bernstein(c)(d)........ Class B Common Stock 7,644,264 77.3%
Class A Common Stock 358,974 *
Ronald G. Bizick,
II(e).................. Class A Common Stock 822,034 *
Daniel W. Eldridge(f)... Class A Common Stock 780,000 *
Robert M. Grobstein(g).. Class A Common Stock 420,097 *
Michael N. Simkin(h).... Class A Common Stock 204,214 *
Jeffrey A.
Stoops(d)(i)........... Class A Common Stock 1,522,536 *
Donald B. Hebb, Jr.(j).. Class A Common Stock 3,635,556 3.7
C. Kevin Landry(k)...... Class A Common Stock 3,086,441 3.1
Richard W. Miller(l).... Class A Common Stock 66,666 *
Robert S. Picow(m)...... Class A Common Stock 33,333 *
All executive officers
and directors as a
group (10 persons)..... 17,204,252 86.9
Beneficial Owners of 5%
or More of Capital
Stock
- ------------------------
ABS Capital Partners II,
L.P.(n)................ Class A Common Stock 3,635,556 3.7
TA Associates, Inc.(o).. Class A Common Stock 3,086,441 3.1
Selling Shareholders
- ------------------------
ABS Capital Partners II,
L.P.(n)................ Class A Common Stock 3,635,556 3.7
Advent VII, L.P.(p)..... Class A Common Stock 1,815,555 1.8
Advent Atlantic and
Pacific III, L.P.(p)... Class A Common Stock 1,243,656 1.3
TA Venture Investors
Limited
Partnership(p)......... Class A Common Stock 27,230 *
</TABLE>
- --------
* Less than 1%.
(a) Except as otherwise indicated, the address of each person named in this
table is c/o SBA Communications Corporation, One Town Center Road, Third
Floor, Boca Raton, Florida 33486.
(b) 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 December 31, 1999 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
shareholders. To our knowledge, except as otherwise indicated, beneficial
ownership includes sole voting and dispositive power with respect to all
shares. The selling shareholders will offer shares of Class A common stock
only in the over-allotment option, if the over-allotment option is
exercised by the underwriters. This column assumes the exercise of the
over-allotment option in full. We have agreed that if any or all of the
selling shareholders decide not to sell their shares upon exercise of the
over-allotment option, we will issue any shares necessary to satisfy the
option.
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<PAGE>
(c) All shares are owned of record by Bernstein Limited Partnership I and II
and Bernstein Family Charitable Foundation. This number includes options to
purchase 58,333 shares of Class A common stock which are exercisable within
60 days after December 31, 1999.
(d) Mr. Bernstein has granted Mr. Stoops options to purchase 1,369,863 of his
shares of common stock at an exercise price of $2.19 per share. As of
December 31, 1999, all of the options were exercisable. Until 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.
(e) This number includes options to purchase 45,833 shares of Class A common
stock which are exercisable within 60 days after December 31, 1999.
(f) This number does not include up to 720,000 shares of Class A common stock
that are issuable if 1999 and 2000 EBITDA targets established in connection
with the acquisition of Com-Net are met.
(g) This number includes options to purchase 420,097 shares of Class A common
stock which are exercisable within 60 days after December 31, 1999.
(h) This number includes options to purchase 83,334 shares of Class A common
stock which are exercisable within 60 days after December 31, 1999.
(i) This number also includes options to purchase 66,666 shares of Class A
common stock which are exercisable within 60 days after December 31, 1999.
(j) This number includes 3,220,000 shares owned by ABS and 415,556 shares owned
by ABS Capital Partners, II, L.P. 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.
(k) This number includes (1) 1,815,555 shares owned by Advent VII L.P., whose
general partner is TA Associates VII L.P., (2) 1,243,656 shares owned by
Advent Atlantic & Pacific III L.P., whose general partner is TA Associates
AAP III Partners L.P. and (3) 27,230 shares owned by TA Venture Investors
L.P. Advent VII L.P., Advent Atlantic & Pacific L.P. and TA Venture
Investors L.P. are part of an affiliated group of investment partnerships
referred to collectively as the TA Associates Group. The general partner of
TA Associates VII L.P. and TA Associates AAP III Partners L.P. is TA
Associates, Inc. As general partner for these entities, TA Associates, Inc.
exercises sole voting and investment power with respect to all shares held
of record by the named investment partnerships, with the exception of TA
Venture Investors L.P. Individually, no stockholder, director or officer of
TA Associates, Inc. is deemed to have or share such voting or investment
power. Mr. Landry is one of the general partners of TA Venture Investors
L.P. Mr. Landry may be deemed to share voting and investment power with
respect to the 27,230 shares held of record by TA Venture Investors L.P.
Mr. Landry disclaims beneficial ownership of all shares, except to the
extent of his pecuniary interest therein.
(l) This number includes options to purchase 66,666 shares of Class A common
stock which are exercisable within 60 days after December 31, 1999.
(m) This number includes options to purchase 33,333 shares of Class A common
stock which are exercisable within 60 days after December 31, 1999.
(n) The principal business address of ABS Capital Partners, II, L.P. is One
South Street, Baltimore, MD 21202.
(o) This number includes (1) 1,815,555 shares owned by Advent VII L.P., whose
general partner is TA Associates VII L.P., (2) 1,243,656 shares owned by
Advent Atlantic & Pacific III L.P., whose general partner is TA Associates
AAP III Partners L.P. and (3) 27,230 shares owned by TA Venture Investors
L.P. Advent VII L.P., Advent Atlantic & Pacific L.P. and TA Venture
Investors L.P. are part of an affiliated group of investment partnerships
referred to collectively as the TA Associates Group. The general partner of
TA Associates VII L.P. and TA Associates AAP III Partners L.P. is TA
Associates, Inc. As general partner for these entities, TA Associates, Inc.
exercises sole voting and investment power with respect to all shares held
of record by the named investment partnerships, with the exception of TA
Venture Investors L.P. Individually, no stockholder, director or officer of
TA Associates, Inc. is deemed to have or share such voting or investment
power. The principal business address of TA Associates, Inc. is 125 High
Street, Boston, MA 02110.
(p) The shares sold by this selling shareholder are the same shares reflected
above as being sold by TA Associates, Inc., the beneficial owner of this
entity.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following summary of the terms and provisions of our capital stock is not
complete and is qualified in its entirety by reference to our Amended and
Restated Articles of Incorporation, which have been filed as an exhibit to the
registration statement of which this prospectus is a part.
Our authorized capital stock consists of 100,000,000 shares of Class A common
stock, par value $.01 per share, 8,100,000 shares of Class B common stock, par
value $.01 per share, and 30,000,000 shares of preferred stock, par value $.01
per share. These shares of preferred stock have not been designated as to
series and are available for issuance from time to time in one or more series
at the discretion of our Board of Directors. While we have no present intention
to issue shares of preferred stock, any issuance of preferred stock could be
used to discourage, delay or make more difficult a change in control of SBA.
We have 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 validly issued, fully paid and
non-assessable. As of December 31, 1999, there was one holder of all of our
Class B common stock.
As of December 31, 1999, our outstanding capital stock consisted of
21,226,737 shares of Class A common stock and 7,644,264 shares of Class B
common stock. No other shares of any class or series were issued and
outstanding as of December 31, 1999. In addition, we have reserved (1)
3,057,248 shares of Class A common stock issuable upon exercise of outstanding
stock options, (2) 884,543 shares that may be issued upon exercise of options
that may be granted in the future under our 1999 Equity Participation Plan, (3)
470,138 shares for issuance under our 1999 Employee Stock Purchase Plan, (4)
402,500 shares issuable upon exercise of the outstanding warrant that we
granted Deutsche Bank Securities Inc. and (5) the 320,000 and 400,000 shares
that are issuable to the former shareholders of Com-Net if 1999 and 2000 EBITDA
targets established in connection with the acquisition of that company are met.
Except as otherwise required by law or in our articles of incorporation,
owners of the Class A common stock and Class B common stock will vote together
as a single class on all matters, including the election of directors. Our
articles of incorporation provide for a separate class vote of each class of
common stock in the event of any amendment that alters the terms of the Class B
common stock. Pursuant to our articles of incorporation and by-laws, our Board
of Directors is classified into three classes of directors, denoted as Class I,
Class II and Class III. Messrs. Picow and Landry are Class I directors, Messrs.
Miller and Stoops are Class II directors, and Messrs. Bernstein and Hebb are
Class III directors.
Class A Common Stock
Voting Rights
Each share of Class A common stock is entitled to one vote. Except as noted
above, and except as provided under the Florida Business Corporation Act, the
holders of shares of Class A common stock and Class B common stock vote
together as a single class on all matters on which shareholders are permitted
or entitled to vote.
Dividends
Each share of Class A common stock is entitled to receive dividends if, as
and when declared by the Board of Directors out of funds legally available for
that purpose, subject to preferences that may apply to any preferred stock that
we may issue in the future. No dividends may be declared and paid to holders of
shares of Class A common stock unless the Board of Directors at the same time
also declares and pays to the holders of Class B common stock a per share
dividend equal to the dividend declared and paid to the holders of shares of
Class A common stock.
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Liquidation Rights
In the event of our dissolution or liquidation, after satisfaction of all our
debts and liabilities and distributions to the holders of any preferred stock
that we may issue in the future, if any, of amounts to which they are
preferentially entitled, holders of Class A common stock will be entitled to
share ratably with holders of Class B common stock in the distribution of
assets to the shareholders.
Other Provisions
There are no cumulative, subscription or preemptive rights to subscribe for
any additional securities which we may issue, and there are no redemption
provisions, conversion provisions or sinking fund provisions applicable to the
Class A common stock.
Class B Common Stock
Voting Rights
Each share of Class B common stock is entitled to ten votes for each share on
all matters presented to the shareholders. Except as provided under the Florida
Business Corporation Act, the holders of the shares of Class B common stock and
Class A common stock vote together as a single class on all matters on which
shareholders are permitted or entitled to vote.
Dividends
Each share of Class B common stock is entitled to receive dividends if, as
and when declared by the Board of Directors out of funds legally available for
that purpose, subject to preferences that may apply to any preferred stock that
we may issue in the future. No dividends may be declared and paid to holders of
shares of Class B common stock unless the Board of Directors at the same time
also declares and pays to holders of Class A common stock a per share dividend
equal to the dividend declared and paid to holders of shares of Class B common
stock.
Liquidation Rights
In the event of our dissolution or liquidation, after satisfaction of all our
debts and liabilities to creditors and distributions to the holders of any
preferred stock that we may issue in the future, if any, of amounts to which
they are preferentially entitled, holders of Class B common stock will be
entitled to share ratably with holders of Class A common stock in the
distribution of assets available for distribution to the shareholders.
Convertibility
Each outstanding share of Class B common stock may, at the option of the
holder thereof, at any time, be converted into one fully paid and non-
assessable share of Class A common stock. Each share of outstanding Class B
common stock converts into one fully paid and non-assessable share of Class A
common stock immediately upon transfer to any holder other than any one or more
of the following (an "Eligible Class B Shareholder"): (1) Steven E. Bernstein;
(2) other members of his immediate family or their lineal descendants; (3)
spouses of lineal descendants or lineal descendants of spouses, whether alive
as of the date of the articles of incorporation or born subsequently; (4) any
trusts or other estate planning vehicles for the benefit of any of the
foregoing, whether existing as of the date of the articles of incorporation or
subsequently created; or (5) 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
Shareholders in the aggregate constitute 10% or less of the outstanding shares
of our common stock, or upon the death or mental incapacity of Steven E.
Bernstein, each share of Class B common stock shall immediately convert into
one fully paid and non-assessable share of Class A common stock. Each share of
outstanding Class B common stock which is held by any Eligible Class B
Shareholder will immediately convert into one share of Class A common stock at
the time that the holder is no longer an Eligible Class B Shareholder.
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<PAGE>
Other Provisions
There are no cumulative, subscription or preemptive rights to subscribe for
any additional securities that we may issue, and there are no redemption
provisions or sinking fund provisions applicable to the Class B common stock.
The rights and preferences of holders of both classes of common stock are
subject to the rights of any series of preferred stock which we may issue in
the future.
Warrant
In connection with the 1997 issuance of capital stock, we issued a warrant to
acquire shares of Class A common stock to Deutsche Bank Securities Inc. The
warrant, when exercised, entitles its holder to receive 402,500 fully paid and
non-assessable shares of Class A common stock at an exercise price of $3.73 per
share. The warrant is exercisable at any time on or before March 2002. The
exercise and transfer of the warrant is subject to applicable federal and state
securities laws.
Registration Rights
If at any time, the holders of not less than 25% of the Class A common stock
which was issued upon conversion of our previously outstanding preferred stock
or that is issuable upon exercise of the warrant issued to Deutsche Bank
Securities Inc. request that we file a registration statement covering their
shares of Class A common stock (with an anticipated aggregate offering price of
$3.0 million), we will use our best efforts to cause these shares to be
registered, subject to reduction if, in the case of a firm underwritten
offering, the underwriter stipulates that it is not advisable for us to
register the full amount of Class A common stock that holders have requested
that we register; provided, however, that we may delay any demand registration
for a period of up to three months for a valid business reason. We will not be
required to file more than three registration statements, other than on Form S-
3. In addition, these holders have the right to require us 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. However, these holders may only request that we file a registration
statement to the extent that their shares exceed the amount that can be sold
pursuant to Rule 144 of the Securities Act.
Each of Messrs. Bernstein, Bizick, Grobstein and Stoops also has certain
rights to have his shares of common stock registered under the Securities Act.
Mr. Bernstein has the right to have his shares of Class B common stock
registered under the Securities Act. Mr. Bizick has the right to have 773,528
shares of Class A common stock registered under the Securities Act. Mr.
Grobstein has the right to have 386,764 shares of Class A common stock
registered under the Securities Act. Mr. Stoops has the right to have 1,369,863
shares of Class A common stock registered under the Securities Act.
If at any time, Mr. Bernstein, Mr. Bizick, Mr. Grobstein or Mr. Stoops,
individually or as a group, request that we file a registration statement on
Form S-3 for these shares, we will use our best efforts to cause these shares
to be registered subject to certain cut-back provisions; provided, however,
that we may delay any registration for a period of up to three months for a
valid business reason. We will not be required to file the registration
statement on Form S-3 more frequently than twice a year.
The former holders of the preferred stock and the holder of the warrant
(after exercise of the warrant) are entitled to have the shares of Class A
common stock issued upon conversion of the preferred stock or warrant included
in each registration statement filed on behalf of ourselves or at the request
of holders, subject to reduction if, in the case of a firm underwritten
offering, the underwriter stipulates that it is not advisable for us to
register the full amount of Class A common stock that holders have requested
that we register. Except as otherwise agreed, in the event of an application of
these cut-back provisions, the former holders of the preferred stock and the
holder of the warrant have a priority right to participate in the registration
over Messrs. Bernstein, Bizick, Grobstein or Stoops.
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In connection with the creation of a joint venture for the development of
towers in New York, we have granted our joint venturers the right to exchange
their interests in the joint venture for restricted shares of our Class A
common stock of equivalent value. In the event that we register securities on
behalf of ourselves or at the request of holders, our joint venturers have the
right, subject to certain conditions and cut-back provisions, to have us
register those restricted securities that they received in the exchange. Except
as otherwise agreed, in the event of an application of any cut-back provisions,
the right of our joint venturers to have their shares of Class A common stock
registered is subordinate to the registration rights of (1) the former holders
of the preferred stock and the holder of the warrant and (2) Messrs. Bernstein,
Bizick, Grobstein or Stoops.
Preferred Stock
Our board of directors is authorized by our articles of incorporation to
provide for the issuance of shares of preferred stock, in one or more series,
to establish the number of shares to be included in each series, to fix the
designation, rights, preferences, privileges and restrictions of the shares of
each series and to increase or decrease the number of shares of any series of
preferred stock, all without any further vote or action by our shareholders.
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DESCRIPTION OF EXISTING DEBT
The Senior Credit Facility
On February 5, 1999, our wholly owned subsidiary, SBA Telecommunications,
entered into a senior credit facility with a group of banks and other financial
institutions led by Lehman Commercial Paper Inc., as administrative agent, and
Lehman Brothers Inc. and General Electric Capital Corporation, as co-arrangers.
Lehman Brothers Inc. is an underwriter in this offering. This facility was
amended on December 16, 1999. The following is a summary of certain provisions
of the senior credit facility, as amended, but you should refer to the actual
credit agreement, which is filed as an exhibit to the registration statement of
which this prospectus is a part.
The senior credit facility provides for revolving credit loans of up to
$225.0 million. The senior credit facility also provides for two term loans in
the amount of $25.0 million and $50.0 million. SBA Telecommunications borrowed
the full $25.0 million of the first term loan on February 5, 1999 and the full
$50.0 million of the second term loan on December 16, 1999. We plan to use some
of the proceeds of the offering to repay outstanding revolving credit loans.
The senior credit facility is secured by a lien on substantially all of our
assets and the assets of our domestic subsidiaries and a pledge of all of the
outstanding capital stock of each of our domestic subsidiaries. We, and each of
our domestic subsidiaries (other than Telecommunications) have guaranteed the
obligations of Telecommunications under the senior credit facility.
The senior credit facility contains a number of covenants that, among other
things, restrict our ability, and the ability of each of our subsidiaries, to
dispose of assets, incur additional indebtedness, incur guaranty obligations,
pay dividends or make capital distributions, create liens on assets, make
investments, make acquisitions, engage in mergers or consolidations, engage in
certain transactions with subsidiaries and affiliates and otherwise restrict
corporate activities. In addition, the senior credit facility requires
compliance with certain financial covenants and restricts the number of towers
that may be constructed in advance of securing an anchor tenant. Prior to
August 5, 2001, Telecommunications and its subsidiaries must maintain a minimum
annualized adjusted EBITDA, a minimum ratio of annualized adjusted EBITDA to
interest expense and a minimum amount of revenues from towers and cannot exceed
a maximum amount of total debt per tower, a maximum ratio of total debt to
total capitalization, a maximum amount of total debt to annualized adjusted
EBITDA and a maximum amount of capital expenditures. From and after August 5,
2001, Telecommunications and its subsidiaries must maintain a minimum ratio of
consolidated EBITDA to interest expense, a minimum ratio of fixed charges and a
minimum ratio of debt service coverage and cannot exceed a maximum ratio of
total debt to EBITDA and maximum amount of capital expenditures. We do not
expect that these covenants will materially impact our ability to operate our
respective businesses.
The senior credit facility contains customary events of default, including
(1) the failure to pay principal when due, (2) the failure to pay any interest
or any other amount within five days after it becomes due, (3) the material
inaccuracy of any representation or warranty being made by us or any of our
domestic subsidiaries on or as of the date made or deemed made, (4) a default
in the performance of any negative covenant (including any financial covenant),
(5) a default in the performance of other covenants or agreements subject, in
certain cases, to a 30 day grace period, (6) default in certain of our other
indebtedness, (7) certain insolvency events and (8) certain change of control
events. In addition, a default under the indenture governing our senior
discount notes will result in a default under the senior credit facility.
The 12% Senior Discount Notes Due 2008
On March 2, 1998, we privately placed $269.0 million in aggregate principal
amount at maturity of our senior discount notes due 2008. This description
summarizes certain terms of the senior discount notes, but does not describe
all of the terms. You should refer to the indenture governing the senior
discount notes, a copy of which has been filed as an exhibit to the
registration statement of which this prospectus is a part.
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<PAGE>
The senior discount notes are unsecured senior obligations of SBA, and rank
equal in right of payment with all existing and future unsecured senior
indebtedness of SBA and senior in right of payment to future subordinated
indebtedness of SBA. Our subsidiaries are not guarantors of the senior discount
notes. The senior discount notes mature on March 1, 2008. The senior discount
notes accrete in value until March 1, 2003. After that date, cash interest will
accrue on the senior discount notes at the rate of 12% per year and will be
payable semi-annually, commencing on September 1, 2003.
Except as stated below, the senior discount notes are not redeemable at our
option prior to March 1, 2004. Thereafter, the senior discount notes are
redeemable at our option, in whole or in part, at any time, at a premium which
is at a fixed percentage that declines to par on or after March 1, 2007, in
each case together with accrued and unpaid interest, if any, to the date of
redemption. In the event we consummate a public equity offering or certain
strategic equity investments prior to March 1, 2001, we may, at our option, use
all or a portion of the proceeds from the offering to redeem up to 20% of the
original aggregate principal amount at maturity of the senior discount notes at
a redemption price equal to 112% of the accreted value of the senior discount
notes to be redeemed, plus accrued and unpaid interest, if any, thereon to the
redemption date, if at least 80% of the original aggregate principal amount at
maturity of the senior discount notes remains outstanding after each
redemption.
Upon the occurrence of certain change of control events, each holder of
senior discount notes has the right to require us to purchase all or a portion
of the holder's senior discount notes at a price equal to 101% of the aggregate
principal amount thereof, together with accrued and unpaid interest to the date
of purchase or, if the senior discount notes are purchased prior to March 1,
2003, at a purchase price equal to 101% of the accreted value of the senior
discount notes on the date of purchase.
The indenture contains certain covenants, including covenants that limit (1)
the incurrence of certain additional indebtedness and issuance of preferred
stock, (2) restricted payments, (3) distributions from restricted subsidiaries,
(4) transactions with affiliates, (5) sales of assets and subsidiary stock
(including sale and leaseback transactions), (6) dividend and other payment
restrictions affecting restricted subsidiaries and (7) mergers or
consolidations.
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SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the offering, we will have shares (assuming the
selling shareholders fulfill the over-allotment option in full) of common stock
outstanding (including the 7,644,264 shares of Class B common stock). In
addition, we have reserved 3,057,248 shares of Class A common stock issuable
upon exercise of outstanding stock options, 884,543 shares that may be issued
upon exercise of options that may be granted in the future under our 1999
Equity Participation Plan, 470,138 shares for issuance under our 1999 Employee
Stock Purchase Plan and 402,500 shares issuable upon exercise of the
outstanding warrant. We will also be required to issue up to 720,000 shares of
Class A common stock to the former holders of Com-Net if the 1999 and 2000
EBITDA targets are met. Of the 28,871,000 shares of our common stock
outstanding, 28,091,000 shares are freely transferable without restriction
under the Securities Act, unless they are held by our "affiliates" as that term
is used under the Securities Act. The remaining 780,000 shares are "restricted
securities" as that term is defined in Rule 144 of the Securities Act and
subject to the volume restrictions of Rule 144. The shares sold in the
offering will be freely transferable without restriction under the Securities
Act, unless they are held by our affiliates. Certain shareholders have demand
and piggyback registration rights for a total of up to 16,854,556 shares of
common stock.
In connection with the offering and subject to certain exceptions, we and all
of our executive officers and directors and the selling shareholders have
agreed not to sell any shares of Class A common stock, or any securities which
may be converted into or exchanged for any shares of Class A common stock or
substantially similar securities, for a period of 90 days after the date of
this prospectus without the prior written consent of Lehman Brothers Inc.
In general, under Rule 144 as currently in effect, a shareholder, including
an "affiliate," who has beneficially owned his or her restricted securities (as
that term is defined in Rule 144) for at least one year from the later of the
date the securities were acquired from us or, if applicable, the date they were
acquired from an affiliate, is entitled to sell, within any three-month period,
a number of shares that does not exceed the greater of 1% of the then
outstanding shares of Class A common stock or the average weekly trading volume
in the Class A common stock during the four calendar weeks before the date on
which notice of the sale was filed under Rule 144, provided certain
requirements concerning availability of public information, manner of sale and
notice of sale are satisfied. In addition, under Rule 144(k), if a period of at
least two years has elapsed from the later of the date restricted securities
were acquired from us or, if applicable, the date they were acquired from an
affiliate of ours, a shareholder who is not an affiliate of ours at the time of
sale and has not been an affiliate of ours for at least three months prior to
the sale is entitled to sell the shares immediately without compliance with the
foregoing requirements under Rule 144.
Except as indicated above, we are unable to estimate the amount, timing and
nature of future sales of outstanding Class A common stock. Future sales of
significant numbers of shares of Class A common stock in the public market
could adversely affect the market price of the Class A common stock and could
impair our ability to raise capital through an offering of our equity
securities.
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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS TO NON-U.S. HOLDERS
The following is a general summary of the material United States federal
income and estate tax considerations to a Non-U.S. Holder (as defined below)
relevant to the ownership and disposition of shares of Class A common stock.
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), final, temporary and proposed United States Treasury regulations
promulgated thereunder, Internal Revenue Service (the "IRS") rulings, official
pronouncements and judicial decisions, all as in effect on the date hereof and
all of which are subject to change, possibly with retroactive effect, or
different interpretations. This summary does not discuss all the tax
consequences that may be relevant to a particular Non-U.S. Holder in light of
the holder's particular circumstances and it is not intended to be applicable
in all respects to all categories of Non-U.S. Holders, some of whom may be
subject to special rules not discussed below. In addition, this summary does
not address any state, local or foreign tax considerations that may be relevant
to a Non-U.S. Holder's decision to purchase shares of Class A common stock.
For purposes of this discussion, a "Non-U.S. Holder" or a "Non-U.S. person"
means a beneficial owner of common stock that is not (1) a citizen or resident
of the United States, (2) a corporation or partnership created or organized in
or under the laws of the United States or any political subdivision thereof,
(3) an estate the income of which is subject to United States federal income
taxation regardless of its source and (4) a trust (a) that is subject to the
supervision of a court within the United States and the control of one or more
United States persons as described in section 7701(a)(30) of the Code or (b)
that has a valid election in effect under applicable United States Treasury
regulations to be treated as a United States person. A "U.S. person" is a
person that is not a Non-U.S. person. An individual may be deemed to be a
resident alien (as opposed to a nonresident alien) by virtue of being present
in the United States on at least 31 days during the calendar year and for an
aggregate of at least 183 days during the calendar year and the two preceding
calendar years (counting, for this purpose all the days present in the current
year, one-third of the days present in the immediately preceding year and one
sixth of the days present in the second preceding year). In addition to the
"substantial presence test" described in the immediately preceding sentence, an
individual may be treated as a resident alien if he or she (1) meets the lawful
permanent residence test (a so-called "green card" test) or (2) elects to be
treated as a United States resident and meets certain presence requirements,
including the "substantial presence test," in the immediately following year.
Generally, resident aliens are subject to United States federal income and
estate tax in the same manner as United States citizens and residents.
ALL NON-U.S. HOLDERS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS REGARDING
THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF SHARES OF CLASS A COMMON STOCK IN LIGHT OF THEIR
OWN PARTICULAR CIRCUMSTANCES.
Dividends on Class A Common Stock
Generally, any dividends paid to a Non-U.S. Holder of Class A common stock
will be subject to United States federal withholding tax at a rate of 30% of
the amount of the dividend, or at a lower applicable income tax treaty rate.
However, if the dividend is effectively connected with the conduct of a United
States trade or business of a Non-U.S. Holder (and is attributable to a U.S.
permanent establishment of such Non-U.S. Holder, if an applicable income tax
treaty so requires as a condition for the Non-U.S. Holder to be subject to U.S.
income tax on a net income basis in respect of such dividends) it will be
subject to United States federal income tax on a net income basis at ordinary
federal income tax rates (in which case the "branch profits tax" at 30% (or
such lower rate as may be specified in an applicable income tax treaty) may
also apply if such Non-U.S. Holder is a foreign corporation), and assuming
certain certification requirements are met, will not be subject to the 30%
withholding tax.
Under current United States Treasury regulations, a holder's status as a Non-
U.S. Holder and eligibility for a tax treaty reduced rate of withholding will
be determined by reference to the holder's address and to any outstanding
certificates or statements concerning eligibility for a reduced rate of
withholding, unless facts and
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circumstances indicate that reliance on this address, certificates or
statements is not warranted. However, subject to certain transitional rules,
recently issued United States Treasury regulations require a Non-U.S. Holder to
provide certifications under penalties of perjury in order to obtain treaty
benefits (and avoid backup withholding as discussed below) for payments made
after December 31, 2000.
A Non-U.S. Holder of Class A common stock eligible for a reduced rate of
United States withholding tax pursuant to an income tax treaty may obtain a
refund of any excess amounts withheld by filing an appropriate claim for refund
with the IRS.
Disposition of Class A Common Stock
Subject to the discussion of backup withholding below, any capital gain
realized upon a sale or other disposition of Class A common stock by a Non-U.S.
Holder ordinarily will not be subject to United States federal income tax
unless (1) the gain is effectively connected with a trade or business conducted
by such Non-U.S. Holder within the United States (and is attributable to a U.S.
permanent establishment of such holder, if an applicable income tax treaty so
requires as a condition for the Non-U.S. Holder to be subject to U.S. income
tax on a net income basis in respect of such gain) (in which case the branch
profits tax at 30% of the Non-U.S. Holder's effectively connected earnings and
profits within the meaning of the Code for the taxable year, as adjusted for
certain items, (or such lower rate as may be specified in an applicable income
tax treaty) may also apply, in addition to tax on the net gain derived from the
sale under regular graduated United States federal income tax rates, if the
Non-U.S. Holder is a foreign corporation), (2) in the case of a Non-U.S. Holder
that is an individual who holds the Class A common stock as a capital asset,
such Non-U.S. Holder is present in the United States for a period or periods
aggregating 183 days or more in the taxable year of the sale or other
disposition and either (a) has a "tax home" for United States federal income
tax purposes in the United States or (b) has an office or other fixed place of
business in the United States to which the gain is attributable (in which case
the holder will be subject to a flat 30% tax on the gain derived from the sale,
which may be offset by United States source capital losses (even though the
individual is not considered a resident of the United States)), or (3) we are
or have been a "United States real property holding corporation" (a "USRPHC")
for United States federal income tax purposes within the lesser of (a) the
five-year period ending on the date of the sale or other disposition and (b)
the Non-U.S. Holder's holding period, and, in each case, no income tax treaty
exception is applicable. We believe that we are currently a USRPHC. However,
any gain recognized by a Non-U.S. Holder on the disposition of the Class A
common stock still would not be subject to U.S. tax if the common stock were to
be "regularly traded" (within the meaning of applicable United States Treasury
regulations) on an established securities market (such as, for example, the
Nasdaq National Market) and the Non-U.S. Holder did not own, directly or
constructively, more than 5% of the outstanding Class A common stock at any
time during the shorter of (a) the five-year period ending on the date of the
sale or other disposition and (b) the Non-U.S. Holder's holding period. We
believe that upon the consummation of the offering the Class A common stock
will be "regularly traded" (within the meaning of applicable United States
Treasury regulations) on an established securities market. Non-U.S. Holders
should consult their tax advisors to determine whether an income tax treaty is
applicable.
Special rules may apply to certain Non-U.S. Holders, such as "controlled
foreign corporations," "passive foreign investment companies," and "foreign
personal holding companies," that are subject to special treatment under the
Code. Such entities should consult their own tax advisors to determine the U.S.
federal, state, local and other tax consequences that may be relevant to them.
Federal Estate Taxes
Class A Common stock that is beneficially owned by an individual Non-U.S.
Holder at the time of death will be included in the individual's gross estate
for United States federal estate tax purposes, unless an applicable estate tax
treaty provides otherwise.
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Backup Withholding and Information Reporting
Under current law, dividends on Class A common stock paid to a Non-U.S.
Holder at an address outside the United States will generally be exempt from
backup withholding tax (unless the payer has knowledge that the payee is a U.S.
person). Under United States Treasury regulations, however, backup withholding
of United States Federal income tax at a rate of 31% may apply to dividends
paid with respect to Class A common stock after December 31, 2000 to Non-U.S.
Holders that fail to meet applicable certification requirements.
Payments of the proceeds from the sale by a Non-U.S. Holder of shares of
Class A common stock made by or through a foreign office of a broker will not
be subject to information reporting or backup withholding except that if the
broker is, for United States tax purposes, a U.S. person, a controlled foreign
corporation or a foreign person 50% or more of whose gross income is
effectively connected with the conduct of a United States trade or business for
a specified three-year period, information reporting may apply to these
payments. Payments of the proceeds from the sale of shares of Class A common
stock by or through the United States office of a broker will be subject to
information reporting and backup withholding unless the Non-U.S. Holder
certifies under penalties of perjury that it is a Non-U.S. Holder or otherwise
establishes an exemption from information reporting and backup withholding.
Subject to certain transitional rules, United States Treasury regulations
change information reporting requirements for Non-U.S. Holders for payments
made after December 31, 2000. Accordingly, a Non-U.S. Holder should consult its
tax advisor regarding the effects on it, if any, of these new regulations.
Any amounts withheld under the backup withholding rules may be allowed as a
refund or a credit against such Non-U.S. Holder's United States federal income
tax liability provided the required information is furnished to the IRS.
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UNDERWRITING
Under the underwriting agreement which is filed as an exhibit to the
registration statement relating to this prospectus, the underwriters of the
offering named below, for whom Lehman Brothers Inc., Deutsche Bank Securities
Inc., Salomon Smith Barney Inc. and Raymond James & Associates, Inc. are acting
as the representatives, severally agreed to purchase, and we have agreed to
sell to the underwriters, the number of shares of Class A common stock set
forth opposite the name of each underwriter below.
<TABLE>
<CAPTION>
Number
of
Underwriters Shares
- ------------ ---------
<S> <C>
Lehman Brothers Inc. .................................................
Deutsche Bank Securities Inc. ........................................
Raymond James & Associates, Inc. .....................................
Fidelity Capital Markets, a division of
National Financial Services Corporation..............................
---------
Total...............................................................
=========
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters to purchase the shares included in the offering are subject to
approval of legal matters by counsel as well as to other conditions. The
underwriters are obligated to purchase all the shares (other than those covered
by the over-allotment option described below) if they purchase any of the
shares.
The underwriters propose to offer some of the shares directly to the public
at the public offering price set forth on the cover page of this prospectus and
some of the shares to certain dealers at the public offering price less a
concession not in excess of $ per share. The underwriters may allow, and
these dealers may reallow, a concession not in excess of $ per share on sales
to certain brokers and dealers. If all of the shares are not sold at the
initial offering price, the representatives may change the public offering
price and the other selling terms. The representatives have advised us that the
underwriters do not intend to confirm any sales to any accounts over which they
exercise discretionary authority without the prior written approval of the
customer.
We and the selling shareholders have granted to the underwriters an option,
exercisable for 30 days from the date of this prospectus, to purchase up to
additional shares of our Class A common stock at the public offering price less
the underwriting discount. The underwriters may exercise this option solely for
the purpose of covering over-allotments, if any, in connection with the
offering. To the extent this option is exercised, each underwriter will be
obligated, subject to various conditions, to purchase a number of additional
shares approximately proportionate to its initial purchase commitment.
We, our executive officers and directors and the selling shareholders have
agreed not to do any of the following, whether any transaction described in
clause (1), (2) or (3) below is to be settled by delivery of Class A common
stock or other securities, in cash or otherwise, in each case without the prior
written consent of Lehman Brothers Inc., on behalf of the underwriters, for a
period of 90 days after the date of this prospectus:
(1) offer, sell, pledge, or otherwise dispose of, or enter into any
transaction or device which is designed or could be expected to, result
in the disposition by any person at any time in the future of, any
shares of Class A common stock or securities convertible into or
exchangeable for Class A common stock or substantially similar
securities, other than any of the following:
.the Class A common stock sold under this prospectus and
. shares of Class A common stock we issue pursuant to employee benefit
plans, qualified stock option plans or other employee compensation
plans existing on the date of this prospectus or pursuant to
currently outstanding options, warrants or rights;
62
<PAGE>
(2) sell or grant options, rights or warrants with respect to any shares of
our Class A common stock or securities convertible into or exchangeable for our
Class A common stock or substantially similar securities, other than the grant
of options pursuant to option plans existing on the date hereof; and
(3) enter into any swap or other derivatives transaction that transfers to
another, in whole or in part, any of the economic benefits or risks or
ownership of shares of Class A common stock.
These lock up arrangements will be subject to the following exceptions:
. transfers of common stock in private transactions or
. transfers of common stock for estate planning purposes;
in each case, provided that the transferees agree to be bound by the
restrictions described above.
Our Class A common stock is quoted on the Nasdaq National Market under the
symbol "SBAC."
Fidelity Capital Markets, a division of National Financial Services
Corporation, is acting as an underwriter in this offering and will be
facilitating electronic distribution of information through the Internet,
intranet and other proprietary electronic technology.
In connection with the offering, Lehman Brothers, on behalf of the
underwriters, may purchase and sell shares of our Class A common stock in the
open market. These transactions may include over-allotment, syndicate covering
transactions and stabilizing transactions. Over-allotment involves syndicate
sales of Class A common stock in excess of the number of shares to be purchased
by the underwriters in the offering, which creates a syndicate short position.
Syndicate covering transactions involve purchases of our Class A common stock
in the open market after the distribution has been completed in order to cover
syndicate short positions. Stabilizing transactions consist of certain bids or
purchases of our Class A common stock made for the purpose of preventing or
retarding a decline in the market price of our Class A common stock while the
offering is in progress.
The representatives also may impose a penalty bid. Penalty bids permit the
representatives to reclaim a selling concession from a syndicate member when
Lehman Brothers, in covering syndicate short positions or making stabilizing
purchases, repurchases shares originally sold by that syndicate member.
Any of these activities may cause the price of our Class A common stock to be
higher than the price that otherwise would exist in the open market in the
absence of these transactions. These transactions may be affected in the over-
the-counter market or otherwise and, if commenced, may be discontinued at any
time.
Any offer of the shares of Class A common stock in Canada will be made only
pursuant to an exemption from the prospectus filing requirement and an
exemption from the dealer registration requirement (where such an exemption is
not available, offers shall be made only by a registered dealer) in the
relevant Canadian jurisdiction where any offer is made.
Purchasers of the shares of Class A common stock offered in this prospectus
may be required to pay stamp taxes and other charges in accordance with the
laws and practices of the country of purchase, in addition to the offering
price set forth on the cover of this prospectus.
We and the selling shareholders have agreed to indemnify the underwriters
against liabilities, including liabilities under the Securities Act of 1933, or
to contribute to payments the underwriters may be required to make in respect
of any of those liabilities.
As permitted by Rule 103 of Regulation M promulgated by the Securities and
Exchange Commission under the Exchange Act, the underwriters, if any, that are
market makers, referred to as passive market makers, in the Class A common
stock, may make bids for or purchases of the Class A common stock on The Nasdaq
63
<PAGE>
National Market until the time, if any, when a stabilizing bid for such
securities has been made. Rule 103 generally provides that:
. a passive market maker's net daily purchases of the Class A common stock
may not exceed 30% of its average daily trading volume in securities for
the two full consecutive calendar months (or any 60 consecutive days
ending within the 10 days) immediately preceding the filing date of the
registration statement of which this prospectus forms a part;
. a passive market maker may not effect transactions or display bids for
the Class A common stock at a price that exceeds the highest independent
bid for the Class A common stock by persons who are not passive market
makers; and
. bids made by passive market makers must be identified as such.
Certain of the representatives have from time to time provided investment
banking, financial advisory and other services to us for which these
representatives received customary fees and commissions. Lehman Brothers acted
as co-arranger of our senior credit facility and its affiliate, Lehman
Commercial Paper Inc., is the administrative agent of the senior credit
facility. Lehman Commercial Paper Inc. will receive a portion of the proceeds
of the offering in repayment of indebtedness outstanding under the senior
credit facility. Therefore, this offering is being conducted pursuant to
Conduct Rule 2710(c)(8) of the National Association of Securities Dealers, Inc.
Lehman Brothers and Deutsche Bank Securities Inc. were also the initial
purchasers of our senior discount notes. In addition, Deutsche Bank Securities
Inc. acted as placement agent in connection with the private placement of
shares of our Series A preferred stock in March 1997. We granted Deutsche Bank
Securities Inc. a warrant to purchase up to 402,500 shares of Class A common
stock, subject to certain anti-dilution rights.
64
<PAGE>
LEGAL MATTERS
Certain legal matters relating to the offering will be passed upon for us by
Akerman, Senterfitt & Eidson, P.A., Miami, Florida. Certain legal matters
relating to the Class A common stock will be passed upon for the underwriters
by Simpson Thacher & Bartlett, New York, New York.
INDEPENDENT ACCOUNTANTS
The consolidated financial statements and schedule of SBA Communications
Corporation as of December 31, 1998 and 1997 and for each of the three years in
the period ended December 31, 1998, financial statements of Caddo Tower Company
Inc. for the fiscal year ended July 31, 1998, financial statements of PrimeCo
Tower Operations for the year ended December 31, 1997, financial statements of
Northwest Tower Service, Inc. for the year ended December 31, 1997 and
financial statements of General Communications Properties, Inc. Tower
Operations for the year ended December 31, 1997, incorporated by reference in
this prospectus and elsewhere in the registration statement, have been audited
by Arthur Andersen LLP, independent certified public accountants, as indicated
in their reports with respect thereto, and are incorporated by reference herein
in reliance upon the authority of said firm as experts in giving said reports.
The financial statements of Transmission Facilities, Inc. for the year ended
December 31, 1997, incorporated by reference in this prospectus and elsewhere
in the registration statement, have been audited by Peter C. Cosmas Co.,
Certified Public Accountants as indicated in their report with respect thereto,
and are incorporated by reference in reliance upon the authority of said firm
as experts in giving said reports.
The financial statements of Long Island Waves, Inc. for the ten months ended
September 30, 1998, incorporated by reference in this prospectus and elsewhere
in the registration statement, have been audited by John A. Criscuola,
Certified Public Accountant as indicated in his report with respect thereto,
and are incorporated by reference in reliance upon his authority as an expert
in giving said report.
The financial statements of Quad States Towers and Communications for the
year ended June 30, 1998, incorporated by reference in this prospectus and
elsewhere in the registration statement, have been audited by Turbes Drealan
Kvilhaug & Co. PA, Certified Public Accountants, as indicated in their report
with respect thereto, and are incorporated by reference in reliance upon the
authority of said firm as experts in giving said reports.
65
<PAGE>
Shares
[SBA LOGO]
SBA Communications Corporation
Class A Common Stock
--------------------------
PROSPECTUS
, 2000
--------------------------
Lehman Brothers
Deutsche Banc Alex. Brown
Raymond James & Associates, Inc.
Fidelity Capital Markets
a division of National Financial Services Corporation
Facilitating Electronic Distribution
<PAGE>
Part II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Set forth below is a table of the registration fee for the Securities and
Exchange Commission, the filing fee for the National Association of Securities
Dealers, Inc., the additional listing fee for the Nasdaq National Market and
estimates of all other expenses to be incurred in connection with the issuance
and distribution of the securities described in the Registration Statement,
other than underwriting discounts and commissions:
<TABLE>
<S> <C>
SEC registration fee.............................................. $26,400
NASD filing fee................................................... 10,500
Nasdaq listing fee................................................
Printing and engraving expenses...................................
Blue Sky Fees and Expenses........................................ 3,000
Legal fees and expenses...........................................
Accounting fees and expenses......................................
Transfer agent and registrar fees.................................
Miscellaneous.....................................................
-------
Total......................................................... $
</TABLE>
Item 15. 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 regarding corporate
management or policy unless (1) the director breached or failed to perform his
duties as a director and (2) the director's breach of, or failure to perform,
those duties constitutes: (a) 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, (b) a transaction from
which the director derived an improper personal benefit, either directly or
indirectly, (c) a circumstance under which an unlawful distribution is made,
(d) 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 shareholder, conscious disregard for
the best interest of the corporation, or willful misconduct, or (e) in a
proceeding by or in the right of someone other than the corporation or a
shareholder, 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.
Under the FBCA, a corporation has power to indemnify any person who was or is
a party to any proceeding (other than an action by, or in the right of the
corporation), by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against liability
incurred in connection with the proceeding, including any appeal thereof, if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any proceeding by judgment, order, settlement
or conviction or upon a plea of nolo contendere or its equivalent does not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in, or not opposed to, the best
interests of the corporation or, with respect to any criminal action or
proceeding, has reasonable cause to believe that his conduct was unlawful.
However, indemnification or advancement of expenses shall not be made to or
on behalf of any director, officer, employee or agent if a judgment or other
final adjudication establishes that his actions, or omissions to act, were
material to the cause of action so adjudicated and constitute: (a) a violation
of the criminal law,
II-1
<PAGE>
unless the director, officer, employee or agent had reasonable cause to believe
his conduct was lawful or had no reasonable cause to believe his conduct was
unlawful; (b) a transaction from which the director, officer, employee or agent
derived an improper personal benefit; (c) in the case of a director, a
circumstance under which the above liability provisions are applicable; or (d)
willful misconduct or a conscious disregard for the best interests of the
corporation in a proceeding by or in the right of the corporation to procure a
judgment in its favor or in a proceeding by or in the right of a shareholder.
The articles of incorporation of the Company provide that the Company shall,
to the fullest extent permitted by applicable law and its by-laws, 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.
Item 16. Exhibits and Financial Statement Schedule
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibits
- ------- -----------------------
<S> <C>
1.1 Form of Underwriting Agreement./(4)/
3.4 Fourth Amended and Restated Articles of Incorporation of SBA Communications Corporation./(2)/
3.5 Amended and Restated By-Laws of SBA Communications Corporation./(2)/
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./(1)/
4.2 Specimen Certificate of Class A Common Stock./(2)/
5.1 Opinion of Akerman, Senterfitt & Eidson, P.A., regarding the validity of the Class A Common
Stock./(4)/
10.25 Second Amended and Restated Credit Agreement, dated as of December 16, 1999, by and among
SBA Communications Corporation, SBA Telecommunications, Inc., the several banks and other
financial institutions or entities from time to time parties thereto, Lehman Brothers Inc.,
General Electric Capital Corporation, Toronto Dominion (Texas) Inc., Barclays Bank PLC and
Lehman Commercial Paper Inc./(3)/
23.1 Consent of Akerman, Senterfitt & Eidson, P.A. (included in their opinion filed as Exhibit 5.1
hereto)./(4)/
23.2 Consent of Arthur Andersen LLP./(3)/
23.3 Consent of Peter C. Cosmas Co., CPA./(3)/
23.4 Consent of John A. Criscuola, CPA./(3)/
23.5 Consent of Turbes Drealan Kvilhaug & Co. PA, CPA./(3)/
24.1 Power of Attorney of SBA Communications Corporation (included on signature page to this
Registration Statement on Form S-3)./(3)/
</TABLE>
- --------
/(1)/ Incorporated by reference to the Registration Statement on Form S-4
previously filed by the Registrant (Registration No. 333-50219).
/(2)/ Incorporated by reference to the Registration Statement on Form S-1
previously filed by the Registrant (Registration No. 333-76547).
/(3)/ Filed herewith.
/(4)/ To be filed by amendment.
(b) Financial Statement Schedules:
Schedule I--Condensed Financial Information of Registrant
All other schedules are omitted because they are not applicable or because
the required information is contained in the financial statements or notes
thereto included in this Registration Statement.
II-2
<PAGE>
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, 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 and is, therefore, unenforceable. In
the event that a claim for 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 or proceeding) is asserted 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 whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issues.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus 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.
(3) For the purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that
is incorporated by reference in this Registration Statement 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.
II-3
<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 January 6, 2000.
SBA Communications Corporation
/s/ Steven E. Bernstein
By:_____________________________________
Steven E. Bernstein
Chairman of the Board of Directors,
President and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints each of Jeffrey A. Stoops and Robert M. Grobstein, or
any of them, each acting alone, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for such person and in his
name, place and stead, in any and all capacities, in connection with the
Registrant's Registration Statement on Form S-3 under the Securities Act of
1933, including to sign the Registration Statement in the name and on behalf of
the Registrant or on behalf of the undersigned as a director or officer of the
Registrant, and any and all amendments or supplements to the Registration
Statement, including any and all stickers and post-effective amendments to the
Registration Statement and to sign any and all additional registration
statements relating to the same offerings of securities as those that are
covered by the Registration Statement that are filed 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 and any applicable securities exchange or securities self-
regulatory body, granting unto said attorneys-in-fact and agents, each acting
alone, 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 said attorneys-in-fact and agents, or their substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
II-4
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on this 6th day of January, 2000.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Steven E. Bernstein Chairman of the Board of January 6, 2000
------------------------- Directors, President and Chief
Steven E. Bernstein Executive Officer (Principal
Executive Officer)
/s/ Jeffrey A. Stoops Chief Financial Officer January 6, 2000
------------------------- (Principal Financial Officer) and
Jeffrey A. Stoops Director
/s/ Robert M. Grobstein Chief Accounting Officer January 6, 2000
------------------------- (Principal Accounting Officer)
Robert M. Grobstein
Director
-------------------------
Donald B. Hebb, Jr.
/s/ C. Kevin Landry Director January 6, 2000
-------------------------
C. Kevin Landry
/s/ Richard W. Miller Director January 6, 2000
-------------------------
Richard W. Miller
/s/ Robert S. Picow Director January 6, 2000
-------------------------
Robert S. Picow
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibits
------- -----------------------
<S> <C>
10.25 Second Amended and Restated Credit Agreement, dated as of December 16, 1999, by and among
SBA Communications Corporation, SBA Telecommunications, Inc., the several banks and other
financial institutions or entities from time to time parties thereto, Lehman Brothers Inc., General
Electric Capital Corporation, Toronto Dominion (Texas) Inc., Barclays Bank PLC and Lehman
Commercial Paper Inc.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Peter C. Cosmas Co., CPA.
23.4 Consent of John A. Criscuola, CPA.
23.5 Consent of Turbes Drealan Kvilhaug & Co. PA, CPA.
</TABLE>
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of December 16,
1999, among SBA COMMUNICATIONS CORPORATION, a Florida corporation ("Holdings"),
--------
SBA TELECOMMUNICATIONS, INC., a Florida corporation (the "Borrower"), the
--------
several banks and other financial institutions or entities from time to time
parties to this Agreement (the "Lenders"), LEHMAN BROTHERS INC., as advisor and
-------
book manager ("LBI"), LEHMAN BROTHERS INC., as the arranger (in such capacity,
---
the "Arranger"), GENERAL ELECTRIC CAPITAL CORPORATION, as syndication agent (in
--------
such capacity, the "Syndication Agent"), TORONTO DOMINION (TEXAS), INC., as
-----------------
documentation agent (in such capacity, the "Documentation Agent"), BARCLAYS BANK
-------------------
PLC (in such capacity, the "Co-Documentation Agent") and LEHMAN COMMERCIAL PAPER
----------------------
INC., as administrative agent (in such capacity, the "Administrative Agent").
--------------------
W I T N E S S E T H:
-------------------
WHEREAS, the Borrower is a party to the Amended and Restated Credit
Agreement, dated as of February 5, 1999 (the "Existing Credit Agreement"), among
-------------------------
Holdings, the Borrower, the lenders parties thereto, Lehman Commercial Paper
Inc., as administrative agent, and others, pursuant to which such lenders have
agreed to extend, and have extended, credit to the Borrower; and
WHEREAS, the Borrower has requested certain amendments to the Existing
Credit Agreement (including an increase in the Total Revolving Credit
Commitments and the addition of a Tranche B Term Loan Facility), and the
Required Lenders and each Lender whose Revolving Credit Commitment is being
increased hereby have agreed to amend and restate the Existing Credit Agreement
as set forth below;
NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth, the parties hereto hereby agree that on the Second
Amendment and Restatement Effective Date, the Existing Credit Agreement shall be
amended and restated in its entirety as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms listed in
-------------
this Section 1.1 shall have the respective meanings set forth in this Section
1.1.
"Acceptable Tenant": any Person that (a) has a contract with the
-----------------
Borrower or any of its Subsidiaries to locate wireless transmission
antennae on a Tower and (b) either (i) is listed on Annex B or (ii) has
been approved in writing by the Required Lenders.
"Adjusted EBITDA": for any period, Consolidated EBITDA for such
---------------
period; provided, however, that for purposes of calculating Non-Tower
-------- -------
EBITDA, Mature Tower
<PAGE>
2
EBITDA and Developmental Tower EBITDA for any period, Consolidated EBITDA
shall be adjusted by allocating sales and marketing and general and
administrative expenses (as such expenses are reflected in the financial
statements referred to in Section 4.1(b) on the date hereof) reflected in
Consolidated EBITDA as follows: (a) to Non-Tower EBITDA, 28% of such
expenses, (b) to Mature Tower EBITDA, 72% of such expenses, multiplied by
the ratio of the aggregate number of Mature Towers to the aggregate number
of Towers, and (c) to Developmental Tower EBITDA, 72% of such expenses,
multiplied by the ratio of the aggregate number of Developmental Towers to
the aggregate number of Towers.
"Adjustment Date": as defined in the Pricing Grid.
---------------
"Administrative Agent": as defined in the preamble hereto.
--------------------
"Affiliate": as to any Person, any other Person which, directly or
---------
indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person
means the power, directly or indirectly, either to (a) vote 10% or more of
the securities having ordinary voting power for the election of directors
(or persons performing similar functions) of such Person or (b) direct or
cause the direction of the management and policies of such Person, whether
by contract or otherwise.
"Agents": the collective reference to the Syndication Agent, the
------
Documentation Agent, the Co-Documentation Agent and the Administrative
Agent.
"Aggregate Exposure": with respect to any Lender at any time, an
------------------
amount equal to (a) until the Closing Date, the aggregate amount of such
Lender's Commitments at such time and (b) thereafter, the sum of (i) the
aggregate then unpaid principal amount of such Lender's Term Loans and (ii)
amount of such Lender's Revolving Credit Commitment then in effect or, if
the Revolving Credit Commitments have been terminated, the amount of such
Lender's Revolving Extensions of Credit then outstanding.
"Aggregate Exposure Percentage" with respect to any Lender at any
-----------------------------
time, the ratio (expressed as a percentage) of such Lender's Aggregate
Exposure at such time to the Aggregate Exposure of all Lenders at such
time.
"Agreement": this Second Amended and Restated Credit Agreement, as
---------
amended, supplemented or otherwise modified from time to time.
"Annualized Adjusted EBITDA": for any period, the sum of
--------------------------
Developmental Tower EBITDA, Mature Tower EBITDA and Non-Tower EBITDA for
such period.
<PAGE>
3
"Applicable Margin": (a) for each Tranche A Term Loan and each
-----------------
Revolving Loan, the rate per annum determined pursuant to the Pricing Grid
and (b) for each Tranche B Loan, the rate per annum set forth under the
relevant column heading below:
Base Rate Eurodollar
Loans Loans
--------- ----------
2.50% 3.50%;
"Application": an application, in such form as the Issuing Lender may
-----------
specify from time to time, requesting the Issuing Lender to open a Letter
of Credit.
"Asset Coverage Test Amount": at any date of calculation thereof, the
--------------------------
sum of (a) the lesser of (i) $125,000 for each Tower which is a
Developmental Tower on such date of calculation and (ii) 55% of Tower Cost
with respect to such Tower, plus (b) the product of (i) the aggregate
Mature Tower EBITDA for the period of twelve consecutive calendar months
most recently ended prior to such date of calculation and (ii) six, plus
(c) the product of (i) the aggregate Non-Tower EBITDA for the period of
twelve consecutive calendar months most recently ended prior to such date
of calculation and (ii) four; provided, that in calculating the Asset
--------
Coverage Test Amount on any date, no amount may be attributed to the Mature
Tower EBITDA or Non-Tower EBITDA, as the case may be, attributable to
assets Disposed of prior to such date of calculation.
"Asset Sale": any Disposition of Property or series of related
----------
Dispositions of Property (excluding any such Disposition permitted by
clauses (b), (c) or (d) of Section 7.5) which yields gross proceeds to
Holdings, the Borrower or any of its Subsidiaries (valued at the initial
principal amount thereof in the case of non-cash proceeds consisting of
notes or other debt securities and valued at fair market value in the case
of other non-cash proceeds) in excess of $10,000.
"Assignee": as defined in Section 10.6(c).
--------
"Assignor": as defined in Section 10.6(c).
--------
"Available Revolving Credit Commitment": as to any Revolving Credit
-------------------------------------
Lender at any time, an amount equal to the excess, if any, of (a) such
Lender's Revolving Credit Commitment then in effect over (b) such Lender's
----
Revolving Extensions of Credit then outstanding.
"Base Rate": for any day, a rate per annum (rounded upwards, if
---------
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime
Rate in effect on such day, (b) the Base CD Rate in effect on such day plus
1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2
of 1%. For purposes hereof: "Prime Rate" shall mean the rate of interest
----------
per annum publicly announced from time to time by the Reference Lender as
its prime or base rate in effect at its principal office in New York City
(the Prime Rate not
<PAGE>
4
being intended to be the lowest rate of interest charged by the Reference
Lender in connection with extensions of credit to debtors); "Base CD Rate"
------------
shall mean the sum of (a) the product of (i) the Three-Month Secondary CD
Rate and (ii) a fraction, the numerator of which is one and the denominator
of which is one minus the C/D Reserve Percentage and (b) the C/D Assessment
Rate; and "Three-Month Secondary CD Rate" shall mean, for any day, the
-----------------------------
secondary market rate for three-month certificates of deposit reported as
being in effect on such day (or, if such day shall not be a Business Day,
the next preceding Business Day) by the Board through the public
information telephone line of the Federal Reserve Bank of New York (which
rate will, under the current practices of the Board, be published in
Federal Reserve Statistical Release H.15(519) during the week following
such day), or, if such rate shall not be so reported on such day or such
next preceding Business Day, the average of the secondary market quotations
for three-month certificates of deposit of major money center banks in New
York City received at approximately 10:00 A.M., New York City time, on such
day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Reference Lender from three New York City negotiable
certificate of deposit dealers of recognized standing selected by it. Any
change in the Base Rate due to a change in the Prime Rate, the Three-Month
Secondary CD Rate or the Federal Funds Effective Rate shall be effective as
of the opening of business on the effective day of such change in the Prime
Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective
Rate, respectively.
"Base Rate Loans": Loans for which the applicable rate of interest is
---------------
based upon the Base Rate.
"Benefitted Lender": as defined in Section 10.7.
-----------------
"Board": the Board of Governors of the Federal Reserve System of the
-----
United States (or any successor).
"Borrower": as defined in the preamble hereto.
--------
"Borrowing Date": any Business Day specified by the Borrower as a
--------------
date on which the Borrower requests the relevant Lenders to make Loans
hereunder.
"Business Day": (i) for all purposes other than as covered by clause
------------
(ii) below, a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to
close and (ii) with respect to all notices and determinations in connection
with, and payments of principal and interest on, Eurodollar Loans, any day
which is a Business Day described in clause (i) and which is also a day for
trading by and between banks in Dollar deposits in the interbank eurodollar
market.
"Capital Expenditures": for any period, with respect to any Person,
--------------------
the aggregate of all expenditures by such Person and its Subsidiaries for
the acquisition or leasing (pursuant to a capital lease) of fixed or
capital assets or additions to equipment (including replacements,
construction costs, capitalized repairs and improvements during such
<PAGE>
5
period) which should be capitalized under GAAP on a consolidated balance
sheet of such Person and its Subsidiaries.
"Capital Lease Obligations": as to any Person, the obligations of
-------------------------
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under
GAAP, and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such
time determined in accordance with GAAP.
"Capital Stock": any and all shares, interests, participations or
-------------
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants, rights or options to purchase any of
the foregoing.
"Cash Equivalents": (a) marketable direct obligations issued by, or
----------------
unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of acquisition;
(b) certificates of deposit, time deposits, eurodollar time deposits or
overnight bank deposits having maturities of six months or less from the
date of acquisition issued by any Lender or by any commercial bank
organized under the laws of the United States of America or any state
thereof having combined capital and surplus of not less than $500,000,000;
(c) commercial paper of an issuer rated at least A-2 by Standard & Poor's
Ratings Services ("S&P") or P-2 by Moody's Investors Service, Inc.
---
("Moody's"), or carrying an equivalent rating by a nationally recognized
---------
rating agency, if both of the two named rating agencies cease publishing
ratings of commercial paper issuers generally, and maturing within six
months from the date of acquisition; (d) repurchase obligations of any
Lender or of any commercial bank satisfying the requirements of clause (b)
of this definition, having a term of not more than 30 days with respect to
securities issued or fully guaranteed or insured by the United States
government; (e) securities with maturities of one year or less from the
date of acquisition issued or fully guaranteed by any state, commonwealth
or territory of the United States, by any political subdivision or taxing
authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory,
political subdivision, taxing authority or foreign government (as the case
may be) are rated at least A by S&P or A by Moody's; (f) securities with
maturities of six months or less from the date of acquisition backed by
standby letters of credit issued by any Lender or any commercial bank
satisfying the requirements of clause (b) of this definition; or (g) shares
of money market mutual or similar funds which invest exclusively in assets
satisfying the requirements of clauses (a) through (f) of this definition.
"C/D Assessment Rate": for any day as applied to any Base Rate Loan,
-------------------
the annual assessment rate in effect on such day that is payable by a
member of the Bank Insurance
<PAGE>
6
Fund maintained by the Federal Deposit Insurance Corporation (the "FDIC")
----
classified as well-capitalized and within supervisory subgroup "B" (or a
comparable successor assessment risk classification) within the meaning of
12 C.F.R. (S) 327.4 (or any successor provision) to the FDIC (or any
successor) for the FDIC's (or such successor's) insuring time deposits at
offices of such institution in the United States.
"C/D Reserve Percentage": for any day as applied to any Base Rate
----------------------
Loan, that percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board, for determining the maximum reserve
requirement for a Depositary Institution (as defined in Regulation D of the
Board as in effect from time to time) in respect of new non-personal time
deposits in Dollars having a maturity of 30 days or more.
"Closing Date": the date on which the conditions precedent set forth
------------
in Section 5.1 were satisfied, which date occurred on February 5, 1999.
"Code": the Internal Revenue Code of 1986, as amended from time to
----
time.
"Collateral": all Property of the Loan Parties, now owned or
----------
hereafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Commitment": as to any Lender, the sum of the Tranche A Term Loan
----------
Commitment, the Tranche B Term Loan Commitment and the Revolving Credit
Commitment of such Lender.
"Commitment Fee Rate": the rate per annum determined pursuant to the
-------------------
Pricing Grid.
"Commitment Increase Date": the date that is three Business Days
------------------------
after the Second Amendment and Restatement Effective Date.
"Commonly Controlled Entity": an entity, whether or not incorporated,
--------------------------
which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group that includes the Borrower and
that is treated as a single employer under Section 414 of the Code.
"Compliance Certificate": a certificate duly executed by a
----------------------
Responsible Officer substantially in the form of Exhibit B.
"Communications Act": the Communications Act of 1934, and any
------------------
similar or successor federal statute, and the rules and regulations of the
FCC thereunder, all as amended and as may be in effect from time to time.
"Confidential Information Memorandum": the Confidential Information
-----------------------------------
Memorandum dated November 1999 and furnished to the Lenders prior to the
Second Amendment and Restatement Effective Date.
<PAGE>
7
"Consent": the Consent, substantially in the form of Exhibit M, to be
-------
executed and delivered by each Loan Party other than the Borrower on the
Second Amendment and Restatement Effective Date.
"Consolidated Current Assets": at any date, all amounts (other than
---------------------------
cash and Cash Equivalents) which would, in conformity with GAAP, be set
forth opposite the caption "total current assets" (or any like caption) on
a consolidated balance sheet of the Borrower and its Subsidiaries at such
date.
"Consolidated Current Liabilities": at any date, all amounts that
--------------------------------
would, in conformity with GAAP, be set forth opposite the caption "total
current liabilities" (or any like caption) on a consolidated balance sheet
of the Borrower and its Subsidiaries at such date, but excluding (a) the
current portion of any Funded Debt of the Borrower and its Subsidiaries and
(b) without duplication of clause (a) above, all Indebtedness consisting of
Revolving Credit Loans to the extent otherwise included therein.
"Consolidated EBITDA": for any period, Consolidated Net Income for
-------------------
such period plus, without duplication and to the extent reflected as a
----
charge in the statement of such Consolidated Net Income for such period,
the sum of (a) income tax expense, (b) Consolidated Interest Expense,
amortization or writeoff of debt discount and debt issuance costs and
commissions, discounts and other fees and charges associated with
Indebtedness (including the Loans), (c) depreciation and amortization
expense, (d) amortization of intangibles (including, but not limited to,
goodwill) and organization costs, (e) any extraordinary, unusual or non-
recurring expenses or losses (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net
Income for such period, losses on sales of assets outside of the ordinary
course of business) and (f) any other non-cash charges, and minus, to the
-----
extent included in the statement of such Consolidated Net Income for such
period, the sum of (a) interest income (except to the extent deducted in
determining Consolidated Interest Expense), (b) any extraordinary, unusual
or non-recurring income or gains (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net
Income for such period, gains on the sales of assets outside of the
ordinary course of business) and (c) any other non-cash income, all as
determined on a consolidated basis; provided that for purposes of
--------
calculating Consolidated EBITDA of the Borrower and its Subsidiaries for
any period, (i) the Consolidated EBITDA of any Mature Tower or Person
acquired by the Borrower or its Subsidiaries during such period shall be
included on a pro forma basis for such period (assuming the consummation of
--- -----
such acquisition and the incurrence or assumption of any Indebtedness in
connection therewith occurred on the first day of such period) if, with
respect to any acquisition of any Person, the consolidated balance sheet of
such acquired Person and its consolidated Subsidiaries as at the end of the
period preceding the acquisition of such Person and the related
consolidated statements of income and stockholders' equity and of cash
flows for the period in respect of which Consolidated EBITDA is to be
calculated (x) have been previously provided to the Administrative Agent
and the Lenders and (y) either (1) have been reported on without a
qualification arising out of the scope of the audit by independent
certified
<PAGE>
8
public accountants of nationally recognized standing or (2) have been found
acceptable by the Administrative Agent and (ii) the Consolidated EBITDA of
any Person Disposed of by the Borrower or its Subsidiaries during such
period shall be excluded for such period (assuming the consummation of such
Disposition and the repayment of any Indebtedness in connection therewith
occurred on the first day of such period).
"Consolidated Fixed Charge Coverage Ratio": for any period, the
----------------------------------------
ratio of (a) the sum of (i) Consolidated EBITDA for such period, (ii) the
Net Cash Proceeds from issuances of Capital Stock or Indebtedness during
such period, (iii) the aggregate of the Available Revolving Credit
Commitments, as determined in accordance with this Agreement, as of the
date of the most recently ended fiscal quarter and (iv) without
duplication, cash of the Borrower and its Subsidiaries as of the date of
the most recently ended fiscal quarter to (b) Consolidated Fixed Charges
for such period.
"Consolidated Fixed Charges": for any period, the sum (without
--------------------------
duplication) of (a) Consolidated Interest Expense for such period, (b)
provision for cash income taxes made by the Borrower or any of its
Subsidiaries on a consolidated basis in respect of such period, (c)
scheduled payments made during such period on account of principal of
Indebtedness of the Borrower or any of its Subsidiaries (including
scheduled principal payments in respect of the Term Loans and scheduled
reductions of the Revolving Credit Commitments) and (d) Capital
Expenditures for such period.
"Consolidated Interest Expense": for any period, total cash interest
-----------------------------
expense (including that attributable to Capital Lease Obligations) of the
Borrower and its Subsidiaries for such period with respect to all
outstanding Indebtedness of the Borrower and its Subsidiaries (including,
without limitation, all commissions, discounts and other fees and charges
owed with respect to letters of credit and bankers' acceptance financing
and net costs under Hedge Agreements in respect of interest rates to the
extent such net costs are allocable to such period in accordance with
GAAP).
"Consolidated Net Income": for any period, the consolidated net
-----------------------
income (or loss) of the Borrower and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP; provided that there shall be
--------
excluded (a) the income (or deficit) of any Person accrued prior to the
date it becomes a Subsidiary of the Borrower or is merged into or
consolidated with the Borrower or any of its Subsidiaries, (b) the income
(or deficit) of any Person (other than a Subsidiary of the Borrower) in
which the Borrower or any of its Subsidiaries has an ownership interest,
except to the extent that any such income is actually received by the
Borrower or such Subsidiary in the form of dividends or similar
distributions and (c) the undistributed earnings of any Subsidiary of the
Borrower to the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary is not at the time permitted by
the terms of any Contractual Obligation (other than under any Loan
Document) or Requirement of Law applicable to such Subsidiary; provided,
--------
that Consolidated Net Income shall include income from Excluded Entities
only to the extent that such income is actually received by the Borrower
and its Subsidiaries in cash.
<PAGE>
9
"Consolidated Total Debt": at any date, the aggregate principal
-----------------------
amount of all Indebtedness of the Borrower and its Subsidiaries at such
date, determined on a consolidated basis in accordance with GAAP.
"Consolidated Working Capital": at any date, the excess of
----------------------------
Consolidated Current Assets on such date over Consolidated Current
Liabilities on such date.
"Contractual Obligation": as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.
"Control Investment Affiliate": as to any Person, any other Person
----------------------------
that (a) directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person and (b) is organized by such Person
primarily for the purpose of making equity or debt investments in one or
more companies. For purposes of this definition, "control" of a Person
means the power, directly or indirectly, to direct or cause the direction
of the management and policies of such Person whether by contract or
otherwise.
"Default": any of the events specified in Section 8, whether or not
-------
any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"Derivatives Counterparty": as defined in Section 7.6.
------------------------
"Developmental Tower": at any date of determination thereof, each
-------------------
Tower which (a) has been operational for twelve months or a shorter period
of time, (b) during such period has had, and continues to have on such date
of determination, at least one broadband Acceptable Tenant under a contract
having an original term of not less than five years, (c) has capacity for
at least two additional broadband tenants and at least two additional
narrowband tenants and (d) has not been designated by the Borrower by
written notice to the Administrative Agent, as a Mature Tower.
"Developmental Tower EBITDA": for any period of twelve consecutive
--------------------------
calendar months, the product of (a) Adjusted EBITDA derived from
Developmental Towers for the last three calendar months of such period
(whether or not a fiscal quarter) and (b) four.
"Disposition": with respect to any Property, any sale, lease, sale
-----------
and leaseback, assignment, conveyance, transfer or other disposition
thereof; and the terms "Dispose" and "Disposed of" shall have correlative
------- -----------
meanings.
"Dollars" and "$": dollars in lawful currency of the United States of
------- -
America.
"Domestic Subsidiary": any Subsidiary of the Borrower organized
-------------------
under the laws of any jurisdiction within the United States of America.
<PAGE>
10
"Environmental Laws": any and all laws, rules, orders, regulations,
------------------
statutes, ordinances, guidelines, codes, decrees, or other legally
enforceable requirements (including, without limitation, common law) of any
international authority, foreign government, the United States, or any
state, local, municipal or other governmental authority having jurisdiction
over the Borrower, any Subsidiary of the Borrower or any Tower, regulating,
relating to or imposing liability or standards of conduct concerning
protection of the environment or of human health, or employee health and
safety, as has been, is now, or may at any time hereafter be, in effect.
"Environmental Permits": any and all permits, licenses, approvals,
---------------------
registrations, notifications, exemptions and any other authorization
required under any Environmental Law.
"ERISA": the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
---------------------------------
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board or other Governmental
Authority having jurisdiction with respect thereto) dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board) maintained by a
member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each Interest
--------------------
Period pertaining to a Eurodollar Loan, the rate per annum determined on
the basis of the rate for deposits in Dollars for a period equal to such
Interest Period commencing on the first day of such Interest Period
appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London
time, two Business Days prior to the beginning of such Interest Period. In
the event that such rate does not appear on Page 3750 of the Telerate
screen (or otherwise on such screen), the "Eurodollar Base Rate" for
--------------------
purposes of this definition shall be determined by reference to such other
comparable publicly available service for displaying eurodollar rates as
may be selected by the Administrative Agent or, in the absence of such
availability, by reference to the rate at which the Administrative Agent is
offered Dollar deposits at or about 11:00 A.M., New York City time, two
Business Days prior to the beginning of such Interest Period in the
interbank eurodollar market where its eurodollar and foreign currency and
exchange operations are then being conducted for delivery on the first day
of such Interest Period for the number of days comprised therein.
"Eurodollar Loans": Loans the rate of interest applicable to which is
----------------
based upon the Eurodollar Rate.
<PAGE>
11
"Eurodollar Rate": with respect to each day during each Interest
---------------
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurodollar Base Rate
-----------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar Loans
------------------
the then current Interest Periods with respect to all of which begin on the
same date and end on the same later date (whether or not such Eurodollar
Loans shall originally have been made on the same day).
"Event of Default": any of the events specified in Section 8,
----------------
provided that any requirement for the giving of notice, the lapse of time,
--------
or both, has been satisfied.
"Excess Cash Flow": for any fiscal year of the Borrower, the excess,
----------------
if any, of (a) the sum, without duplication, of (i) Consolidated Net Income
for such fiscal year, (ii) an amount equal to the amount of all non-cash
charges (including depreciation and amortization) deducted in arriving at
such Consolidated Net Income, (iii) decreases in Consolidated Working
Capital for such fiscal year, (iv) an amount equal to the aggregate net
non-cash loss on the Disposition of Property by the Borrower and its
Subsidiaries during such fiscal year (other than sales of inventory in the
ordinary course of business), to the extent deducted in arriving at such
Consolidated Net Income and (v) the net increase during such fiscal year
(if any) in deferred tax accounts of the Borrower over (b) the sum, without
----
duplication, of (i) an amount equal to the amount of all non-cash credits
included in arriving at such Consolidated Net Income, (ii) the aggregate
amount actually paid by the Borrower and its Subsidiaries in cash during
such fiscal year on account of Capital Expenditures (excluding the
principal amount of Indebtedness incurred in connection with such
expenditures and any such expenditures financed with the proceeds of any
Reinvestment Deferred Amount), (iii) the aggregate amount of all
prepayments of Revolving Credit Loans during such fiscal year to the extent
accompanying permanent optional reductions of the Revolving Credit
Commitments and all optional prepayments of the Term Loans during such
fiscal year, (iv) the aggregate amount of all regularly scheduled principal
payments of Funded Debt (including, without limitation, the Term Loans) of
the Borrower and its Subsidiaries made during such fiscal year (other than
in respect of any revolving credit facility to the extent there is not an
equivalent permanent reduction in commitments thereunder), (v) increases in
Consolidated Working Capital for such fiscal year, (vi) an amount equal to
the aggregate net non-cash gain on the Disposition of Property by the
Borrower and its Subsidiaries during such fiscal year (other than sales of
inventory in the ordinary course of business), to the extent included in
arriving at such Consolidated Net Income, and (vii) the net decrease during
such fiscal year (if any) in deferred tax accounts of the Borrower.
"Excess Cash Flow Application Date": as defined in Section 2.10(c).
---------------------------------
<PAGE>
12
"Excluded Entities": SBA Brazil and Metro Joint Venture, L.C. (or
-----------------
such other partnership, limited liability company or other entity formed by
and between SBA Towers New York, Inc. and Site Tech, Inc.)
"Excluded Foreign Subsidiaries": any Foreign Subsidiary in respect of
-----------------------------
which either (i) the pledge of all of the Capital Stock of such Subsidiary
as Collateral or (ii) the guaranteeing by such Subsidiary of the
Obligations, would, in the good faith judgment of the Borrower, result in
adverse tax consequences to the Borrower.
"Existing Credit Agreement": as defined in the Recitals.
-------------------------
"FAA": the Federal Aviation Administration, and any successor agency
---
of the United States Government exercising substantially equivalent powers.
"Facility": each of (a) the Tranche A Term Loan Commitments and the
--------
Tranche A Term Loans made thereunder (the "Tranche A Term Loan Facility"),
----------------------------
(b) the Tranche B Term Loan Commitments and the Tranche B Term Loans made
thereunder (the "Tranche B Term Loan Facility") and (c) the Revolving
----------------------------
Credit Commitments and the extensions of credit made thereunder (the
"Revolving Credit Facility").
--------------------------
"FCC": the Federal Communications Commission, and any successor
---
agency of the United States Government exercising substantially equivalent
powers.
"Federal Funds Effective Rate": for any day, the weighted average of
----------------------------
the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by
the Reference Lender from three federal funds brokers of recognized
standing selected by it.
"Foreign Subsidiary": any Subsidiary of the Borrower that is not a
------------------
Domestic Subsidiary.
"Funded Debt": as to any Person, all Indebtedness of such Person of
-----------
the types described in clauses (a) through (e) of the definition of
"Indebtedness" in this Section.
"Funding Office": the office designated from time to time by the
--------------
Administrative Agent, by written notice to the Borrower and the Lenders, as
the Funding Office.
"GAAP": generally accepted accounting principles in the United
----
States of America as in effect from time to time, except that for purposes
of Section 7.1, GAAP shall be determined on the basis of such principles in
effect on the date hereof and consistent with those used in the preparation
of the most recent audited financial statements delivered pursuant to
Section 4.1(b).
<PAGE>
13
"Governmental Authority": any nation or government, any state or
----------------------
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee and Collateral Agreement": the Guarantee and Collateral
----------------------------------
Agreement executed and delivered by Holdings, the Borrower and each
Subsidiary Guarantor on the Closing Date, a copy of which is attached as
Exhibit A, as the same may be amended, supplemented or otherwise modified
from time to time.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
-------------------- -------------------
any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person
-------------------
(the "primary obligor") in any manner, whether directly or indirectly,
---------------
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or
any Property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase Property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided,
--------
however, that the term Guarantee Obligation shall not include endorsements
-------
of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (a) an amount equal to the stated
or determinable amount of the primary obligation in respect of which such
Guarantee Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee
Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in
good faith.
"Guarantors": the collective reference to Holdings and the Subsidiary
----------
Guarantors.
"Hedge Agreements": all interest rate swaps, caps or collar
----------------
agreements or similar arrangements entered into by the Borrower providing
for protection against fluctuations in interest rates or currency exchange
rates or the exchange of nominal interest obligations, either generally or
under specific contingencies.
<PAGE>
14
"Indebtedness": of any Person at any date, without duplication, (a)
------------
all indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of Property or services (other
than trade payables incurred in the ordinary course of such Person's
business), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments (other than performance bonds and
other obligations of a like nature incurred in the ordinary course of such
Person's business), (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to
Property acquired by such Person (even though the rights and remedies of
the seller or lender under such agreement in the event of default are
limited to repossession or sale of such Property), (e) all Capital Lease
Obligations of such Person, (f) all obligations of such Person, contingent
or otherwise, as an account party under acceptance, letter of credit or
similar facilities, (g) all obligations of such Person, contingent or
otherwise, to purchase, redeem, retire or otherwise acquire for value any
Capital Stock of such Person, (h) all Guarantee Obligations of such Person
in respect of obligations of the kind referred to in clauses (a) through
(g) above; (i) all obligations of the kind referred to in clauses (a)
through (h) above secured by (or for which the holder of such obligation
has an existing right, contingent or otherwise, to be secured by) any Lien
on Property (including, without limitation, accounts and contract rights)
owned by such Person, whether or not such Person has assumed or become
liable for the payment of such obligation, (j) for the purposes of Section
8(e) only, all obligations of such Person in respect of Hedge Agreements
and (k) the liquidation value of any preferred Capital Stock of such Person
or its Subsidiaries held by any Person other than such Person and its
Wholly Owned Subsidiaries.
"Indemnified Liabilities": as defined in Section 10.5.
-----------------------
"Indemnitee": as defined in Section 10.5.
----------
"Initial Tower Report": the report of Arthur Andersen LLP,
--------------------
independent certified public accountants of Holdings, dated November 30,
1998 stating that the procedures that such accountants used to verify
information with respect to leases in existence for Developmental Towers
and Mature Towers and which report (i) demonstrated that Total Tower
Revenue for the eleven months ended November 30, 1998 was at least
$10,500,000 and that total Tower gross profit for such period was at least
$4,000,000, (ii) confirmed that on the last day of such period there were
at least 418 Towers, (iii) confirmed the total number of tenants on the
Towers on the last day of such period and (iv) confirmed such other
information as reasonably requested by the Administrative Agent.
"Initial Tower Report Supplement": the report of Arthur Andersen LLP
-------------------------------
supplementing the Initial Tower Report which(a) verified cash collections
of the Borrower in respect of a statistical sample of Towers, and describe
the methods and procedures used for such verification and (b) verified that
Towers classified by the Borrower as Developmental Towers met the criteria
specified in the definition of
<PAGE>
15
"Developmental Towers" in this Section 1.1 at the time such Towers were so
classified by the Borrower.
"Insolvency": with respect to any Multiemployer Plan, the condition
----------
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
---------
"Intellectual Property": the collective reference to all rights,
---------------------
priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, copyrights, copyright licenses, patents,
patent licenses, trademarks, trademark licenses, technology, know-how and
processes, and all rights to sue at law or in equity for any infringement
or other impairment thereof, including the right to receive all proceeds
and damages therefrom.
"Interest Payment Date": (a) as to any Base Rate Loan, the last day
---------------------
of each March, June, September and December to occur while such Base Rate
Loan is outstanding and the final maturity date of such Loan, (b) as to any
Eurodollar Loan having an Interest Period of three months or less, the last
day of such Interest Period, (c) as to any Eurodollar Loan having an
Interest Period longer than three months, each day which is three months,
or a whole multiple thereof, after the first day of such Interest Period
and the last day of such Interest Period and (d) as to any Loan (other than
any Revolving Credit Loan that is a Base Rate Loan), the date of any
repayment or prepayment made in respect thereof, including without
limitation, the Prepayment Date.
"Interest Period": as to any Eurodollar Loan, (a) initially, the
---------------
period commencing on the borrowing or conversion date, as the case may be,
with respect to such Eurodollar Loan and ending one, two, three or six
months thereafter, as selected by the Borrower in its notice of borrowing
or notice of conversion, as the case may be, given with respect thereto;
and (b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Loan and ending
one, two, three or six months thereafter, as selected by the Borrower by
irrevocable notice to the Administrative Agent not less than three Business
Days prior to the last day of the then current Interest Period with respect
thereto; provided that, all of the foregoing provisions relating to
--------
Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be
to carry such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately preceding
Business Day;
(ii) any Interest Period in respect of Revolving Credit Loans
that would otherwise extend beyond the Revolving Credit Termination
Date shall end on the
<PAGE>
16
Revolving Credit Termination Date, and any Interest Period in respect
of Tranche A Term Loans or Tranche B Term Loans that would otherwise
extend beyond the applicable final maturity date therefor shall end on
such final maturity date;
(iii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(iv) the Borrower shall select Interest Periods so as not to require
a payment or prepayment of any Eurodollar Loan during an Interest
Period for such Loan.
"Investments": as defined in Section 7.8.
-----------
"Issuing Lender": Toronto Dominion (Texas), Inc., in its capacity as
--------------
issuer of any Letter of Credit.
"LBI": as defined in the preamble thereto.
---
"L/C Commitment": $25,000,000.
--------------
"L/C Fee Payment Date": the last day of each March, June, September
--------------------
and December and the last day of the Revolving Credit Commitment Period.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
---------------
aggregate then undrawn and unexpired amount of the then outstanding Letters
of Credit and (b) the aggregate amount of drawings under Letters of Credit
that have not then been reimbursed pursuant to Section 3.5.
"L/C Participants": the collective reference to all the Revolving
----------------
Credit Lenders other than the Issuing Lender.
"Lender Addendum": with respect to any Lender which became a party
---------------
hereto on the Closing Date, a Lender Addendum, substantially in the form of
Exhibit I, executed and delivered by such Lender on the Closing Date as
provided in Section 10.17.
"Lenders": as defined in the preamble hereto.
-------
"Letters of Credit": as defined in Section 3.1(a).
-----------------
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention
<PAGE>
17
agreement and any capital lease having substantially the same economic
effect as any of the foregoing).
"Loan": any loan made by any Lender pursuant to this Agreement.
----
"Loan Documents": this Agreement, the Security Documents, the
--------------
Applications and the Notes.
"Loan Parties": Holdings, the Borrower and each Subsidiary of the
------------
Borrower which is a party to a Loan Document.
"Majority Facility Lenders": with respect to any Facility, the
-------------------------
holders of more than 50% of the aggregate unpaid principal amount of the
Tranche A Term Loans, the Tranche B Term Loans or the Total Revolving
Extensions of Credit, as the case may be, outstanding under such Facility
(or, in the case of the Revolving Credit Facility, prior to any termination
of the Revolving Credit Commitments, the holders of more than 50% of the
Total Revolving Credit Commitments).
"Majority Revolving Credit Facility Lenders": the Majority Facility
------------------------------------------
Lenders in respect of the Revolving Credit Facility.
"Material Adverse Effect": a material adverse effect on (a) the
-----------------------
business, assets, property, condition (financial or otherwise) or prospects
of Holdings, the Borrower and its Subsidiaries taken as a whole or (b) the
validity or enforceability of this Agreement or any of the other Loan
Documents or the rights or remedies of the Agents or the Lenders hereunder
or thereunder.
"Material Environmental Amount": an amount or amounts payable by the
-----------------------------
Borrower and/or any of its Subsidiaries, in the aggregate in excess of
$1,000,000, for: costs to comply with any Environmental Law; costs of any
investigation, and any remediation, of any Material of Environmental
Concern; and compensatory damages (including, without limitation damages to
natural resources), punitive damages, fines, and penalties pursuant to any
Environmental Law; provided that any amounts expended for environmental
--------
site assessments pursuant to customary due diligence conducted in
connection with the acquisition of towers and/or tower sites shall be
excluded from the calculation of any Material Environmental Amount.
"Materials of Environmental Concern": any gasoline or petroleum
----------------------------------
(including crude oil or any fraction thereof) or petroleum products,
polychlorinated biphenyls, urea-formaldehyde insulation, asbestos,
pollutants, contaminants, radioactivity, and any other substances or forces
of any kind, whether or not any such substance or force is defined as
hazardous or toxic under any Environmental Law, that is regulated pursuant
to or could give rise to liability under any Environmental Law.
"Mature Tower": any Tower other than a Developmental Tower.
------------
<PAGE>
18
"Mature Tower EBITDA": for any period of twelve consecutive calendar
-------------------
months, the product of (a) Adjusted EBITDA derived for the last three
calendar months of such period (whether or not a fiscal quarter) from
Mature Towers, from the Borrower's lease/sublease business (excluding
revenue derived from Developmental Towers) and the Borrower's businesses of
leasing antennae space on buildings and managing towers and antennae space
on buildings owned by others and (b) four.
"Mortgaged Properties": the real properties upon which the
--------------------
Administrative Agent for the benefit of the Lenders has been or shall be
granted a Lien pursuant to the Mortgages.
"Mortgage Requirement": the requirement that, within 60 days after
--------------------
the end of each fiscal quarter there shall have been executed, and
delivered to the appropriate recording offices, Mortgages (i) covering
Towers which during such fiscal quarter most recently ended contributed at
least 80% of Total Tower Revenue (excluding revenue from the Borrower's
lease/sublease business) and (ii) Developmental Towers on such date which
constitute at least 80% in number of all Developmental Towers on such date
(it being understood that the Borrower will execute and deliver Mortgages
within 60 days of the Second Amendment and Restatement Effective Date based
upon Total Tower Revenue and number of Developmental Towers as of September
30, 1999); all of the foregoing to be accomplished pursuant to the
procedures set forth in Annex C).
"Mortgages": each of the mortgages and deeds of trust made by any
---------
Loan Party in favor of, or for the benefit of, the Administrative Agent for
the benefit of the Lenders, substantially in the form of Exhibit D (with
such changes thereto as shall be advisable under the law of the
jurisdiction of in which such mortgage or deed of trust is to be recorded),
as the same may be amended, supplemented or otherwise modified from time to
time.
"Multiemployer Plan": a Plan that is a multiemployer plan as defined
------------------
in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": (a) in connection with any Asset Sale or any
-----------------
Recovery Event, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds received by way of deferred
payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but only as and when
received) of such Asset Sale or Recovery Event, net of attorneys' fees,
accountants' fees, investment banking fees, amounts required to be applied
to the repayment of Indebtedness secured by a Lien expressly permitted
hereunder on any asset which is the subject of such Asset Sale or Recovery
Event (other than any Lien pursuant to a Security Document) and other
customary fees and expenses (including commissions, transfer taxes and
other customary expenses) actually incurred in connection therewith and net
of taxes paid or reasonably estimated to be payable as a result thereof
(after taking into account any available tax credits or deductions and any
tax sharing arrangements) and (b) in connection with any issuance or sale
of equity securities or debt securities or
<PAGE>
19
instruments or the incurrence of loans, the cash proceeds received from
such issuance or incurrence, net of attorneys' fees, investment banking
fees, accountants' fees, underwriting discounts and commissions and other
customary fees and expenses (including commissions, transfer taxes and
other customary expenses) actually incurred in connection therewith.
"Non-Excluded Taxes": as defined in Section 2.18(a).
------------------
"Non-Tower EBITDA": for any period of twelve consecutive calendar
----------------
months, the difference of (i) Adjusted EBITDA for such period minus (ii)
the sum of (a) Developmental Tower EBITDA for such period plus (b) Mature
Tower EBITDA for such period.
"Non-U.S. Lender": as defined in Section 2.18(d).
---------------
"Notes": the collective reference to any promissory note evidencing
-----
Loans.
"Obligations": the unpaid principal of and interest on (including,
-----------
without limitation, interest accruing after the maturity of the Loans and
Reimbursement Obligations and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not
a claim for post-filing or post-petition interest is allowed in such
proceeding) the Loans and all other obligations and liabilities of the
Borrower to the Administrative Agent or to any Lender (or, in the case of
Specified Hedge Agreements, any Affiliate of any Lender), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with,
this Agreement, any other Loan Document, the Letters of Credit, any
Specified Hedge Agreement or any other document made, delivered or given in
connection herewith or therewith, whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including, without limitation, all fees, charges and disbursements of
counsel to the Administrative Agent or to any Lender that are required to
be paid by the Borrower pursuant hereto) or otherwise.
"Other Taxes": any and all present or future stamp or documentary
-----------
taxes or any other excise or property taxes, charges or similar levies
arising from any payment made hereunder or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement or any other
Loan Document.
"Participant": as defined in Section 10.6(b).
-----------
"Payment Office": the office designated from time to time by the
--------------
Administrative Agent, by written notice to the Borrower, as the Payment
Office.
"PBGC": the Pension Benefit Guaranty Corporation established
----
pursuant to Subtitle A of Title IV of ERISA (or any successor).
<PAGE>
20
"Person": an individual, partnership, corporation, limited liability
------
company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"Plan": at a particular time, any employee benefit plan that is
----
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Preferred Stock": the collective reference to the Series A Preferred
---------------
Stock, the Series B Preferred Stock, the Series C Preferred Stock and the
Series D Preferred Stock.
"Prepayment Date": as defined in Section 2.16(e).
---------------
"Pricing Grid": the pricing grid attached hereto as Annex A.
------------
"Pricing Ratio": (a) on the last day of any fiscal quarter ending on
-------------
or before the Transition Date, the ratio of (i) Consolidated Total Debt on
such last day to (ii) Annualized Adjusted EBITDA for the period of twelve
consecutive calendar months ended on such day, and (b) on the last day of
any fiscal quarter ending after the Transition Date, the ratio of (i)
Consolidated Total Debt on such last day to (ii) Consolidated EBITDA for
the period of four consecutive fiscal quarters ended on such day.
"Pro Forma Balance Sheet": as defined in Section 4.1(a).
-----------------------
"Pro Forma Consolidated Debt Service Coverage Ratio": for any
--------------------------------------------------
period, the ratio of (a) Consolidated EBITDA for such period to (b) Pro
Forma Consolidated Debt Service for such period.
"Pro Forma Consolidated Debt Service": for any period, the sum
-----------------------------------
(without duplication) of (a) Pro Forma Consolidated Interest Expense plus
(b) scheduled payments to be made during the next succeeding four fiscal
quarters of the Borrower and its Subsidiaries on account of principal of
Indebtedness of the Borrower or any of its Subsidiaries (including
scheduled principal payments in respect of the Term Loans and scheduled
reductions of the Revolving Credit Commitments).
"Pro Forma Consolidated Interest Expense": for any period, total cash
---------------------------------------
interest expense of the Borrower and its Subsidiaries for the next
succeeding four fiscal quarters with respect to all outstanding
Indebtedness of the Borrower and its Subsidiaries (including, without
limitation, all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing and net
costs under Hedge Agreements in respect of interest rates to the extent
such net costs are allocable to such period in accordance with GAAP).
"Projections": as defined in Section 6.2(c).
-----------
<PAGE>
21
"Property": any right or interest in or to property of any kind
--------
whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, Capital Stock.
"Recovery Event": any settlement of or payment in respect of any
--------------
property or casualty insurance claim or any condemnation proceeding
relating to any asset of Holdings, the Borrower or any of its Subsidiaries.
"Reference Lender": Deutsche Bank, New York Office.
----------------
"Register": as defined in Section 10.6(d).
--------
"Regulation U": Regulation U of the Board as in effect from time to
------------
time.
"Reimbursement Obligation": the obligation of the Borrower to
------------------------
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn
under Letters of Credit.
"Reinvestment Deferred Amount": with respect to any Reinvestment
----------------------------
Event, the aggregate Net Cash Proceeds received by Holdings, the Borrower
or any of its Subsidiaries in connection therewith that are not applied to
prepay the Term Loans or reduce the Revolving Credit Commitments pursuant
to Section 2.10(b) as a result of the delivery of a Reinvestment Notice.
"Reinvestment Event": any Asset Sale or Recovery Event in respect of
------------------
which the Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a Responsible
-------------------
Officer stating that no Default or Event of Default has occurred and is
continuing and that the Borrower (directly or indirectly through a
Subsidiary) intends and expects to use all or a specified portion of the
Net Cash Proceeds of an Asset Sale or Recovery Event to acquire assets
useful in its business or make capitalized repairs and improvements with
respect to such assets.
"Reinvestment Prepayment Amount": with respect to any Reinvestment
------------------------------
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire
assets useful in the Borrower's business.
"Reinvestment Prepayment Date": with respect to any Reinvestment
----------------------------
Event, the earlier of (a) the date occurring six months after such
Reinvestment Event and (b) the date on which the Borrower shall have
determined not to, or shall have otherwise ceased to, acquire assets useful
in the Borrower's business with all or any portion of the relevant
Reinvestment Deferred Amount.
<PAGE>
22
"Reorganization": with respect to any Multiemployer Plan, the
--------------
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c) of
----------------
ERISA, other than those events as to which the 30 day notice period is
waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC
Reg. (S) 4043.
"Required Lenders": at any time, the holders of more than 50% of the
----------------
sum of (a) the aggregate unpaid principal amount of the Term Loans then
outstanding and (b) the Total Revolving Credit Commitments then in effect
or, if the Revolving Credit Commitments have been terminated, the Total
Revolving Extensions of Credit then outstanding.
"Required Prepayment Lenders": the Majority Facility Lenders in
---------------------------
respect of each Facility.
"Requirement of Law": as to any Person, the Certificate of
------------------
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its Property or to
which such Person or any of its Property is subject.
"Responsible Officer": the chief executive officer, president or
-------------------
chief financial officer of the Borrower, but in any event, with respect to
financial matters, the chief financial officer of the Borrower.
"Restricted Payments": as defined in Section 7.6.
-------------------
"Revolving Credit Commitment": as to any Lender, the obligation of
---------------------------
such Lender, if any, to make Revolving Credit Loans and participate in
Letters of Credit, in an aggregate principal and/or face amount not to
exceed the amount set forth under the heading "Revolving Credit Commitment"
opposite such Lender's name (a) in the case of each Lender that became a
Revolving Credit Lender on the Closing Date, on Schedule 1 to the Lender
Addendum delivered by such Lender on the Closing Date (as such amount may
be changed pursuant to a Second Lender Addendum executed by such Lender on
the Second Amendment and Restatement Effective Date), (b) in the case of
each Lender that has become or shall become a Revolving Credit Lender
pursuant to an Assignment and Acceptance, on Schedule 1 to such Assignment
and Acceptance (as such amount may be changed pursuant to a Second Lender
Addendum executed by such Lender on the Second Amendment and Restatement
Effective Date), and (c) in the case of each Lender that becomes a
Revolving Credit Lender on the Second Amendment and Restatement Effective
Date, and each Revolving Credit Lender whose Revolving Credit Commitment is
increased on the Commitment Increase Date, on Schedule 1 to the Second
Lender Addendum executed and delivered by such Lender on the Second
Amendment and Restatement Effective Date (which commitment or commitment
increase, as the case may
<PAGE>
23
be, shall become available on the Commitment Increase Date), in each case,
as the same may be changed from time to time pursuant to the terms hereof.
The aggregate amount of the Total Revolving Credit Commitments as of the
Commitment Increase Date will be $225,000,000.00.
"Revolving Credit Commitment Period": the period from and including
----------------------------------
the Closing Date to the Revolving Credit Termination Date.
"Revolving Credit Lender": each Lender that has a Revolving Credit
-----------------------
Commitment or that is the holder of Revolving Credit Loans.
"Revolving Credit Loans": as defined in Section 2.4.
----------------------
"Revolving Credit Percentage": as to any Revolving Credit Lender at
---------------------------
any time, the percentage which such Lender's Revolving Credit Commitment
then constitutes of the Total Revolving Credit Commitments (or, at any time
after the Revolving Credit Commitments shall have expired or terminated,
the percentage which the aggregate amount of such Lender's Revolving
Extensions of Credit then outstanding constitutes of the aggregate amount
of the Revolving Extensions of Credit then outstanding).
"Revolving Credit Termination Date": December 31, 2004.
---------------------------------
"Revolving Extensions of Credit": as to any Revolving Credit Lender
------------------------------
at any time, an amount equal to the sum of (a) the aggregate principal
amount of all Revolving Credit Loans made by such Lender then outstanding
and (b) such Lender's Revolving Credit Percentage of the L/C Obligations
then outstanding.
"SBA Brazil": SBA Telecommunicacoes do Brasil, LTDA, a company
----------
organized under the laws of Brazil.
"SEC": the Securities and Exchange Commission (or successors
---
thereto or an analogous Governmental Authority).
"Second Amendment and Restatement Effective Date": the date on which
-----------------------------------------------
each of the conditions precedent specified in Section 5.3 shall have been
satisfied.
"Second Lender Addendum": each Second Lender Addendum, substantially
----------------------
in the form of Exhibit L, to be executed on the Second Amendment and
Restatement Effective Date by (a) each Lender that becomes a Revolving
Credit Lender on the Second Amendment and Restatement Effective Date, (b)
each Lender whose Revolving Credit Commitment is increased on the
Commitment Increase Date and (c) each additional Lender, if any, required
to constitute the Required Lenders.
"Security Documents": the collective reference to the Guarantee and
------------------
Collateral Agreement, the Mortgages and all other security documents
hereafter delivered to the
<PAGE>
24
Administrative Agent granting a Lien on any Property of any Person to
secure the obligations and liabilities of any Loan Party under any Loan
Document.
"Senior Discount Notes": the 12% Senior Discount Notes of Holdings
---------------------
due 2008 in the initial aggregate face amount of $269,000,000.
"Senior Discount Notes Indenture": the Indenture dated as of March 2,
-------------------------------
1998, as amended by the Senior Discount Notes Indenture Amendment, between
Holdings and State Street Bank and Trust Company, as trustee, together with
all instruments and other agreements entered into by Holdings in connection
therewith, as in effect on the date hereof.
"Senior Discount Notes Indenture Amendment": the Amendment, dated as
-----------------------------------------
of October 28, 1999, between Holdings and State Street Bank and Trust
Company, as trustee.
"Series A Preferred Stock": the 4% Series A Convertible Preferred
------------------------
Stock, par value $0.01 per share, of Holdings.
"Series B Preferred Stock": the 4% Series B Redeemable Preferred
------------------------
Stock, par value $0.01 per share, of Holdings issuable upon conversion of
the Series A Preferred Stock.
"Series C Preferred Stock": the 4% Series C Convertible Preferred
------------------------
Stock, par value $0.01 per share, of Holdings.
"Series D Preferred Stock": the 4% Series D Redeemable Preferred
------------------------
Stock, par value $0.01 per share, of Holdings issuable upon conversion of
the Series C Preferred Stock.
"Single Employer Plan": any Plan that is covered by Title IV of
--------------------
ERISA, but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, as of any date of
-------
determination, (a) the amount of the "present fair saleable value" of the
assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise", as of such date, as
such quoted terms are determined in accordance with applicable federal and
state laws governing determinations of the insolvency of debtors, (b) the
present fair saleable value of the assets of such Person will, as of such
date, be greater than the amount that will be required to pay the liability
of such Person on its debts as such debts become absolute and matured, (c)
such Person will not have, as of such date, an unreasonably small amount of
capital with which to conduct its business, and (d) such Person will be
able to pay its debts as they mature. For purposes of this definition, (i)
"debt" means liability on a "claim", and (ii) "claim" means any (x) right
to payment, whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed,
<PAGE>
25
contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (y) right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured or unmatured, disputed, undisputed, secured or
unsecured.
"Specified Hedge Agreement": any Hedge Agreement (a) entered into by
-------------------------
(i) the Borrower or any of its Subsidiaries and (ii) any Lender or any
Affiliate thereof, as counterparty and (b) which has been designated by
such Lender and the Borrower, by notice to the Administrative Agent and the
Syndication Agent, as a Specified Hedge Agreement.
"Specified New Equity Securities": common or preferred stock of
-------------------------------
Holdings issued and sold within six months after the Second Amendment and
Restatement Effective Date; provided that, in the case of preferred stock,
--------
such preferred stock shall not provide for the payment of any cash
dividends and shall not be mandatorily redeemable prior to the date which
is one year after the final maturity date of the Tranche B Term Loans.
"Subsidiary": as to any Person, a corporation, partnership, limited
----------
liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such
other ownership interests having such power only by reason of the happening
of a contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person (it
being understood that an Excluded Entity shall not be a Subsidiary).
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Borrower.
"Subsidiary Guarantor": each Subsidiary of Holdings other than the
--------------------
Borrower and any Excluded Foreign Subsidiary.
"Term Loans": the collective reference to Tranche A Term Loans and
----------
Tranche B Term Loans.
"Term Loan Commitments": the collective reference to the Tranche A
---------------------
Term Loan Commitments and the Tranche B Term Loan Commitments.
"Term Loan Lenders": the collective reference to the Tranche A Term
-----------------
Loan Lenders and the Tranche B Term Loan Lenders.
"Total Capitalization": as at any date, the sum of (i) shareholder's
--------------------
equity, (ii) Consolidated Total Debt of the Borrower and its Subsidiaries
and (iii) 90% of all accumulated depreciation expense, in each case, as
reflected in a consolidated balance
<PAGE>
26
sheet of the Borrower and its Subsidiaries as at such date prepared in
accordance with GAAP.
"Total Revolving Credit Commitments": at any time, the aggregate
----------------------------------
amount of the Revolving Credit Commitments then in effect.
"Total Revolving Extensions of Credit": at any time, the aggregate
------------------------------------
amount of the Revolving Extensions of Credit of the Revolving Credit
Lenders outstanding at such time.
"Total Tower Revenue": for any period, the Borrower's revenue from
-------------------
all Towers for such period, plus the Borrower's revenue for such period
from its lease/sublease business and its business of leasing or managing
antennae space on buildings, Towers or other structures.
"Tower": any wireless transmission tower, and related assets that are
-----
located on the site of such wireless transmission tower, owned by the
Borrower or any of its Subsidiaries or leased by the Borrower or any of its
Subsidiaries pursuant to a lease required to be classified and accounted
for as a capital lease on a balance sheet of the Borrower and its
Subsidiaries under GAAP.
"Tower Company": 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.
"Tower Cost": with respect to any Tower, the aggregate cost of
----------
construction thereof, plus the aggregate cost of all zoning and other
regulatory approvals required for the construction and/or operation of such
Tower, plus, without duplication, the cost of Capital Expenditures with
respect to such Tower.
"Tranche A Term Loan": as defined in Section 2.1.
-------------------
"Tranche A Term Loan Commitment": as to any Tranche A Term Loan
------------------------------
Lender, the obligation of such Lender, if any, to make a Tranche A Term
Loan to the Borrower hereunder in a principal amount not to exceed the
amount set forth under the heading "Term Loan Commitment" opposite such
Lender's name on Schedule 1 to the Lender Addendum delivered by such
Lender, or, as the case may be, in the Assignment and Acceptance pursuant
to which such Lender became a party hereto, as the same may be changed from
time to time pursuant to the terms hereof. The original aggregate amount of
the Tranche A Term Loan Commitments is $25,000,000.
"Tranche A Term Loan Lender": each Lender that has a Tranche A Term
--------------------------
Loan Commitment or is the holder of a Tranche A Term Loan.
<PAGE>
27
"Tranche A Term Loan Percentage": as to any Tranche A Term Loan
------------------------------
Lender at any time, the percentage which such Lender's Tranche A Term Loan
Commitment then constitutes of the aggregate Tranche A Term Loan
Commitments (or, at any time after the Closing Date, the percentage which
the aggregate principal amount of such Lender's Tranche A Term Loans then
outstanding constitutes of the aggregate principal amount of the Tranche A
Term Loans then outstanding).
"Tranche B Term Loan": as defined in Section 2.1.
-------------------
"Tranche B Term Loan Commitment": as to any Tranche B Term Loan
------------------------------
Lender, the obligation of such Lender, if any, to make a Tranche B Term
Loan to the Borrower hereunder in a principal amount not to exceed the
amount set forth under the heading "Tranche B Term Loan Commitment"
opposite such Lender's name on Schedule 1 to the Second Lender Addendum
delivered by such Lender, or, as the case may be, in the Assignment and
Acceptance pursuant to which such Lender became a party hereto, as the same
may be changed from time to time pursuant to the terms hereof. The original
aggregate amount of the Tranche B Term Loan Commitments is $50,000,000.
"Tranche B Term Loan Lender": each Lender that has a Tranche B Term
--------------------------
Loan Commitment or is the holder of a Tranche B Term Loan.
"Tranche B Term Loan Percentage": as to any Tranche B Term Loan
------------------------------
Lender at any time, the percentage which such Lender's Tranche B Term Loan
Commitment then constitutes of the aggregate Tranche B Term Loan
Commitments (or, at any time after the Second Amendment and Effective Date,
the percentage which the aggregate principal amount of such Lender's
Tranche B Term Loans then outstanding constitutes of the aggregate
principal amount of the Tranche B Term Loans then outstanding).
"Transferee": as defined in Section 10.14.
----------
"Transition Date": January 1, 2002.
---------------
"Type": as to any Loan, its nature as a Base Rate Loan or a
----
Eurodollar Loan.
"Wholly Owned Subsidiary": as to any Person, any other Person all of
-----------------------
the Capital Stock of which (other than directors' qualifying shares
required by law) is owned by such Person directly and/or through other
Wholly Owned Subsidiaries.
"Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor that
---------------------------------
is a Wholly Owned Subsidiary of Holdings.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
-----------------------------
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.
<PAGE>
28
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to Holdings, the Borrower and its Subsidiaries not
defined in Section 1.1 and accounting terms partly defined in Section 1.1, to
the extent not defined, shall have the respective meanings given to them under
GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(e) Each reference to the "Credit Agreement" in any Loan Document
shall be deemed to be a reference to this Second Amended and Restated Credit
Agreement.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Term Loan Commitments. The entities which were Tranche A Term
---------------------
Loan Lenders on the Closing Date made term loans ("Tranche A Term Loans") to the
--------------------
Borrower on the Closing Date in an aggregate principal amount equal to
$25,000,000, and the Tranche A Term Loans will continue to be outstanding
hereunder from and after the Second Amendment and Restatement Effective Date.
Subject to the terms and conditions hereof, each Tranche B Term Loan Lender
severally agrees to make a term loan (a "Tranche B Term Loan") to the Borrower
-------------------
on the Second Amendment and Restatement Effective Date in an amount not to
exceed the lesser of (a) the amount of the Tranche B Term Loan Commitment of
such Lender and (b) such Tranche B Term Loan Lender's Tranche B Loan Percentage
of the difference of (i) the Asset Coverage Test Amount less (ii) the sum of (A)
the Total Revolving Extension of Credit on the Second Amendment and Restatement
Effective Date plus (B) the aggregate outstanding principal amount of the
Tranche A Term Loans. The Term Loans may from time to time be Eurodollar Loans
or Base Rate Loans, as determined by the Borrower and notified to the
Administrative Agent in accordance with Sections 2.2 and 2.11.
2.2 Procedure for Tranche B Term Loan Borrowing. The Borrower shall
-------------------------------------------
give the Administrative Agent irrevocable notice (which notice must be received
by the Administrative Agent prior to 10:00 A.M., New York City time, one
Business Day prior to the anticipated Second Amendment and Restatement Effective
Date) requesting that the Tranche B Term Loan Lenders make the Tranche B Term
Loans on the Second Amendment and Restatement Effective Date and specifying the
amount to be borrowed. The Tranche B Term Loans made on the Second Amendment and
Restatement Effective Date shall initially be Base Rate Loans, and no Tranche B
Term Loan may be converted into or continued as a Eurodollar Loan having an
Interest Period in excess of one month prior to the date which is 60 days after
the Second Amendment and Restatement Effective Date. Upon receipt of such notice
the Administrative
<PAGE>
29
Agent shall promptly notify each Tranche B Term Loan Lender thereof. Not later
than 12:00 Noon, New York City time, on the Second Amendment and Restatement
Effective Date each Tranche B Term Loan Lender shall make available to the
Administrative Agent at the Funding Office an amount in immediately available
funds equal to the Tranche B Term Loan or Tranche B Term Loans to be made by
such Lender. The Administrative Agent shall make available to the Borrower the
aggregate of the amounts made available to the Administrative Agent by the
Tranche B Term Loan Lenders in like funds.
2.3 Repayment of Term Loans. (a) The Tranche A Term Loan of each
-----------------------
Tranche A Term Loan Lender shall mature in consecutive quarterly installments,
commencing on March 31, 2001, each of which shall be in an amount equal to such
Lender's Tranche A Term Loan Percentage multiplied by the amount set forth below
opposite such installment:
<TABLE>
<CAPTION>
Quarterly Installment Principal Amount
--------------------- ----------------
<S> <C>
March 31, 2001 $ 625,000
June 30, 2001 $ 625,000
September 30, 2001 $ 625,000
December 31, 2001 $ 625,000
March 31, 2002 $ 625,000
June 30, 2002 $ 625,000
September 30, 2002 $ 625,000
December 31, 2002 $ 625,000
March 31, 2003 $1,875,000
June 30, 2003 $1,875,000
September 30, 2003 $1,875,000
December 30, 2003 $1,875,000
March 31, 2004 $3,125,000
June 30, 2004 $3,125,000
September 30, 2004 $3,125,000
December 31, 2004 $3,125,000
</TABLE>
(b) The Tranche B Term Loan of each Tranche B Term Loan Lender shall
mature in consecutive quarterly installments, commencing on March 31, 2002, each
of which shall be in an amount equal to such Lender's Tranche B Term Loan
Percentage multiplied by the amount set forth below opposite such installment:
<TABLE>
<CAPTION>
Quarterly Installment Principal Amount
--------------------- ----------------
<S> <C>
March 31, 2002 $ 125,000
June 30, 2002 $ 125,000
September 30, 2002 $ 125,000
December 31, 2002 $ 125,000
March 31, 2003 $ 125,000
June 30, 2003 $ 125,000
September 30, 2003 $ 125,000
</TABLE>
<PAGE>
30
<TABLE>
<CAPTION>
Quarterly Installment Principal Amount
--------------------- ----------------
<S> <C>
December 30, 2003 $ 125,000
March 31, 2004 $ 125,000
June 30, 2004 $ 125,000
September 30, 2004 $ 125,000
December 31, 2004 $ 125,000
March 31, 2005 $12,125,000
June 30, 2005 $12,125,000
September 30, 2005 $12,125,000
December 31, 2005 $12,125,000
</TABLE>
2.4 Revolving Credit Commitments. (a) Subject to the terms and
----------------------------
conditions hereof, each Revolving Credit Lender severally agrees to make
revolving credit loans ("Revolving Credit Loans") to the Borrower from time to
----------------------
time during the Revolving Credit Commitment Period in an aggregate principal
amount at any one time outstanding which, when added to such Lender's Revolving
Credit Percentage of the L/C Obligations then outstanding, does not exceed the
lesser of (i) the amount of such Lender's Revolving Credit Commitment and (ii)
prior to the Transition Date, the product of (A) such Lender's Revolving Credit
Percentage and (B) the difference of (x) the Asset Coverage Test Amount, as most
recently calculated prior to the date of such Revolving Credit Loans pursuant to
Section 6.2(h), less (y) the aggregate outstanding principal amount of the Term
Loans. During the Revolving Credit Commitment Period the Borrower may use the
Revolving Credit Commitments by borrowing, prepaying the Revolving Credit Loans
in whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof. The Revolving Credit Loans may from time to time be
Eurodollar Loans or Base Rate Loans, as determined by the Borrower and notified
to the Administrative Agent in accordance with Sections 2.5 and 2.11, provided
--------
that no Revolving Credit Loan shall be made as a Eurodollar Loan after the day
that is one month prior to the Revolving Credit Termination Date.
(b) Revolving Credit Loans made under (and as defined in) the
Existing Credit Agreement prior to the Second Amendment and Restatement
Effective Date and outstanding on such date shall constitute Revolving Credit
Loans hereunder.
2.5 Procedure for Revolving Credit Borrowing. The Borrower may
----------------------------------------
borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day, provided that the Borrower shall give the
--------
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 12:00 Noon, New York City time, (a) three Business
Days prior to the requested Borrowing Date, in the case of Eurodollar Loans, or
(b) one Business Day prior to the requested Borrowing Date, in the case of Base
Rate Loans), specifying (i) the amount and Type of Revolving Credit Loans to be
borrowed, (ii) the requested Borrowing Date and (iii) in the case of Eurodollar
Loans, the length of the initial Interest Period therefor. Each borrowing under
the Revolving Credit Commitments shall be in an amount equal to (x) in the case
of Base Rate Loans, $1,000,000 or a whole multiple thereof (or, if the then
aggregate Available Revolving Credit Commitments are less than
<PAGE>
31
$1,000,000, such lesser amount) and (y) in the case of Eurodollar Loans,
$2,500,000 or a whole multiple of $500,000 in excess thereof. Upon receipt of
any such notice from the Borrower, the Administrative Agent shall promptly
notify each Revolving Credit Lender thereof. Each Revolving Credit Lender will
make the amount of its pro rata share of each borrowing available to the
--- ----
Administrative Agent for the account of the Borrower at the Funding Office prior
to 12:00 Noon, New York City time, on the Borrowing Date requested by the
Borrower in funds immediately available to the Administrative Agent. The
Administrative Agent shall make available to the Borrower the aggregate of the
amounts made available to the Administrative Agent by the Revolving Credit
Lenders in like funds as received by the Administrative Agent.
2.6 Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
------------------------------------
unconditionally promises to pay to the Administrative Agent for the account of
the appropriate Revolving Credit Lender or Term Loan Lender, as the case may be,
the then unpaid principal amount of each Revolving Credit Loan of such Revolving
Credit Lender on the Revolving Credit Termination Date (or such earlier date on
which the Loans become due and payable pursuant to Section 8) and the principal
amount of each Term Loan of such Term Loan Lender in installments according to
the applicable amortization schedule set forth in Section 2.3. The Borrower
hereby further agrees to pay interest on the unpaid principal amount of the
Loans from time to time outstanding from the date hereof until payment in full
thereof at the rates per annum, and on the dates, set forth in Section 2.13.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrower to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(c) The Administrative Agent, on behalf of the Borrower, shall
maintain the Register pursuant to Section 10.6(d), and a subaccount therein for
each Lender, in which shall be recorded the amount of each Loan made hereunder
and any Note evidencing such Loan, the Type thereof and each Interest Period
applicable thereto, the amount of any principal or interest due and payable or
to become due and payable from the Borrower to each Lender hereunder and both
the amount of any sum received by the Administrative Agent hereunder from the
Borrower and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 2.6(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
----- -----
obligations of the Borrower therein recorded; provided, however, that the
-------- -------
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made to
such Borrower by such Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the Administrative
Agent by any Lender, the Borrower will execute and deliver to such Lender a
promissory note of the Borrower evidencing any Term Loans or Revolving Credit
Loans of such Lender, substantially in
<PAGE>
32
in the forms of Exhibit G-1 or G-2, respectively, with appropriate insertions as
to date and principal amount.
2.7 Commitment Fees, etc. The Borrower agrees to pay to the
---------------------
Administrative Agent for the account of each Revolving Credit Lender a
commitment fee for the period from and including the Closing Date to the last
day of the Revolving Credit Commitment Period, computed at the Commitment Fee
Rate on the average daily amount of the Available Revolving Credit Commitment of
such Lender during the period for which payment is made, payable quarterly in
arrears on the last day of each March, June, September and December and on the
Revolving Credit Termination Date, commencing on the first of such dates to
occur after the date hereof; provided that on and after the Second Amendment
--------
and Restatement Effective Date, such commitment fee shall be based on the
Available Revolving Credit Commitment of such Lender as of the Commitment
Increase Date.
(b) The Borrower agrees to pay to LBI the fees in the amounts and on
the dates previously agreed to in writing by the Borrower and LBI.
(c) The Borrower agrees to pay to the Administrative Agent the fees
in the amounts and on the dates from time to time agreed to in writing by the
Borrower and the Administrative Agent.
2.8 Optional Termination or Reduction of Revolving Credit
-----------------------------------------------------
Commitments; Scheduled Reductions of Revolving Credit Commitments. (a) The
- -----------------------------------------------------------------
Borrower shall have the right, upon not less than three Business Days' notice to
the Administrative Agent, to terminate the Revolving Credit Commitments or, from
time to time, to reduce the amount of the Revolving Credit Commitments; provided
--------
that no such termination or reduction of Revolving Credit Commitments shall be
permitted if, after giving effect thereto and to any prepayments of the
Revolving Credit Loans made on the effective date thereof, the Total Revolving
Extensions of Credit would exceed the Total Revolving Credit Commitments. Any
such reduction shall be in an amount equal to $1,000,000, or a whole multiple
thereof, and shall reduce permanently the Revolving Credit Commitments then in
effect.
(b) The Revolving Credit Commitments shall be reduced automatically
in quarterly installments, commencing on March 31, 2001, by the percentage of
the Total Revolving Credit Commitments set forth below opposite such period:
Amount of Reduction of
Total Revolving
Quarterly Installment Credit Commitments
--------------------- ------------------
March 31, 2001 2.5%
June 30, 2001 2.5%
September 30, 2001 2.5%
December 31, 2001 2.5%
March 31, 2002 5.0%
June 30, 2002 5.0%
<PAGE>
33
Amount of Reduction of
Total Revolving
Quarterly Installment Credit Commitments
--------------------- ------------------
September 30, 2002 5.0%
December 31, 2002 5.0%
March 31, 2003 7.5%
June 30, 2003 7.5%
September 30, 2003 7.5%
December 31, 2003 7.5%
March 31, 2004 10.0%
June 30, 2004 10.0%
September 30, 2004 10.0%
December 31, 2004 10.0%
(c) Any optional, scheduled or mandatory reduction of the Revolving
Credit Commitments pursuant to Section 2.8 or 2.10 shall be accompanied by
prepayment of the Revolving Credit Loans to the extent, if any, that the Total
Revolving Extensions of Credit exceed the amount of the Total Revolving Credit
Commitments as so reduced; and until the Transition Date, if any Asset Coverage
Test Certificate delivered pursuant to Section 6.2(h) shows that, as of the date
thereof, the Total Revolving Extensions of Credit, together with the aggregate
principal amount of outstanding Term Loans, exceeded the Asset Coverage Test
Amount, the Borrower shall prepay Revolving Credit Loans (or, if insufficient
Revolving Credit Loans are then outstanding, the Term Loans to the extent of
such insufficiency) on the date of delivery of such Asset Coverage Test
Certificate, to the extent, if any, that the Total Revolving Extensions of
Credit, together with the aggregate principal amount of outstanding Term Loans,
exceed the Asset Coverage Test Amount; provided that, in each case, if the
--------
aggregate principal amount of Revolving Credit Loans (in the case of clause (i))
or Loans (in the case of clause (ii)) then outstanding is less than the amount
of either such excess (because L/C Obligations constitute a portion thereof),
the Borrower shall, to the extent of the balance of such excess, replace
outstanding Letters of Credit and/or deposit an amount in cash in a cash
collateral account established with the Administrative Agent for the benefit of
the Lenders on terms and conditions reasonably satisfactory to the
Administrative Agent. Each prepayment of Eurodollar Loans shall be accompanied
by accrued interest to the date of such prepayment on the amount prepaid.
2.9 Optional Prepayments. The Borrower may at any time and from time
--------------------
to time prepay the Loans, in whole or in part, without premium or penalty, upon
irrevocable notice delivered to the Administrative Agent at least three Business
Days prior thereto in the case of Eurodollar Loans and at least one Business Day
prior thereto in the case of Base Rate Loans, which notice shall specify the
date and amount of prepayment and whether the prepayment is of Eurodollar Loans
or Base Rate Loans; provided, that if a Eurodollar Loan is prepaid on any day
--------
other than the last day of the Interest Period applicable thereto, the Borrower
shall also pay any amounts owing pursuant to Section 2.19. Upon receipt of any
such notice the Administrative
<PAGE>
34
Agent shall promptly notify each relevant Lender thereof. If any such notice is
given, the amount specified in such notice shall be due and payable on the date
specified therein, together with (except in the case of Revolving Credit Loans
that are Base Rate Loans) accrued interest to such date on the amount prepaid.
Optional partial prepayments of Term Loans and Revolving Credit Loans shall be
in an aggregate principal amount of $1,000,000 or a whole multiple thereof.
2.10 Mandatory Prepayments and Commitments Reductions. (a) Unless the
------------------------------------------------
Required Prepayment Lenders shall otherwise agree, if any Capital Stock shall be
issued (other than (i) the issuance of common stock of Holdings upon the
exercise of the common stock options of Holdings held by directors, officers and
employees of Holdings, the Borrower and its Subsidiaries and (ii) Specified New
Equity Securities), or Indebtedness incurred, by Holdings, the Borrower or any
of its Subsidiaries, an amount equal to 100% of the Net Cash Proceeds thereof
shall be applied on the date of such issuance or incurrence toward the
prepayment of the Term Loans and the repayment of Revolving Credit Loans (which
repayment shall not be required to be accompanied by any reduction of the
Revolving Credit Commitments) in accordance with Section 2.16(d); provided, that
--------
the proceeds of any issuance of Capital Stock shall not be applied to prepay the
Tranche B Term Loans.
(b) Unless the Required Prepayment Lenders shall otherwise agree, if
on any date Holdings, the Borrower or any of its Subsidiaries shall receive Net
Cash Proceeds from any Asset Sale or Recovery Event then, unless a Reinvestment
Notice shall be delivered in respect thereof, such Net Cash Proceeds shall be
applied on such date toward the prepayment of the Term Loans and the permanent
reduction of the Revolving Credit Commitments in accordance with Section
2.16(d); provided, that, notwithstanding the foregoing, the aggregate Net Cash
--------
Proceeds of Asset Sales that may be held by the Borrower for reinvestment and
excluded from the foregoing requirement pursuant to a Reinvestment Notice shall
not exceed $5,000,000 at any time and on each Reinvestment Prepayment Date, an
amount equal to the Reinvestment Prepayment Amount with respect to the relevant
Reinvestment Event shall be applied toward the prepayment of the Term Loans and
the reduction of the Revolving Credit Commitments in accordance with Section
2.16(d).
(c) Unless the Required Prepayment Lenders shall otherwise agree, if,
for any fiscal year of the Borrower commencing with the fiscal year ending
December 31, 2000, there shall be Excess Cash Flow, the Borrower shall, on the
relevant Excess Cash Flow Application Date, apply 75% of such Excess Cash Flow
toward the prepayment of the Term Loans and the permanent reduction of the
Revolving Credit Commitments in accordance with Section 2.16(d). Each such
prepayment and commitment reduction shall be made on a date (an "Excess Cash
-----------
Flow Application Date") no later than five days after the earlier of the date
- ---------------------
on which the financial statements of the Borrower referred to in Section 6.1(a),
for the fiscal year with respect to which such prepayment is made, are required
to be delivered to the Lenders and the date such financial statements are
actually delivered.
(d) Amounts required by this Section to be applied to the prepayment
of the Tranche B Term Loans and/or the Tranche A Term Loans and the permanent
reduction of the Revolving Credit Commitments shall be allocated between the
Revolving Credit Facility and the
<PAGE>
35
Tranche A Term Loan Facility and, if applicable, the Tranche B Term Loan
Facility, pro rata based upon the aggregate principal amount of Term Loans
--- ----
outstanding under the relevant Facility or Facilities and the aggregate amount
of the Revolving Credit Commitments. Any such permanent reduction of the
Revolving Credit Commitments shall be accompanied by prepayment of the Revolving
Credit Loans to the extent, if any, that the Total Revolving Extensions of
Credit exceed the amount of the Total Revolving Credit Commitments as so
reduced, provided that if the aggregate principal amount of Revolving Credit
--------
Loans then outstanding is less than the amount of such excess (because L/C
Obligations constitute a portion thereof), the Borrower shall, to the extent of
the balance of such excess, replace outstanding Letters of Credit and/or deposit
an amount in cash in a cash collateral account established with the
Administrative Agent for the benefit of the Lenders on terms and conditions
reasonably satisfactory to the Administrative Agent. Each prepayment of the
Loans under this Section (except in the case of Revolving Credit Loans that are
Base Rate Loans) shall be accompanied by accrued interest to the date of such
prepayment on the amount prepaid.
2.11 Conversion and Continuation Options. (a) The Borrower may elect
-----------------------------------
from time to time to convert Eurodollar Loans to Base Rate Loans by giving the
Administrative Agent at least two Business Days' prior irrevocable notice of
such election, provided that any such conversion of Eurodollar Loans may
--------
only be made on the last day of an Interest Period with respect thereto. The
Borrower may elect from time to time to convert Base Rate Loans to Eurodollar
Loans by giving the Administrative Agent at least three Business Days' prior
irrevocable notice of such election (which notice shall specify the length of
the initial Interest Period therefor), provided that no Base Rate Loan under a
--------
particular Facility may be converted into a Eurodollar Loan when any Event of
Default has occurred and is continuing and the Administrative Agent or the
Majority Facility Lenders in respect of such Facility have determined in its or
their sole discretion not to permit such conversions or after the date that is
one month prior to the final scheduled termination or maturity date of such
Facility. Upon receipt of any such notice the Administrative Agent shall
promptly notify each relevant Lender thereof.
(b) Any Eurodollar Loan may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower giving
irrevocable notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in Section 1.1, of
the length of the next Interest Period to be applicable to such Loans, provided
--------
that no Eurodollar Loan under a particular Facility may be continued as such
when any Event of Default has occurred and is continuing and the Administrative
Agent has or the Majority Facility Lenders in respect of such Facility have
determined in its or their sole discretion not to permit such continuations or
after the date that is one month prior to the final scheduled termination or
maturity date of such Facility; and provided, further, that if the Borrower
-------- -------
shall fail to give any required notice as described above in this paragraph or
if such continuation is not permitted pursuant to the preceding proviso such
Loans shall be automatically converted to Base Rate Loans on the last day of
such then expiring Interest Period. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.
<PAGE>
36
2.12 Minimum Amounts and Maximum Number of Eurodollar Tranches.
---------------------------------------------------------
Notwithstanding anything to the contrary in this Agreement, all borrowings,
conversions, continuations and optional prepayments of Eurodollar Loans
hereunder and all selections of Interest Periods hereunder shall be in such
amounts and be made pursuant to such elections so that, after giving effect
thereto, the aggregate principal amount of the Eurodollar Loans comprising each
Eurodollar Tranche shall be equal to $2,500,000 or a whole multiple of $500,000
in excess thereof and no more than 15 Eurodollar Tranches shall be outstanding
at any one time.
2.13 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall
--------------------------------
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum equal
to the Base Rate plus the Applicable Margin.
(c) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum that is equal to (x) in the case of the Loans, the rate that
would otherwise be applicable thereto pursuant to the foregoing provisions of
this Section plus 2% or (y) in the case of Reimbursement Obligations, the rate
----
applicable to Base Rate Loans under the Revolving Credit Facility plus 2%, and
----
if all or a portion of any interest payable on any Loan or Reimbursement
Obligation or any commitment fee or other amount payable hereunder shall not be
paid when due (whether at the stated maturity, by acceleration or otherwise),
such overdue amount shall bear interest at a rate per annum equal to the rate
then applicable to Base Rate Loans under the relevant Facility plus 2% (or, in
----
the case or any such other amounts that do not relate to a particular Facility,
the rate then applicable to Base Rate Loans under the Revolving Credit Facility
plus 2%), in each case, with respect to clauses (i) and (ii) above, from the
- ----
date of such non-payment until such amount is paid in full (after as well as
before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this Section
--------
shall be payable from time to time on demand.
2.14 Computation of Interest and Fees. (a) Interest, fees and
--------------------------------
commissions payable pursuant hereto shall be calculated on the basis of a 360-
day year for the actual days elapsed, except that, with respect to Base Rate
Loans the rate of interest on which is calculated on the basis of the Prime
Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-,
as the case may be) day year for the actual days elapsed. The Administrative
Agent shall as soon as practicable notify the Borrower and the relevant Lenders
of each determination of a Eurodollar Rate. Any change in the interest rate on a
Loan resulting from a change in the Base Rate or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Administrative Agent shall as
<PAGE>
37
soon as practicable notify the Borrower and the relevant Lenders of the
effective date and the amount of each such change in interest rate.
(d) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 2.13(a).
2.15 Inability to Determine Interest Rate. If prior to the first day
------------------------------------
of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for such
Interest Period, or
(b) the Administrative Agent shall have received notice from the
Majority Facility Lenders in respect of the relevant Facility that the
Eurodollar Rate determined or to be determined for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (as
conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the relevant Lenders as soon as practicable thereafter. If such
notice is given (x) any Eurodollar Loans under the relevant Facility requested
to be made on the first day of such Interest Period shall be made as Base Rate
Loans, (y) any Loans under the relevant Facility that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be
continued as Base Rate Loans and (z) any outstanding Eurodollar Loans under the
relevant Facility shall be converted, on the last day of the then current
Interest Period with respect thereto, to Base Rate Loans. Until such notice has
been withdrawn by the Administrative Agent, no further Eurodollar Loans under
the relevant Facility shall be made or continued as such, nor shall the Borrower
have the right to convert Loans under the relevant Facility to Eurodollar Loans.
2.16 Pro Rata Treatment and Payments. (a) Each borrowing by the
-------------------------------
Borrower from the Lenders hereunder, each payment by the Borrower on account of
any commitment fee and any reduction of the Commitments of the Lenders shall be
made pro rata according to the respective Tranche A Term Loan Percentages,
--- ----
Tranche B Term Loan Percentages or Revolving Credit Percentages, as the case may
be, of the relevant Lenders. Each payment (other than prepayments) in respect of
principal or interest in respect of the Loans, each payment in respect of fees
payable hereunder, and each payment in respect of Reimbursement Obligations,
shall be applied to the amounts of such obligations owing to the Lenders pro
---
rata according to the respective amounts then due and owing to the Lenders.
- ----
<PAGE>
38
(b) Except as otherwise provided in Section 2.16(d), each payment
(including each prepayment) by the Borrower on account of principal and interest
on the Term Loans shall be allocated among the Term Loan Lenders pro rata based
--- ----
on the outstanding principal amounts of the Term Loans then held by the Term
Loan Lenders, and shall be applied to the installments of the Term Loans pro
---
rata based on the remaining outstanding principal amounts of such installments;
- ----
provided, that mandatory prepayments of the Term Loans from the proceeds of any
- --------
issuance of Capital Stock shall not be applied to prepay the Tranche B Term
Loans. Amounts prepaid on account of the Term Loans may not be reborrowed.
(c) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Revolving Credit Loans shall be
allocated among the Revolving Credit Lenders pro rata based on the outstanding
--- ----
principal amounts of the Revolving Credit Loans then held by the Revolving
Credit Lenders.
(d) Notwithstanding anything to the contrary in Sections 2.9, 2.10 or
2.16(b), so long as any Tranche A Term Loans are outstanding, each Tranche B
Term Loan Lender may, at its option, decline up to 100% of the portion of any
optional prepayment or mandatory payment applicable to the Tranche B Term Loans
of such Lender; provided that the aggregate amount of optional and mandatory
prepayments declined by the Tranche B Term Loan Lenders may not exceed the
aggregate outstanding principal amount of the Tranche A Term Loans; accordingly,
with respect to the amount of any optional prepayment described in Section 2.9
or mandatory prepayment described in Section 2.10 that is allocated to Tranche B
Term Loans (such amounts, respectively, the "Optional Prepayment Amount" and the
--------------------------
"Mandatory Prepayment Amount"), at any time when Tranche A Term Loans remain
---------------------------
outstanding, the Borrower will:
(i) in the case of any optional prepayment of the Tranche B Term
Loans which the Borrower wishes to make, not later than 10 Business Days
prior to the date on which the Borrower wishes to make such optional
prepayment, give the Administrative Agent telephonic notice (promptly
confirmed in writing) requesting that the Administrative Agent prepare and
provide to each Tranche B Term Loan Lender a notice (each, a "Prepayment
----------
Option Notice") as described below; and
-------------
(ii) in the case of any mandatory prepayment required to be made
pursuant to Section 2.10, on the date specified in Section 2.10 for such
prepayment, (A) give the Administrative Agent telephonic notice (promptly
confirmed in writing) requesting that the Administrative Agent prepare and
provide to each Tranche B Term Loan Lender a Prepayment Option Notice as
described in clause (e) below and (B) deposit with the Administrative Agent
the Mandatory Prepayment Amount.
(e) As promptly as practicable after receiving such notice from the
Borrower, the Administrative Agent will send to each Tranche B Term Loan Lender
a Prepayment Option Notice, which shall be substantially in the form of Exhibit
K, and shall include an offer by the Borrower to prepay on the Prepayment Date
the Tranche B Term Loans of such Tranche B Term Loan Lender by an amount equal
to the portion of the Optional Prepayment Amount or Mandatory Prepayment Amount,
as the case may be, indicated in such Lender's Prepayment
<PAGE>
39
Option Notice as being applicable to such Tranche B Term Loan Lender's Tranche B
Term Loans. The "Prepayment Date" in respect of any Prepayment Option Notice
---------------
shall be the date which is (i) in the case of a Prepayment Option Notice
relating to an optional prepayment, the later of (A) five Business Days after
the date of such Prepayment Option Notice and (B) the date on which the Borrower
has advised the Administrative Agent that it wishes to make such optional
prepayment and (ii) in the case of a Prepayment Option Notice relating to a
mandatory prepayment, the date which is five Business Days after the date of
such Prepayment Option Notice.
(f) On the Prepayment Date:
(i) in the case of any optional prepayment, the Borrower shall pay to
the Administrative Agent the Optional Prepayment Amount, and the
Administrative Agent shall (A) apply the Optional Prepayment toward
prepayment of the outstanding Tranche B Term Loans in respect of which
Tranche B Term Loan Lenders have accepted optional prepayment as described
above and (B) apply the remaining portion of the Optional Prepayment Amount
not accepted by the Tranche B Term Loan Lenders toward prepayment of the
Tranche A Term Loans; and
(ii) in the case of any mandatory prepayment, the Administrative Agent
shall (A) apply the Mandatory Prepayment Amount toward prepayment of the
outstanding Tranche B Term Loans in respect of which Tranche B Term Loan
Lenders have accepted mandatory prepayment as described above and (B)
apply the remaining portion of the Mandatory Prepayment Amount not accepted
by the Tranche B Term Loan Lenders toward prepayment of the Tranche A Term
Loans.
(g) The application of any payment of Loans under any Facility
(including optional and mandatory prepayments) shall be made, first, to Base
-----
Rate Loans under such Facility and, second, to Eurodollar Loans under such
------
Facility. Each payment of the Loans (except in the case of Revolving Credit
Loans that are Base Rate Loans) shall be accompanied by accrued interest to the
date of such payment on the amount paid.
(h) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Administrative Agent, for the
account of the Lenders, at the Payment Office, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the
Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurodollar Loans) becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day. In the case of
any
<PAGE>
40
extension of any payment of principal pursuant to the preceding two sentences,
interest thereon shall be payable at the then applicable rate during such
extension.
(i) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this paragraph shall be conclusive in the
absence of manifest error. If such Lender's share of such borrowing is not made
available to the Administrative Agent by such Lender within three Business Days
of such Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
Base Rate Loans under the relevant Facility, on demand, from the Borrower.
(j) Unless the Administrative Agent shall have been notified in
writing by the Borrower prior to the date of any payment being made hereunder
that the Borrower will not make such payment to the Administrative Agent, the
Administrative Agent may assume that the Borrower is making such payment, and
the Administrative Agent may, but shall not be required to, in reliance upon
such assumption, make available to the Lenders their respective pro rata shares
--- ----
of a corresponding amount. If such payment is not made to the Administrative
Agent by the Borrower within three Business Days of such required date, the
Administrative Agent shall be entitled to recover, on demand, from each Lender
to which any amount which was made available pursuant to the preceding sentence,
such amount with interest thereon at the rate per annum equal to the daily
average Federal Funds Effective Rate. Nothing herein shall be deemed to limit
the rights of the Administrative Agent or any Lender against the Borrower.
2.17 Requirements of Law. (a) If the adoption of or any change in any
-------------------
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any Application or any
Eurodollar Loan made by it, or change the basis of taxation of payments to
such Lender in respect thereof (except for Non-Excluded Taxes covered by
Section 2.18 and changes in the rate of tax on the overall net income of
such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities
<PAGE>
41
in or for the account of, advances, loans or other extensions of credit by,
or any other acquisition of funds by, any office of such Lender that is not
otherwise included in the determination of the Eurodollar Rate hereunder;
or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable. If any Lender becomes entitled
to claim any additional amounts pursuant to this Section, it shall promptly
notify the Borrower (with a copy to the Administrative Agent) of the event by
reason of which it has become so entitled provided that the Borrower shall not
--------
be required to compensate a Lender pursuant to this paragraph for any amounts
incurred more than six months prior to the date on which such Lender notifies
the Borrower of such Lender's intention to claim compensation therefor; and
provided further that, if the circumstances giving rise to such claim have a
- -------- -------
retroactive effect, then such six-month period shall be extended to include the
period of such retroactive effect.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower (with a copy to the Administrative
Agent) of a written request therefor, the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such reduction;
provided that the Borrower shall not be required to compensate a Lender
- --------
pursuant to this paragraph for any amounts incurred more than six months prior
to the date on which such Lender notifies the Borrower of such Lender's
intention to claim compensation therefor; and provided further that, if the
-------- -------
circumstances giving rise to such claim have a retroactive effect, then such
six-month period shall be extended to include the period of such retroactive
effect. If any Lender becomes entitled to claim any additional amounts pursuant
to this Section, it shall promptly notify the Borrower (with a copy to the
Administrative Agent) of the event by reason of which it has become so entitled.
(c) A certificate as to any additional amounts payable pursuant to
this Section submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
obligations of the Borrower pursuant to this
<PAGE>
42
Section shall survive the termination of this Agreement and the payment of the
Revolving Credit Loans and all other amounts payable hereunder.
2.18 Taxes. (a) All payments made by the Borrower under this
-----
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on any Agent or any Lender as a result of a present or
former connection between such Agent or such Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
such Agent's or such Lender's having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement or any
other Loan Document). If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings ("Non-Excluded Taxes") or Other Taxes
------------------
are required to be withheld from any amounts payable to any Agent or any Lender
hereunder, the amounts so payable to such Agent or such Lender shall be
increased to the extent necessary to yield to such Agent or such Lender (after
payment of all Non-Excluded Taxes and Other Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement, provided, however, that the Borrower shall not be required to
-------- -------
increase any such amounts payable to any Lender with respect to any Non-Excluded
Taxes (i) that are attributable to such Lender's failure to comply with the
requirements of paragraph (d) or (e) of this Section or (ii) that are United
States withholding taxes imposed on amounts payable to such Lender at the time
the Lender becomes a party to this Agreement, except to the extent that such
Lender's assignor (if any) was entitled, at the time of assignment, to receive
additional amounts from the Borrower with respect to such Non-Excluded Taxes
pursuant to Section 2.18(a).
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by
the Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for the account of the relevant Agent or Lender, as the
case may be, a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded
Taxes or Other Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Agents and the Lenders
for any incremental taxes, interest or penalties that may become payable by any
Agent or any Lender as a result of any such failure. The agreements in this
Section 2.18 shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.
(d) Each Lender (or Transferee) that is not a U.S. Person as defined
in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver to the
---------------
Borrower and the Administrative Agent (or, in the case of a Participant, to the
Lender from which the related participation shall have been purchased) two
copies of either U.S. Internal Revenue Service
<PAGE>
43
Form W-8BEN or Form W-8EC1, or, in the case of a Non-U.S. Lender claiming
exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of
the Code with respect to payments of "portfolio interest" a statement
substantially in the form of Exhibit H and a Form W-8BEN, or any subsequent
versions thereof or successors thereto properly completed and duly executed by
such Non-U.S. Lender claiming complete exemption from, or a reduced rate of,
U.S. federal withholding tax on all payments by the Borrower under this
Agreement and the other Loan Documents. Such forms shall be delivered by each
Non-U.S. Lender on or before the date it becomes a party to this Agreement (or,
in the case of any Participant, on or before the date such Participant purchases
the related participation). In addition, each Non-U.S. Lender shall deliver such
forms promptly upon the obsolescence or invalidity of any form previously
delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify
the Borrower at any time it determines that it is no longer in a position to
provide any previously delivered certificate to the Borrower (or any other form
of certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall
not be required to deliver any form pursuant to this paragraph that such Non-
U.S. Lender is not legally able to deliver.
(e) A Lender that is entitled to an exemption from or reduction of
non-U.S. withholding tax under the law of the jurisdiction in which the Borrower
is located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided that such Lender is
--------
legally entitled to complete, execute and deliver such documentation and in such
Lender's reasonable judgment such completion, execution or submission would not
materially prejudice the legal position of such Lender.
2.19 Indemnity. The Borrower agrees to indemnify each Lender and to
---------
hold each Lender harmless from any loss or expense that such Lender may sustain
or incur as a consequence of (a) default by the Borrower in making a borrowing
of, conversion into or continuation of Eurodollar Loans after the Borrower has
given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment or conversion of Eurodollar Loans on
a day that is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest that would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) that
- ----
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. A
<PAGE>
44
certificate as to any amounts payable pursuant to this Section submitted to the
Borrower by any Lender shall be conclusive in the absence of manifest error.
This covenant shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.
2.20 Illegality. Notwithstanding any other provision herein, if the
----------
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be canceled and (b)
such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Loan occurs on
a day which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to Section 2.19.
2.21 Change of Lending Office. Each Lender agrees that, upon the
------------------------
occurrence of any event giving rise to the operation of Section 2.17, 2.18(a) or
2.20 with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such
--------
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided, further, that nothing in this Section shall affect
-------- -------
or postpone any of the obligations of any Borrower or the rights of any Lender
pursuant to Section 2.17, 2.18(a) or 2.20.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions hereof,
--------------
the Issuing Lender, in reliance on the agreements of the other Revolving Credit
Lenders set forth in Section 3.4(a), agrees to issue letters of credit ("Letters
-------
of Credit") for the account of the Borrower on any Business Day during the
- ---------
Revolving Credit Commitment Period in such form as may be approved from time to
time by the Issuing Lender; provided that the Issuing Lender shall have no
--------
obligation to issue any Letter of Credit if, after giving effect to such
issuance, (i) the L/C Obligations would exceed the L/C Commitment, (ii) the
aggregate amount of the Available Revolving Credit Commitments would be less
than zero or (iii) prior to the Transition Date, the Total Revolving Extensions
of Credit would exceed the Asset Coverage Test Amount, as most recently
determined prior to the date of issuance of such Letter of Credit pursuant to
Section 6.2(h). Each Letter of Credit shall (i) be denominated in Dollars and
(ii) expire no later than the earlier of (x) the first anniversary of its date
of issuance and (y) the date which is five Business Days prior to the Revolving
Credit Termination Date, provided that any Letter of Credit with a one-year term
may provide for the renewal thereof for additional one-year periods (which
-------
shall in no event extend beyond the date referred to in clause (y) above).
<PAGE>
45
(b) The Issuing Lender shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
the Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
(c) Letters of Credit outstanding under the Existing Credit
Agreement on the Second Amendment and Restatement Effective Date shall continue
to be Letters of Credit hereunder from and after the Second Amendment and
Restatement Effective Date.
3.2 Procedure for Issuance of Letter of Credit. The Borrower may
------------------------------------------
from time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender at its address for notices specified herein an
Application therefor, completed to the satisfaction of the Issuing Lender, and
such other certificates, documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application, the Issuing Lender
will process such Application and the certificates, documents and other papers
and information delivered to it in connection therewith in accordance with its
customary procedures and, within five Business Days of receipt of such
Application, shall issue the Letter of Credit requested thereby (but in no event
shall the Issuing Lender be required to issue any Letter of Credit earlier than
three Business Days after its receipt of the Application therefor and all such
other certificates, documents and other papers and information relating thereto)
by issuing the original of such Letter of Credit to the beneficiary thereof or
as otherwise may be agreed to by the Issuing Lender and the Borrower. The
Issuing Lender shall furnish a copy of such Letter of Credit to the Borrower
promptly following the issuance thereof. The Issuing Lender shall promptly
furnish to the Administrative Agent, which shall in turn promptly furnish to the
Lenders, notice of the issuance of each Letter of Credit (including the amount
thereof).
3.3 Fees and Other Charges. (a) The Borrower will pay a fee on the
----------------------
aggregate drawable amount of all outstanding Letters of Credit at a per annum
rate equal to the Applicable Margin then in effect with respect to Eurodollar
Loans under the Revolving Credit Facility, shared ratably among the Revolving
Credit Lenders and payable quarterly in arrears on each L/C Fee Payment Date
after the issuance date.
(b) The Borrower shall pay to the Issuing Lender, a fronting fee
with respect to each Letter of Credit, computed for the period from the last L/C
Fee Payment Date to the date upon which such payment is due hereunder at a rate
per annum to be agreed upon between the Borrower and the Issuing Lender,
calculated on the basis of a 365- (or 366-, as the case may be) day year, of the
aggregate amount available to be drawn under such Letter of Credit on the date
on which such fee is calculated. Such fronting fees shall be payable in arrears
on each L/C Fee Payment Date and shall be nonrefundable.
(c) In addition to the foregoing fees, the Borrower shall pay or
reimburse the Issuing Lender for such normal and customary costs and expenses as
are incurred or charged by the Issuing Lender in issuing, negotiating, effecting
payment under, amending or otherwise administering any Letter of Credit.
<PAGE>
46
3.4 L/C Participations. (a) The Issuing Lender irrevocably agrees
------------------
to grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Lender, on the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such L/C
Participant's Revolving Credit Percentage in the Issuing Lender's obligations
and rights under each Letter of Credit issued hereunder and the amount of each
draft paid by the Issuing Lender thereunder. Each L/C Participant
unconditionally and irrevocably agrees with the Issuing Lender that, if a draft
is paid under any Letter of Credit for which the Issuing Lender is not
reimbursed in full by the Borrower in accordance with the terms of this
Agreement, such L/C Participant shall pay to the Issuing Lender upon demand at
the Issuing Lender's address for notices specified herein an amount equal to
such L/C Participant's Revolving Credit Percentage of the amount of such draft,
or any part thereof, that is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion
of any payment made by the Issuing Lender under any Letter of Credit is paid to
the Issuing Lender within three Business Days after the date such payment is
due, such L/C Participant shall pay to the Issuing Lender on demand an amount
equal to the product of (i) such amount, times (ii) the daily average Federal
Funds Effective Rate during the period from and including the date such payment
is required to the date on which such payment is immediately available to the
Issuing Lender, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360. If any
such amount required to be paid by any L/C Participant pursuant to Section
3.4(a) is not made available to the Issuing Lender by such L/C Participant
within three Business Days after the date such payment is due, the Issuing
Lender shall be entitled to recover from such L/C Participant, on demand, such
amount with interest thereon calculated from such due date at the rate per annum
applicable to Base Rate Loans under the Revolving Credit Facility. A certificate
of the Issuing Lender submitted to any L/C Participant with respect to any
amounts owing under this Section shall be conclusive in the absence of manifest
error.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
---
rata share of such payment in accordance with Section 3.4(a), the Issuing Lender
- ----
receives any payment related to such Letter of Credit (whether directly from the
Borrower or otherwise, including proceeds of collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the Issuing
Lender will distribute to such L/C Participant its pro rata share thereof;
--- ----
provided, however, that in the event that any such payment received by the
- -------- -------
Issuing Lender shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion thereof previously
distributed by the Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower. The Borrower agrees to
----------------------------------------
reimburse the Issuing Lender on each date on which the Issuing Lender notifies
the Borrower of the date and amount of a draft presented under any Letter of
Credit and paid by the Issuing Lender for the amount of (a) such draft so paid
and (b) any taxes, fees, charges or other costs or
<PAGE>
47
expenses incurred by the Issuing Lender in connection with such payment. Each
such payment shall be made to the Issuing Lender at its address for notices
specified herein in lawful money of the United States of America and in
immediately available funds. Interest shall be payable on the amount of any
drawing under any Letter of Credit (plus any taxes, fees, charges or other costs
payable by the Borrower pursuant to clause (b) of the preceding sentence) from
the date of such drawing until payment in full at the rate set forth in (i)
until the second Business Day following the date of the applicable drawing,
Section 2.13(b) and (ii) thereafter, Section 2.13(c). Each drawing under any
Letter of Credit shall (unless an event of the type described in clause (i) or
(ii) of Section 8(f) shall have occurred and be continuing with respect to the
Borrower, in which case the procedures specified in Section 3.4 for funding by
L/C Participants shall apply) constitute a request by the Borrower to the
Administrative Agent for a borrowing pursuant to Section 2.5 of Base Rate Loans
in the amount of such drawing. The Borrowing Date with respect to such borrowing
shall be the first date on which a borrowing of Revolving Credit Loans could be
made pursuant to Section 2.5 if the Administrative Agent had received a notice
of such borrowing at the time of such drawing under such Letter of Credit.
3.6 Obligations Absolute. The Borrower's obligations under this
--------------------
Section 3 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment that the
Borrower may have or have had against the Issuing Lender, any beneficiary of a
Letter of Credit or any other Person. The Borrower also agrees with the Issuing
Lender that the Issuing Lender shall not be responsible for, and the Borrower's
Reimbursement Obligations under Section 3.5 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrower against any
beneficiary of such Letter of Credit or any such transferee. The Issuing Lender
shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
the Issuing Lender. The Borrower agrees that any action taken or omitted by the
Issuing Lender under or in connection with any Letter of Credit or the related
drafts or documents, if done in the absence of gross negligence or willful
misconduct and in accordance with the standards or care specified in the Uniform
Commercial Code of the State of New York, shall be binding on the Borrower and
shall not result in any liability of the Issuing Lender to the Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented for
-------------------------
payment under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are substantially in conformity with such
Letter of Credit.
<PAGE>
48
3.8 Applications. To the extent that any provision of any
------------
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this Agreement and
to make Loans and issue or participate in the Letters of Credit, Holdings and
the Borrower hereby jointly and severally represent and warrant to each Agent
and each Lender that:
4.1 Financial Condition. (a) The unaudited pro forma consolidated
------------------- --- -----
balance sheet of Holdings, the Borrower and its consolidated Subsidiaries as at
September 30, 1999 (including the notes thereto) (the "Pro Forma Balance
-----------------
Sheet"), copies of which have heretofore been furnished to each Lender, has been
- -----
prepared giving effect (as if such events had occurred on such date) to (i) the
Loans to be made on the Second Amendment and Restatement Effective Date and the
use of the proceeds thereof described in Section 4.16 and (ii) the payment of
fees and expenses in connection with the foregoing. The Pro Forma Balance Sheet
has been prepared based on the best information available to the Borrower as of
the date of delivery thereof, and presents fairly in all material respects on a
pro forma basis the estimated financial position of Holdings, the Borrower and
- --- -----
its Subsidiaries as at September 30, 1999, assuming that the events specified in
the preceding sentence had actually occurred at such date.
(b) The audited consolidated balance sheets of Holdings and its
Subsidiaries as at December 31, 1998 and December 31, 1997 and the related
statements of income and of cash flows for the three fiscal years ended December
31, 1998, reported on by and accompanied by an unqualified report from Arthur
Andersen LLP, present fairly in all material respects the consolidated financial
condition of Holdings and its Subsidiaries as at such date, and the consolidated
results of its operations and its consolidated cash flows for the respective
fiscal years then ended. The unaudited consolidated balance sheet of Holdings
and its Subsidiaries and of the Borrower and its Subsidiaries as at September
30, 1999, and the related unaudited consolidated statements of income and cash
flows for the nine-month period ended on such date, present fairly in all
material respects the consolidated financial condition of Holdings and its
Subsidiaries and of the Borrower and its Subsidiaries, as the case may be, as at
such date, and the consolidated results of its operations and its consolidated
cash flows for the nine-month period then ended (subject to normal year-end
audit adjustments). All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by the
aforementioned firm of accountants and disclosed therein). Holdings, the
Borrower and its Subsidiaries do not have any material Guarantee Obligations,
contingent liabilities and liabilities for taxes, or any long-term leases or
unusual forward or long-term commitments, including, without limitation, any
interest rate or foreign currency swap or exchange transaction or other
obligation in respect of derivatives, that are not reflected in the most recent
financial statements referred to in this paragraph. During the period from
September 30, 1999 to and including the date hereof there has been no
Disposition by Holdings or the Borrower of any material part of its business or
Property.
<PAGE>
49
4.2 No Change. Since December 31, 1998 there has been no
---------
development or event that has had or could reasonably be expected to have a
Material Adverse Effect.
4.3 Corporate Existence; Compliance with Law. Each of Holdings, the
----------------------------------------
Borrower and its Subsidiaries (a) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (b) has
the corporate power and authority, and the legal right, to own and operate its
Property, to lease the Property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of Property or the conduct of its business
requires such qualification except to the extent the failure to be so qualified
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect and (d) is in compliance with all Requirements of Law except to the
extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations. Each
-------------------------------------------------------
Loan Party has the corporate power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and, in the case
of the Borrower, to borrow hereunder. Each Loan Party has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Loan Documents to which it is a party and, in the case of the Borrower, to
authorize the borrowings on the terms and conditions of this Agreement. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of this Agreement or any of the Loan
Documents, except (i) consents, authorizations, filings and notices described in
Schedule 4.4, which consents, authorizations, filings and notices have been
obtained or made and are in full force and effect and (ii) the filings referred
to in Section 4.19. Each Loan Document has been duly executed and delivered on
behalf of each Loan Party party thereto. This Agreement constitutes, and each
other Loan Document upon execution will constitute, a legal, valid and binding
obligation of each Loan Party party thereto, enforceable against each such Loan
Party in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
4.5 No Legal Bar. The execution, delivery and performance of this
------------
Agreement and the other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder and the use of the proceeds thereof will not violate any
Requirement of Law or any Contractual Obligation of Holdings, the Borrower or
any of its Subsidiaries except as could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect and except for such Contractual
Obligations pursuant to which the Administrative Agent is required to execute
and deliver a non-disturbance agreement and will not result in, or require, the
creation or imposition of any Lien on any of their respective properties or
revenues pursuant to any Requirement of Law or any such Contractual Obligation
(other than the Liens created by the Security Documents). No
<PAGE>
50
Requirement of Law or Contractual Obligation applicable to the Borrower or any
of its Subsidiaries could reasonably be expected to have a Material Adverse
Effect.
4.6 No Material Litigation. (a) No litigation, investigation or
----------------------
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of Holdings or the Borrower, threatened by or against Holdings,
the Borrower or any of its Subsidiaries or against any of their respective
properties or revenues (a) with respect to any of the Loan Documents or any of
the transactions contemplated hereby or thereby, or (b) that could reasonably be
expected to have a Material Adverse Effect.
4.7 No Default. Neither Holdings, the Borrower nor any of its
----------
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect that could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
4.8 Ownership of Property; Liens. Each of Holdings, the Borrower and
----------------------------
its Subsidiaries has title in fee simple to, a valid leasehold interest in, or
an easement, license or permit to occupy, all its real property, and good title
to, a valid leasehold interest in, or an easement, license or permit to occupy,
all its other Property, and none of such Property is subject to any Lien except
as permitted by Section 7.3.
4.9 Intellectual Property. Holdings, the Borrower and each of its
---------------------
Subsidiaries owns, or is licensed to use, all Intellectual Property necessary
for the conduct of its business as currently conducted. No material claim has
been asserted and is pending by any Person challenging or questioning the use of
any Intellectual Property or the validity or effectiveness of any Intellectual
Property, nor does Holdings or the Borrower know of any valid basis for any such
claim. The use of Intellectual Property by Holdings, the Borrower and its
Subsidiaries does not infringe on the rights of any Person in any material
respect.
4.10 Taxes. Each of Holdings, the Borrower and each of its
-----
Subsidiaries has filed or caused to be filed all Federal, state and other
material tax returns that are required to be filed and has paid all taxes shown
to be due and payable on said returns or on any assessments made against it or
any of its Property and all other taxes, fees or other charges imposed on it or
any of its Property by any Governmental Authority (other than any the amount or
validity of which are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of Holdings, the Borrower or its Subsidiaries, as the case
may be); no tax Lien has been filed, and, to the knowledge of Holdings and the
Borrower, no claim is being asserted, with respect to any such tax, fee or other
charge.
4.11 Federal Regulations. No part of the proceeds of any Loans will
-------------------
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U as now and from time to
time hereafter in effect or for any purpose that violates the provisions of the
Regulations of the Board. If requested by any Lender or the Administrative
Agent, the Borrower will furnish to the Administrative Agent and each
<PAGE>
51
Lender a statement to the foregoing effect in conformity with the requirements
of FR From G-3 or FR Form U-1 referred to in Regulation U.
4.12 Labor Matters. There are no strikes or other labor disputes
-------------
against Holdings, the Borrower or any of its Subsidiaries pending or, to the
knowledge of Holdings or the Borrower, threatened that (individually or in the
aggregate) could reasonably be expected to have a Material Adverse Effect. Hours
worked by and payment made to employees of Holdings, the Borrower and its
Subsidiaries have not been in violation of the Fair Labor Standards Act or any
other applicable Requirement of Law dealing with such matters that (individually
or in the aggregate) could reasonably be expected to have a Material Adverse
Effect. All payments due from Holdings, the Borrower or any of its Subsidiaries
on account of employee health and welfare insurance that (individually or in the
aggregate) could reasonably be expected to have a Material Adverse Effect if not
paid have been paid or accrued as a liability on the books of Holdings, the
Borrower or the relevant Subsidiary.
4.13 ERISA. Neither a Reportable Event nor an "accumulated funding
-----
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no Lien
in favor of the PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits by a material amount. Neither the Borrower nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan that
has resulted or could reasonably be expected to result in a material liability
under ERISA, and neither the Borrower nor any Commonly Controlled Entity would
become subject to any material liability under ERISA if the Borrower or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding the date on which this
representation is made or deemed made. No such Multiemployer Plan is in
Reorganization or Insolvent.
4.14 Investment Company Act; Other Regulations. No Loan Party is an
-----------------------------------------
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) which limits its ability to incur Indebtedness.
4.15 Subsidiaries. (a) The Subsidiaries listed on Schedule 4.15
------------
constitute all the Subsidiaries of the Borrower as of the Second Amendment and
Restatement Effective Date. Schedule 4.15 sets forth as of the Second Amendment
and Restatement Effective Date the name and jurisdiction of incorporation of
each Subsidiary and, as to each such Subsidiary, the percentage of each class of
Capital Stock owned by any Loan Party.
<PAGE>
52
(b) There are no outstanding subscriptions, options, warrants,
calls, rights or other agreements or commitments (other than stock options
granted to employees or directors and directors' qualifying shares) of any
nature relating to any Capital Stock of the Borrower or any Subsidiary.
4.16 Use of Proceeds. The proceeds of the Tranche B Term Loans shall
---------------
be used, and the proceeds of the Tranche A Term Loans and Revolving Credit Loans
and the Letters of Credit were used and shall be used, to finance (i) the
acquisition and/or construction of wireless transmission towers, tower sites and
related assets, (ii) the acquisition of rights to place antennae on the sides
and rooftops of buildings owned by others, (iii) the acquisition of leasehold
interests in existing transmission towers to be subleased to others, (iv) the
acquisition of or investments in entities the principal assets of which are
towers, tower sites and related assets, (v) the Borrower's business of managing
transmission towers owned by others, (vi) the Borrower's existing wireless
transmission towers and related assets and (vii) other working capital needs and
general corporate purposes of the Borrower and its Subsidiaries.
4.17 Environmental Matters. Other than exceptions to any of the
---------------------
following that could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect:
(a) the Borrower and its Subsidiaries: (i) are, and within the
period of all applicable statutes of limitation have been, in compliance
with all applicable Environmental Laws; (ii) hold all Environmental Permits
(each of which is in full force and effect) required for any of their
current or intended operations or for any property owned, leased, or
otherwise operated by any of them; (iii) are, and within the period of all
applicable statutes of limitation have been, in compliance with all of
their Environmental Permits; and (iv) reasonably believe that: each of
their Environmental Permits will be timely renewed and complied with,
without material expense; any additional Environmental Permits that may be
required of any of them will be timely obtained and complied with, without
material expense; and compliance with any Environmental Law that is or is
expected to become applicable to any of them will be timely attained and
maintained, without material expense.
(b) Materials of Environmental Concern are not present at, on,
under, in, or about any real property now or formerly owned, leased or
operated by the Borrower or any of its Subsidiaries, or at any other
location (including, without limitation, any location to which Materials of
Environmental Concern have been sent for re-use or recycling or for
treatment, storage, or disposal) which could reasonably be expected to (i)
give rise to liability of the Borrower or any of its Subsidiaries under any
applicable Environmental Law or otherwise result in costs to the Borrower
or any of its Subsidiaries, or (ii) interfere with the Borrower's or any of
its Subsidiaries' continued operations, or (iii) impair the fair saleable
value of any real property owned or leased by the Borrower or any of its
Subsidiaries.
<PAGE>
53
(c) There is no judicial, administrative, or arbitral proceeding
(including any notice of violation or alleged violation) under or relating
to any Environmental Law to which the Borrower or any of its Subsidiaries
is, or to the knowledge of the Borrower or any of its Subsidiaries will be,
named as a party that is pending or, to the knowledge of the Borrower or
any of its Subsidiaries, threatened.
(d) Neither the Borrower nor any of its Subsidiaries has received
any written request for information, or been notified that it is a
potentially responsible party under or relating to the federal
Comprehensive Environmental Response, Compensation, and Liability Act or
any similar Environmental Law, or with respect to any Materials of
Environmental Concern.
(e) Neither the Borrower nor any of its Subsidiaries has entered
into or agreed to any consent decree, order, or settlement or other
agreement, or is subject to any judgment, decree, or order or other
agreement, in any judicial, administrative, arbitral, or other forum for
dispute resolution, relating to compliance with or liability under any
Environmental Law.
(f) Neither the Borrower nor any of its Subsidiaries has assumed or
retained, by contract or operation of law, any liabilities of any kind,
fixed or contingent, known or unknown, under any Environmental Law or with
respect to any Material of Environmental Concern.
4.18 Accuracy of Information, etc. No statement or information
-----------------------------
contained in this Agreement, any other Loan Document, the Confidential
Information Memorandum or any other written document, certificate or statement
furnished to the Administrative Agent or the Lenders or any of them, by or on
behalf of any Loan Party for use in connection with the transactions
contemplated by this Agreement or the other Loan Documents, contained as of the
date such statement, information, document or certificate was so furnished (or,
in the case of the Confidential Information Memorandum, as of the Second
Amendment and Restatement Effective Date), any untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements contained herein or therein not misleading. The projections and pro
---
forma financial information contained in the materials referenced above are
- -----
based upon good faith estimates and assumptions believed by management of the
Borrower to be reasonable at the time made, it being recognized by the Lenders
that such financial information as it relates to future events is not to be
viewed as fact and that actual results during the period or periods covered by
such financial information may differ from the projected results set forth
therein by a material amount. There is no fact actually known to any Loan Party
that could reasonably be expected to have a Material Adverse Effect that has not
been expressly disclosed herein, in the other Loan Documents, in the
Confidential Information Memorandum or in any other documents, certificates and
statements furnished to the Agents and the Lenders for use in connection with
the transactions contemplated hereby and by the other Loan Documents.
4.19 Security Documents. (a) The Guarantee and Collateral Agreement
------------------
is effective to create in favor of the Administrative Agent, for the benefit of
the Lenders, a legal,
<PAGE>
54
valid and enforceable security interest in the Collateral described therein and
proceeds thereof. In the case of the Pledged Stock described in the Guarantee
and Collateral Agreement, stock certificates representing such Pledged Stock
having been delivered to the Administrative Agent, and in the case of the other
Collateral described in the Guarantee and Collateral Agreement, financing
statements in appropriate form having been filed in the offices specified on
Schedule 4.19(a) and such other filings as are specified on Schedule 3 to the
Guarantee and Collateral Agreement having been duly completed, the Guarantee and
Collateral Agreement constitutes a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in such
Collateral and the proceeds thereof, as security for the Obligations (as defined
in the Guarantee and Collateral Agreement), in each case prior and superior in
right to any other Person (except, in the case of Collateral other than Pledged
Stock, Liens permitted by Section 7.3). Notwithstanding the foregoing, it is
understood that UCC-1 financing statements are not being filed in respect of
equipment in locations where the value of such equipment is less than $5000 or
in local jurisdictions requiring dual filings, and that fixture filings are not
being made in respect of Tower locations which are not Mortgaged Properties.
(b) Each of the Mortgages executed and delivered on or prior to the
Second Amendment and Restatement Effective Date is, and each of the Mortgages
executed and delivered after the Second Amendment and Restatement Effective Date
will be when so executed and delivered, effective to create in favor of the
Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable Lien on the Mortgaged Properties described therein and proceeds
thereof, and when such Mortgages are recorded in the appropriate recording
office, each such Mortgage shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Loan Parties in the
Mortgaged Properties and the proceeds thereof, as security for the Obligations
(as defined in the relevant Mortgage), in each case prior and superior in right
to any other Person.
4.20 Solvency. Each Loan Party is, and after giving effect to the
--------
incurrence of all Indebtedness and obligations being incurred in connection
herewith will be and will continue to be, Solvent.
4.21 Regulation H. No Mortgage encumbers improved real property
------------
which is located in an area that has been identified by the Secretary of Housing
and Urban Development as an area having special flood hazards and in which flood
insurance has been made available under the National Flood Insurance Act of
1968, unless such flood insurance either has been obtained and evidence thereof
provided to the Administrative Agent or is unavailable based upon the nature of
the improvements located on such real property.
4.22 Year 2000 Matters. Any reprogramming required to permit the
-----------------
proper functioning, in and following the year 2000, of (i) the Borrower's
computer systems and (ii) equipment containing embedded microchips (including
systems and equipment supplied by others or with which Borrower's systems
interface) and the testing of all such systems and equipment, as so
reprogrammed, has been completed. The cost to the Borrower of such reprogramming
and testing and of the reasonably foreseeable consequences of year 2000 to the
Borrower (including, without limitation, reprogramming errors and the failure of
others' systems
<PAGE>
55
or equipment) will not result in a Default or a Material Adverse Effect. Except
for such of the reprogramming referred to in the preceding sentence as may be
necessary, the computer and management information systems of the Borrower and
its Subsidiaries are and, with ordinary course upgrading and maintenance, will
continue for the term of this Agreement to be, sufficient to permit the Borrower
to conduct its business without Material Adverse Effect.
4.23 Tower Reports. The information set forth in the Initial Tower
-------------
Report and the Initial Tower Report Supplement was true and correct in all
material respects as of the respective dates thereof.
4.24 Tower Sites. At least a majority of the Towers that do not
-----------
constitute Mortgaged Properties are constructed so as to be capable of being
moved from their present locations and except to the extent (i) 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 and (ii) removal and/or disassembly of a
Tower may require the Borrower and its Subsidiaries to obtain the consent of, or
a permit from, the applicable Governmental Authority (which consent or permit
the Borrower believes is reasonably likely to be issued if requested by the
Borrower or any of its Subsidiaries), the Borrower and its Subsidiaries have the
right to remove such Towers from their present locations.
4.25 Real Property Leases. The present and contemplated use of the
--------------------
real property owned or leased by the Borrower or any of its Subsidiaries 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 Effect. Each lease pursuant to which the Borrower or any
of its Subsidiaries, as lessee, acquired rights in real property upon which any
Tower is situated is in full force and effect, the Borrower or such Subsidiary
has all rights of the lessee thereunder, there has been no default in the
performance of any of its terms or conditions by the Borrower or any such
Subsidiary nor (to the best of the Borrower's knowledge) any other 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 Effect.
4.26 FCC and FAA Matters; State Regulatory Compliance. (a) The
------------------------------------------------
Borrower (i) 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 Effect and (ii) is in compliance with all such laws, rules,
regulations and ordinances, including those promulgated by the FCC and the FAA,
to the extent the non-compliance with which would result, or be reasonably
likely to result, in a Material Adverse Effect. All information provided by or
on behalf of the Borrower or any Affiliate in any material filing, if any, with
the FCC and the FAA relating to the business of the Borrower 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
<PAGE>
56
or significant changes in such information as may be required in accordance with
applicable Requirements of Law.
(b) The Borrower and its Subsidiaries have all permits,
certificates, licenses, tariff approvals and other authorizations from all state
and federal Governmental Authorities required to conduct their current business
except for such permits, certificates, licenses, tariff approvals and other
authorizations as could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(c) Except as described on Schedule 4.26, the Borrower has no
knowledge of any investigation, notice of apparent liability, violation,
forfeiture or other order or complaint issued by or before any state or federal
Governmental Authority, or of any other proceedings of or before any state or
federal Governmental Authority, which could reasonably be expected to have a
Material Adverse Effect.
4.27 Representations and Warranties in Existing Credit Agreement. The
-----------------------------------------------------------
representations and warranties contained in Section 4 of the Existing Credit
Agreement were true and correct in all material respects on and as of the dates
when made pursuant to the Existing Credit Agreement.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit. The occurrence of the
-----------------------------------------
Closing Date, and the agreement of each Lender to make the initial extension of
credit requested to be made by it on the Closing Date, were subject to the
satisfaction, prior to or concurrently with the making of such extension of
credit on the Closing Date, of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received (i)
--------------
this Agreement, executed and delivered by a duly authorized officer of
Holdings and the Borrower, (ii) the Guarantee and Collateral Agreement,
executed and delivered by a duly authorized officer of Holdings, the
Borrower and each Subsidiary Guarantor, (iii) subject to Section 6.12, a
Mortgage covering each of the Mortgaged Properties described in Schedule
1.1, executed and delivered by a duly authorized officer of each party
thereto, and (iv) for the account of each relevant Lender, Notes conforming
to the requirements hereof and executed and delivered by a duly authorized
officer of the Borrower.
(b) Pro Forma Balance Sheet; Financial Statements. The Lenders
---------------------------------------------
shall have received (i) the Pro Forma Balance Sheet and (ii) the
consolidated financial statements of Holdings and the Borrower described in
Section 4.1, and such financial statements shall not, in the reasonable
judgment of the Lenders, reflect any material adverse change in the
consolidated financial condition of Holdings, the Borrower and its
Subsidiaries, as reflected in the financial statements or projections
contained in the Confidential Information Memorandum.
<PAGE>
57
(c) Initial Tower Report. The Lenders shall have received the
--------------------
Initial Tower Report, in form, scope and substance satisfactory to them.
(d) Approvals. All governmental and third party approvals (including
---------
landlords' and other consents) necessary or, in the discretion of the
Administrative Agent, advisable in connection with the continuing
operations of Holdings, the Borrower and its Subsidiaries and the
transactions contemplated hereby shall have been obtained and be in full
force and effect, except for such approvals as could not reasonably be
expected to have a Material Adverse Effect.
(e) Related Agreements. The Administrative Agent shall have
------------------
received (in a form reasonably satisfactory to the Administrative Agent),
with a copy for each Lender, true and correct copies, certified as to
authenticity by the Borrower, of the Senior Discount Notes Indenture and
such other documents or instruments as may be reasonably requested by the
Administrative Agent, including, without limitation, a copy of any debt
instrument, security agreement or other material contract to which any of
the Loan Parties may be a party.
(f) Existing Credit Agreement. All loans outstanding, and all
-------------------------
security interests securing such loans, under the Existing Credit Agreement
shall have been assigned to the Lenders in a manner satisfactory to the
Administrative Agent or, with respect to such security interests, at the
request of the Administrative Agent, arrangements satisfactory to the
Administrative Agent shall have been made for the termination of such
security interests.
(g) Fees. The Lenders, LBI, the Co-Arrangers and the Administrative
----
Agent shall have received all fees required to be paid, and all expenses
for which invoices have been presented (including reasonable fees,
disbursements and other charges of counsel to the Agents), on or before the
Closing Date. All such amounts will be paid with proceeds of Loans made on
the Closing Date and will be reflected in the funding instructions given by
the Borrower to the Administrative Agent on or before the Closing Date.
(h) Business Plan. The Lenders shall have received a reasonably
-------------
satisfactory business plan for fiscal years 1997-2007 and a reasonably
satisfactory written analysis of the business and prospects of Holdings,
the Borrower and its Subsidiaries for the period from the Closing Date
through fiscal year 2005.
(i) Solvency Analysis. The Lenders shall have received a reasonably
-----------------
satisfactory solvency analysis certified by the chief financial officer of
Holdings or other senior executive officer of Holdings satisfactory to the
Lenders which shall document the solvency of Holdings, the Borrower and its
Subsidiaries considered as a whole after giving effect to the transactions
contemplated hereby.
(j) Lien Searches. The Administrative Agent shall have received the
-------------
results of a recent lien search in each of the jurisdictions where assets
of the Loan Parties are located,
<PAGE>
58
and such search shall reveal no liens on any of the assets of Holdings, the
Borrower or its Subsidiaries except for liens permitted by Section 7.3 or
liens to be discharged on or prior to the Closing Date pursuant to
documentation satisfactory to the Administrative Agent.
(k) Closing Certificate. The Administrative Agent shall have
-------------------
received a certificate of each Loan Party, dated the Closing Date,
substantially in the form of Exhibit C, with appropriate insertions and
attachments.
(l) Legal Opinions. The Administrative Agent shall have received
--------------
the following executed legal opinions:
(i) the legal opinion of Gunster, Yoakley, Valdes-Fauli &
Stewart, P.A., counsel to the Borrower and its Subsidiaries,
substantially in the form of Exhibit F; and
(ii) subject to Section 6.12, the legal opinion of local
counsel in each of Georgia, Indiana, Maryland and Tennessee and of
such other special and local counsel as may be required by the
Administrative Agent.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(m) Pledged Stock; Stock Power; Pledged Notes. The Administrative
-----------------------------------------
Agent shall have received (i) the certificates representing the shares of
Capital Stock pledged pursuant to the Guarantee and Collateral Agreement,
together with an undated stock power for each such certificate executed in
blank by a duly authorized officer of the pledgor thereof and (ii) each
promissory note pledged to the Administrative Agent pursuant to the
Guarantee and Collateral Agreement endorsed (without recourse) in blank (or
accompanied by an executed transfer form in blank satisfactory to the
Administrative Agent) by the pledgor thereof.
(n) Filings, Registrations and Recordings. Subject to Section 6.12,
-------------------------------------
each document (including, without limitation, any Uniform Commercial Code
financing statement) required by the Security Documents or under law or
reasonably requested by the Administrative Agent to be filed, registered or
recorded in order to create in favor of the Administrative Agent, for the
benefit of the Lenders, a perfected Lien on the Collateral described
therein, prior and superior in right to any other Person (other than with
respect to Liens expressly permitted by Section 7.3), shall be in proper
form for filing, registration or recordation.
(o) Insurance. The Administrative Agent shall have received
---------
insurance certificates satisfying the requirements of Section 5.3 of the
Guarantee and Collateral Agreement.
<PAGE>
59
5.2 Conditions to Each Extension of Credit. The agreement of each
--------------------------------------
Lender to make any extension of credit requested to be made by it on any date
(including, without limitation, its initial extension of credit and any
extension of credit on or after the Second Amendment and Restatement Effective
Date) is subject to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties made by any Loan Party in or pursuant to the Loan Documents
shall be true and correct on and as of such date as if made on and as of
such date except for such representations and warranties expressly stated
to be made as of a specific earlier date, in which case such
representations and warranties shall be true and correct as of such earlier
date.
(b) No Default. No Default or Event of Default shall have occurred
----------
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.2 have been satisfied.
5.3 Conditions to Second Amendment and Restatement Effective Date.
-------------------------------------------------------------
The Second Amendment and Restatement Effective Date shall be the date of
satisfaction of the following conditions precedent:
(a) Agreement; Second Lender Addenda; Consents. The Administrative
------------------------------------------
Agent shall have executed this Agreement and shall have received
counterparts hereof executed by the Borrower, Holdings, each Agent and the
Arranger. The Administrative Agent shall have received (i) a Second Lender
Addendum executed by the Borrower and by the Required Lenders, each Lender
whose Revolving Credit Commitment is being increased hereby and each
Tranche B Term Loan Lender and (ii) a Consent executed by each Loan Party
other than the Borrower.
(b) Pro Forma Balance Sheet; Financial Statements. The Lenders
---------------------------------------------
shall have received the Pro Forma Balance Sheet of Holdings and the
Borrower described in Section 4.1(a).
(c) Approvals. All governmental and third party approvals (including
---------
landlords' and other consents, and consents under the outstanding Senior
Discount Notes) necessary or, in the discretion of the Administrative
Agent, advisable in connection with the continuing operations of Holdings,
the Borrower and its Subsidiaries and the transactions contemplated hereby
shall have been obtained and be in full force and effect, except for such
approvals as could not reasonably be expected to have a Material Adverse
Effect.
(d) Fees. The Lenders, LBI and the Administrative Agent shall have
----
received all fees required to be paid, and all expenses for which invoices
have been presented
<PAGE>
60
(including reasonable fees, disbursements and other charges of counsel to
the Agents), on or before the Second Amendment and Restatement Effective
Date. All such amounts will be paid with proceeds of Loans made on the
Second Amendment and Restatement Effective Date and will be reflected in
the funding instructions given by the Borrower to the Administrative Agent
on or before the Second Amendment and Restatement Effective Date.
(e) Business Plan. The Lenders shall have received a reasonably
-------------
satisfactory business plan for fiscal years 1999-2007 and a reasonably
satisfactory written analysis of the business and prospects of Holdings,
the Borrower and its Subsidiaries for the period from the Second Amendment
and Restatement Effective Date through fiscal year 2005.
(f) Lien Searches. The Administrative Agent shall have received the
-------------
results of a recent lien search in each of the jurisdictions where assets
of the Loan Parties are located (to the extent additional jurisdictions
have become relevant since the date of the lien searches conducted in
connection with the Closing Date) and such search shall reveal no liens on
any of the assets of Holdings, the Borrower or its Subsidiaries except for
liens permitted by Section 7.3.
(g) Solvency Analysis. The Lenders shall have received a reasonably
-----------------
satisfactory solvency analysis certified by the chief financial officer of
Holdings or other senior executive officer of Holdings satisfactory to the
Lenders which shall document the solvency of Holdings, the Borrower and its
Subsidiaries considered as a whole after giving effect to the amendment and
restatement of the Existing Credit Agreement, the making of the Tranche B
Term Loans on the Second Amendment and Restatement Effective Date and the
other transactions contemplated hereby.
(h) Resolutions. The Administrative Agent shall have received, with
-----------
a counterpart for each Lender, a copy of the resolutions, in form and
substance satisfactory to the Administrative Agent, of the Board of
Directors of the Borrower authorizing the execution of this Agreement and
the performance of the Borrower's obligations hereunder and any borrowings
hereunder from time to time, certified by the Secretary or an Assistant
Secretary of the Borrower, as of the Second Amendment and Restatement
Effective Date, which certificate shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded as of the
date of such certificate.
(i) Incumbency Certificate. The Administrative Agent shall have
----------------------
received, to the extent that it has not previously received, a certificate
of the Secretary or Assistant Secretary of the Borrower, dated the Second
Amendment and Restatement Effective Date, as to the authority, incumbency
and signature of each of the officers signing this Agreement, and any other
instrument or document delivered by the Borrower in connection herewith,
together with evidence of the incumbency of such Secretary or Assistant
Secretary.
<PAGE>
61
(j) Legal Opinion. The Administrative Agent shall have received,
-------------
with a counterpart for each Lender, an executed legal opinion of Gunster,
Yoakley, Valdes-Fauli & Stewart, P.A., counsel to the Loan Parties, dated
the Second Amendment and Restatement Effective Date and addressed to the
Administrative Agent and Lenders which shall cover such matters incident to
this Agreement and the transactions contemplated hereby as may be
reasonably requested by the Administrative Agent.
SECTION 6. AFFIRMATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree that, so
long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or any Agent
hereunder, each of Holdings and the Borrower shall and shall cause each of its
Subsidiaries to:
6.1 Financial Statements. Furnish to the Administrative Agent (and
--------------------
the Administrative Agent shall furnish to each other Agent and to each Lender):
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the audited consolidated
and unaudited consolidating balance sheets of Holdings and its consolidated
Subsidiaries and of the Borrower and its consolidated Subsidiaries, in each
case as at the end of such year and the related audited consolidated and
unaudited consolidating statements of income and of cash flows for such
year, setting forth in each case in comparative form the figures for the
previous year, reported on, in the case of such audited financial
statements, without a "going concern" or like qualification or exception,
or qualification arising out of the scope of the audit, by Arthur Andersen
LLP or other independent certified public accountants of nationally
recognized standing;
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated and consolidating balance
sheets of Holdings and its consolidated Subsidiaries and of the Borrower
and its consolidated Subsidiaries, in each case as at the end of such
quarter, and the related unaudited consolidated and consolidating
statements of income and of cash flows for such quarter and the portion of
the fiscal year through the end of such quarter, setting forth in each case
in comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects
(subject to normal year-end audit adjustments); and
(c) as soon as available, but in any event not later than 45 days
after the end of each month occurring during each fiscal year of the
Borrower (other than the third, sixth, ninth and twelfth such month), the
unaudited consolidated and consolidating balance sheets of Holdings and its
Subsidiaries and of the Borrower and its Subsidiaries, in each case as at
the end of such month and the related unaudited consolidated statements of
income for such month and the portion of the fiscal year through the end of
such month,
<PAGE>
62
setting forth in each case in comparative form the figures for the previous
year, certified by a Responsible Officer as being fairly stated in all
material respects (subject to normal year-end audit adjustments);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 Certificates; Other Information. Furnish to the Administrative
Agent (and the Administrative Agent shall furnish to each other Agent and to
each Lender) or, in the case of clause (l), to the relevant Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default in respect of the financial covenants contained
in Section 7.1, except as specified in such certificate;
(b) concurrently with the delivery of any financial statements
pursuant to Section 6.1, (i) a certificate of a Responsible Officer stating
that, to the best of each such Responsible Officer's knowledge, each Loan
Party during such period has observed or performed all of its covenants and
other agreements, and satisfied every condition, contained in this
Agreement and the other Loan Documents to which it is a party to be
observed, performed or satisfied by it, and that such Responsible Officer
has obtained no knowledge of any Default or Event of Default except as
specified in such certificate and (ii) in the case of quarterly or annual
financial statements, a Compliance Certificate containing all information
and calculations necessary for determining compliance by Holdings, the
Borrower and its Subsidiaries with the provisions of this Agreement
referred to therein as of the last day of the fiscal quarter or fiscal year
of the Borrower, as the case may be;
(c) concurrently with the delivery of any financial statements
pursuant to Section 6.1 prior to the Transition Date, a certificate of a
Responsible Officer stating that, as of the date of such delivery, the sum
of the aggregate outstanding principal amount of Term Loans plus the Total
Revolving Extensions of Credit does not exceed the Asset Coverage Test
Amount and sett
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
March 11, 1999 included in the SBA Communications Corporation Form 10-K for the
year ended December 31, 1998. We also consent to the incorporation by reference
of our reports dated March 19, 1999 for Norwest Tower Service, Inc. and General
Communications Properties, Inc., and our reports dated March 24, 1999 and March
26, 1999 for PrimeCo Personal Communications, L.P. and Caddo Tower Company,
Inc., respectively, included in the Company's previously filed Registration
Statement on Form S-1 (File No. 333-76547) and to all references to our firm
included in this registration statement.
ARTHUR ANDERSEN LLP
West Palm Beach, Florida,
January 6, 2000.
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------------------
As independent certified public accountant, we hereby consent to the use of our
report (and to all references to our Firm) included in or made a part of this
registration statement.
/s/ Peter C. Cosmas Co., CPA
- --------------------------
Peter C. Cosmas Co., CPA
January 6, 2000
<PAGE>
Exhibit 23.4
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------------------
As independent certified public accountant, I hereby consent to the use of my
report (and to all references to my Firm) included in or made a part of this
registration statement.
/s/ John A. Criscuola, CPA
- --------------------------
John A. Criscuola, CPA
Port Jefferson Station, New York
January 6, 2000
<PAGE>
Exhibit 23.5
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------------------
As independent certified public accountant, we hereby consent to the use of our
report (and to all references to our Firm) included in or made a part of this
registration statement.
/s/ Turbes Drealan Kvilhaug & Co., PA
- --------------------------
Turbes Drealan Kvilhaug & Co., PA
January 6, 2000
